The Wall Street Legal & Regulatory Feed
Securities Industry Commentator by Bill Singer Esq
February 26, 2020
7Cir Dismisses Order to Arbitrate Commodities Futures Dispute Citing Rule of Finality. Intl FCStone Financial Inc., Plaintiff/Appellee, v. Dave Jacobson, et al., Defendants/Appellants (7Cir. Opinion)
Sexual Bondage, Videotapes, Divorce, Criminal Charges, Revenge Porn and FINRA (BrokeAndBroker.com Blog)
http://www.brokeandbroker.com/5089/pagliara-bondage/
Upon first glance, today's featured litigation seems little more than a garden-variety torts case. Plaintiff Pagliara sued Defendants asserting negligent infliction of emotional distress, intentional infliction of emotional distress, civil conspiracy, and malicious prosecution. When we drill down into the underlying facts, however, we enter into a truly bizarre world of sexual bondage, videotapes, divorce, criminal charges, and the Financial Industry Regulatory Authority. FINRA? Yeah, FINRA.
7Cir Dismisses Order to Arbitrate Commodities Futures Dispute Citing Rule of Finality. Intl FCStone Financial Inc., Plaintiff/Appellee, v. Dave Jacobson, et al., Defendants/Appellants (Opinion, United States Court of Appeals for the Seventh Circuit, Nos. 19-2111 and -2123 / February 24, 2020)
https://www.govinfo.gov/content/pkg/USCOURTS-ca7-19-02111/pdf/USCOURTS-ca7-19-02111-0.pdf
As set forth in the introductory portion of the Opinion:
Investors in commodities futures appeal an order to arbitrate their trading disputes. But they stumble out of the blocks: our review is limited to "final decisions of the district courts." 28 U.S.C. § 1291. Here, the district court ordered arbitration and designated an arbitration forum, then stayed the case to address related issues, including the arbitration venue. Put more simply, the district court made non‐final decisions.Although statutory exceptions exist to the rule of finality, none apply here. Because this case remained open to resolve certain issues, we dismiss defendants' appeal for lack of jurisdiction.
FINRA Doesn't Like What's Up with Rep's Use of WhatsApp. In the Matter of Paul A. Falcon, Respondent (FINRA AWC 2018059746001)
For the purpose of proposing a settlement of rule violations alleged by the Financial Industry Regulatory Authority ("FINRA"), without admitting or denying the findings, prior to a regulatory hearing, and without an adjudication of any issue, Paul A. Falcon submitted a Letter of Acceptance, Waiver and Consent ("AWC") finding that he had violated FINRA Rules 4511 and 2010, which FINRA accepted.The AWC asserts that Falcon entered the industry in 1994, and since July 2013, he has been registered with FINRA member firm Aegis Capital Corp. The AWC asserts that Falcon "does not have any disciplinary history with the Securities and Exchange Commission, any state securities regulators, FINRA, or any other self-regulatory organization." In accordance with the terms of the AWC, FINRA imposed upon Paul A. Falcon a $5,000 fine and a 30-calendar-day suspension from associating in any and all capacities with any FINRA member firm. As set forth in part in the AWC, during the relevant period between November 9, 2017 and June 25, 2019:
On November 6, 2017, Falcon completed the Firm's annual personal activity questionnaire in which he disclosed using a third-party application and communication system for business purposes. Specifically, Falcon stated that he used WhatsApp Messenger to communicate with overseas customers several times a month on his personal cellular telephone. Aegis had not approved this messaging application and it did not capture messages sent or received through this application. That same day, Falcon signed an Aegis Telecommunication Policy Acknowledgement confirming that he would use only communication devices the Firm issued and approved and that the Firm prohibited the use of text messaging to conduct business.During the Relevant Period, Falcon continued to use WhatsApp Messenger for businessrelated communications with several overseas customers. Specifically:
- Between November 9. 2017 and June 25, 2019, Falcon exchanged 348 WhatsApp communications with customer JCVC many of which concerned securities-related business.
- Between November 10, 2017 and March 20, 2019, Falcon exchanged 316 WhatsApp communications with customer DV many of which concerned securities-related business.
- Between November 10, 2017 and June 8, 2018, Falcon exchanged 230 WhatsApp communications with customer AN many of which concerned securities-related business.
Falcon primarily used his personal cellular telephone to communicate via WhatsApp Messenger, but occasionally used his desktop computer at Aegis as well. The Firm did not approve Falcon's use of WhatsApp Messenger, nor did the Firm capture the communications sent and received through WhatsApp Messenger so that it could maintain and preserve them.
Rep Fined And Suspended by FINRA for Undisclosed Borrowing from Customer. In the Matter of Terrence E. Bonk, Respondent (FINRA AWC 2018059746001)
https://www.finra.org/sites/default/files/fda_documents/2019063735801
%20Terrence%20E.%20Bonk%20CRD%201011846%20AWC%20va.pdf
For the purpose of proposing a settlement of rule violations alleged by the Financial Industry Regulatory Authority ("FINRA"), without admitting or denying the findings, prior to a regulatory hearing, and without an adjudication of any issue, Terrence E. Bonk submitted a Letter of Acceptance, Waiver and Consent ("AWC") finding that he had violated FINRA Rules 3240 and 2010, which FINRA accepted.The AWC asserts that Bonk entered the industry in 1983, and since November 2014,was registered with FINRA member firm Feltl & Company until his termination on august 26, 2019, allegedly for his failure to follow firm policy. The AWC asserts that Bonk "does not have any disciplinary history with the Securities and Exchange Commission, any state securities regulators, FINRA, or any other self-regulatory organization." In accordance with the terms of the AWC, FINRA imposed upon Terrence E. Bonk a $10,000 fine and a nine-month suspension from associating in any and all capacities with any FINRA member firm. As set forth in part in the AWC:
https://www.finra.org/sites/default/files/fda_documents/2019063735801
%20Terrence%20E.%20Bonk%20CRD%201011846%20AWC%20va.pdf
For the purpose of proposing a settlement of rule violations alleged by the Financial Industry Regulatory Authority ("FINRA"), without admitting or denying the findings, prior to a regulatory hearing, and without an adjudication of any issue, Terrence E. Bonk submitted a Letter of Acceptance, Waiver and Consent ("AWC") finding that he had violated FINRA Rules 3240 and 2010, which FINRA accepted.The AWC asserts that Bonk entered the industry in 1983, and since November 2014,was registered with FINRA member firm Feltl & Company until his termination on august 26, 2019, allegedly for his failure to follow firm policy. The AWC asserts that Bonk "does not have any disciplinary history with the Securities and Exchange Commission, any state securities regulators, FINRA, or any other self-regulatory organization." In accordance with the terms of the AWC, FINRA imposed upon Terrence E. Bonk a $10,000 fine and a nine-month suspension from associating in any and all capacities with any FINRA member firm. As set forth in part in the AWC:
In 2018 and 2019, Feltl's written supervisory procedures prohibited its registered representatives from entering into borrowing or lending arrangements with Firm customers. Bonk twice acknowledged in writing, by signing Registered Representative Compliance Agreements, that Feltl's policy "absolutely bar[red him] from borrowing or lending money and/or securities to/from a customer, no exception."In September 2018, Bonk borrowed $8,000 from a relative who was also his customer. Bonk did not disclose this loan to Feltl or seek prior approval for it.. . .Bonk made false statements to Feltl, which concealed the $8,000 loan from his customer. On August 4, 2019, Bonk falsely responded "No" to the question, "Have you borrowed from or lent money or securities to any of your clients?" when he signed an annual Registered Representative Questionnaire.On August 5, 2019, Bonk's customer demanded repayment of the loan in a message he sent to Bonk's email address at Feltl. Bonk then requested that his customer send an email to his Feltl email address stating that the loan at issue was made to Bonk's brother and not to Bonk directly, and the customer sent that email on August 7, 2019. On August 7, 2019, after discovering the two emails, Bonk's supervisor confronted Bonk about whether he had borrowed money from his customer. Bonk falsely stated to his Feltl supervisor that his brother had borrowed money from his customer, not him.