charged with two counts of forgery, two counts of identity theft, and two counts of falsifying business records, that Carvallo had pled not guilty, and that the "d]isposition[s] [were] subject to negotiation with District Attorney of New York County." The Form U5 also disclosed that the Firm had initiated an internal review of Carvallo's conduct on August 16, 2016 in connection with a grand jury subpoena it had received from the New York County District Attorney's Office. On January 25, 2018, the Firm filed an amended Form U5 to reflect a date of disposition of December 20, 2017 for the criminal matter. The Firm also disclosed that, "[a]fter meeting certain conditions set by the Court, Mr. Carvallo's case was closed with entry of a plea of guilty to a violation of 'disorderly conduct.'"
By 2009, several auction houses had prohibited Carvallo from participating in their auctions, because on multiple occasions, he had bid for and won items at auction and then failed to pay for and collect the items. From approximately November 2011 through June 2015 (the "Relevant Period"), Carvallo had access to the Firm's confidential personnel records in his role as the Firm's President and Chief Compliance Officer ("CCO"). In order to circumvent the auction houses' bans and continue to bid in auctions as he desired, Carvallo impersonated ten current and former Firm employees (the "employees") during the Relevant Period.Carvallo obtained the employees' personal information from the Firm's personnel files to create approximately 20 false online bidding accounts at three auction houses (collectively, the "Auction Houses") that were purportedly opened for these employees and to which these employees did not consent. To create the false accounts, Carvallo input the employees' names into the Auction Houses' online account opening systems to create the false impression that these individuals were opening the accounts. In addition, Carvallo invented fictional email addresses, physical addresses, and dates of birth for each employee and submitted that false information electronically to the Auction Houses in order to open the false accounts.In or about March 2012, Carvallo also falsified his own telephone bill to create a fictitious proof of address for one of the false accounts. He removed his own name from the bill, inserted the name of one of the employees and changed the address on the bill to match the fictitious address associated with the false account. Carvallo submitted that falsified bill to Auction House A in response to its request for proof of address for the false account.After opening these false accounts, Carvallo used them to participate in 26 online or telephone auctions during the Relevant Period. To do so, Carvallo registered each account with the relevant Auction House conducting the auction. As part of the registration process, the Auction Houses asked account-holders for proof of identification. In response to those requests, Carvallo obtained copies of the employees' driver's licenses and passports from Firm personnel files, and provided them to the Auction Houses via email from fictitious email accounts he created using the employees' names, without authorization from the employees. Carvallo then used the false accounts to bid on items during auctions that the Auction Houses conducted online via the Internet or via telephone.Carvallo participated in the auctions during Firm business hours, at the Firm's office, using the Firm's computer equipment.By bidding on these items, Carvallo purported to bind the employees to the Auction Houses' conditions of sale, which governed their respective auctions. Pursuant to these conditions of sale, a successful bid in an auction created a sales contract between the seller and successful bidder, and successful bidders could be held legally responsible for the winning bid price of the item won.On 26 occasions, Carvallo used the false accounts he created to win bids at the Auction Houses for items totaling over $500,000 in value. In all but one of these instances, Carvallo did not pay for or collect these items.On one occasion in June 2015, Carvallo won an online auction at Auction House B using a false account under the name of Employee B - a then-current Firm employee. Carvallo forged Employee B's signature on Auction House B's documents relating to the items won at the auction. Carvallo also forged Employee B's initials on a form authorizing Auction House B to collect tax on the items. In addition, Carvallo submitted a credit card authorization form containing his own credit card number, authorizing payment of $9,526.56, which included the tax. Carvallo used his own credit card to pay for the items. However, he forged Employee B's name on the credit card authorization form. . .
all civil litigation, with the exception of Federal Trade Commission v. Gerber, Civil Action No. 14-677 1 (SRC) and all pending Social Security cases, in the United States District Court for the District of New Jersey involving as a party the United States of America, its agencies. its officers or employees (whether in their individual or official capacity and whether cmTent or former employees), and/or any other party represented by the Department ofJustice or the United States Attorney's Office is immediately suspended, postponed and held in abeyance continuing either (1) until the federal government is funding through congressional appropriation or (2) for a period of thirty (30) days from the date of entry of this Order, whichever comes sooner.
For purposes of clarification. the language of the Standing Order included actions brought by federal prisoners seeking to vacate, set aside or collect their sentences pursuant to 28 U.S.C. § 2255, as well as those actions brought by immigration detainees pursuant to 28 U.S.C. § 2241. Standing Order 18-4 also provided that this Court could modify the Standing Order . . .
In opting to reduce the OHO's term of suspension, the NAC offers this rationale [Ed: footnotes omitted]:Todd B. Wyche appeals a February 2, 2018 Hearing Panel decision. The Hearing Panelfound that Wyche failed to timely amend his Uniform Application for Securities IndustryRegistration or Transfer ("Form U4") to disclose a federal tax lien, in willful violation of Article V, Section 2(c) of FINRA By-Laws and FINRA Rules 1122 and 2010. For his misconduct, the Hearing Panel suspended Wyche from associating with any FINRA member firm in any capacity for six months and fined him $10,000.The primary issue on appeal is when Wyche learned of the federal tax lien. Wychecontends, as he did before the Hearing Panel, that he did not learn about the lien until FINRA staff questioned him about it six months after it was filed. After an independent review of the record, we reject Wyche's contention and affirm the Hearing Panel's findings. For the reasons explained herein, we modify the sanctions the Hearing Panel imposed.
We note, however, Wyche failed to disclose a single lien, the short duration of the delinquency, and the fact that he had paid down, and had otherwise worked with the IRS to reduce, the amount of lien significantly during the delinquency.Wyche argues that the Hearing Panel failed to consider several other factors that support mitigation. First, Wyche maintains that he did not engage in numerous acts or a pattern of misconduct. While we agree that Wyche failed to disclose only one lien, we reject the characterization that his misconduct was isolated. Despite being aware of the lien, he falsely answered FINRA staff's personal activity questionnaire and filed two Forms U4 amendments during the five-month span in which he falsely answered question 14M that he did not have any outstanding liens. Even after he disclosed the lien on his Form U4, Wyche falsely stated on his Form U4 and testified that he learned about the lien on August 7, 2014. We do not find Wyche's misconduct consistent with an aberrant lapse in judgment.
Respondents Trevor Saliba, Sperry Younger, and Arthur Mansourian appeal a December 15, 2017 Extended Hearing Panel Decision. The Extended Hearing Panel (the "Hearing Panel") found that Saliba caused his firm to violate certain restrictions placed on it by FINRA by acting in a principal capacity when he was prohibited from doing so. The Hearing Panel also found that Saliba provided falsified documents and false and misleading information to FINRA and failed to cooperate fully with FINRA's investigation. The Hearing Panel found that Younger failed to reasonably supervise Saliba while he was restricted from acting as a principal. The Hearing Panel also found that Younger provided false testimony to FINRA. Finally, the Hearing Panel found that Mansourian participated in obtaining falsified documents that were provided to FINRA and caused the firm to maintain inaccurate books and records. For these violations, the Hearing Panel barred Saliba, Younger, and Mansourian in all capacities.On appeal, the respondents argue that the Hearing Panel based its determinations on inadequate circumstantial evidence. Saliba both denies causing a violation of the FINRA restrictions and argues that, to the extent he may have violated the restrictions, those violations were unintentional and the result of his lack of understanding of principal activities. Saliba also denies providing falsified documents and false and misleading information to FINRA, and argues that the bar imposed by the Hearing Panel is excessive. Younger denies failing to supervise Saliba, argues that Saliba was not acting as a principal, and denies providing false testimony to FINRA. Younger also argues that the bar imposed on him is "extreme and overly punitive." Finally, Mansourian argues that his participation in the falsification of firm documents was done at the direction of his superiors and with FINRA's knowledge, and that the bar imposed on him is excessive.After an independent review of the record, we affirm the Hearing Panel's findings of violations and modify the sanctions it imposed.
violation of FINRA rules; negligence; gross negligence; negligent misrepresentation/omission; negligent hiring; negligent retention; negligent supervision; breach of duty of good faith and fair dealing; breach of contract; breach of fiduciary duty; aiding and abetting a breach of fiduciary duty; fraud; aiding and abetting fraud; violation of MINN. STAT. § 80A.76; aiding and abetting a violation of MINN. STAT. § 80A.76; violation of Section 10b and Rule 10b-5 of the Securities Exchange Act of 1934, 15 U.S.C. § 78j(b) and 17 C.F.R. § 240.10b-5; aiding and abetting a violation of Section 10b and Rule 10b-5 of the Securities Exchange Act of 1934, 15 U.S.C. § 78j(b) and 17 C.F.R. § 240.10b-5; violation of Section 206 of the Investment Advisers Act of 1940, 15 U.S.C. § 80b-6; and aiding and abetting a violation of Section 206 of Investment Advisers Act of 1940, 15 U.S.C. § 80b-6.
$37,309.53 in compensatory damages, consequential, special, and equitable damages; disgorgement of the fees Respondent earned from Claimant; all filing fees and forum fees paid, owed, or incurred by Claimant in connection with this arbitration; all costs and expenses paid, owed, or incurred by Claimant in connection with this arbitration; attorneys' fees; punitive damages; remuneration sufficient to cover the taxes applied to any Award made to Claimant; pre- and post-judgment interest at the maximum legal rate permissible under the law on all sums recovered; a referral of Respondent's and Broker's misconduct to FINRA for investigation. . .
1. Respondent is liable for and shall pay to Claimants the sum of $920,197.54 in compensatory damages.2. Respondent is liable for and shall pay to Claimants interest on the above stated sum at the rate of 4.25% per annum from January 6, 2019 until the date that the Award is paid in full.3. Respondent is liable for and shall pay to Claimants the sum of $125,000.00 in attorneys' fees pursuant to A.R.S. § 44-2001(A).4. Respondent is liable for and shall pay to Claimants the sum of $5,233.60 in costs.5. Respondent is liable for and shall pay to Claimants the sum of $425.00 to reimburse Claimant for the non-refundable portion of the filing fee previously paid to FINRA Office of Dispute Resolution. . .