Securities Industry Commentator by Bill Singer Esq

August 4, 2020
It's a really, really slow news day. We got COVID ragin'. We got Isaias stormin. It's August. Everyone's in a lousy mood. Thankfully, Fox Business broke the dramatic story about the nightmarish, unhygienic nature of  McDonald's ball pits. You can read about this developing scandal. You can watch a penetrating Stuart Varney interview. Absent from Fox's penetrating inquiry, however, is just what the hell McDonalds's will do with the balls once they are removed from the pits. Will they be sealed in lead-lined concrete shipping containers and buried in a third-world nation? What will McDonald's use to fill up the empty ball pits -- ketchup packets?

Florida man buys $140,000 Porsche with check printed from home computer / The suspect tried to then purchase 3 Rolex watches (Fox Business by Daniella Genovese)
In keeping with the theme that this is a slow news day, inveterate Fox Business reports about William Kelley, who printed a bogus cashier's check on his home computer in order to buy a Porsch and some luxury jewelry. The jeweler held on to his goods in order to see if the check cleared. The car dealer, well, he took the paper and let Kelley drive a 911 Turbo off the lot.
Notwithstanding that I'm a lawyer, I'm still puzzled when I see a contract that proscribes "any and all" conduct of a particular nature. What the hell falls under "any" but not under "all," and vice versa? Imagine a sign in the window of a local store that says "Closed on all Sundays." Now imagine a sign that says "Closed on any Sunday" And, okay, just to beat this to death, imagine a sign that says "Closed on any and all Sundays." Oh yes, there are legal and grammatical experts who will make an arcane case about the distinction but, c'mon, it's a distinction without much of a difference. No matter which of the three signs are hanging in the window, the shop ain't open on Sunday, right? Never on a Sunday! All of which provides a segue into a recent federal case involving JPMorgan Chase Bank and an agreement that requires arbitration of "any," "all," and/or "any or all" claims and disputes.  

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, Frederick Scott Levine submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA accepted. The AWC alleges that Frederick Scott Levine was first registered from 2002 until November 2014 with FINRA member firm Oppenheimer & Co. Inc. The AWC alleges that Frederick Scott Levine "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 found that Levine had violated violated NASD Rule 2310 (for conduct before July 9, 2012), FINRA Rule 2111 (for conduct on or after July 9, 2012), and FINRA Rule 2010;  and the self regulator imposed upon him a $5,000 fine and an three-month suspension from association with any FINRA member in all capacities. As set forth in pertinent parts of the AWC [Ed: footnotes omitted]:

During the Relevant Period, Levine recommended his customers roll over UITs more than 100 days prior to maturity on approximately 950 occasions. Indeed, although his customers' UITs typically had a 24-month maturity period, Levine recommended that they sell their UITs after holding them for, on average, only 260 days, and use the proceeds to purchase a new UIT. 

Of the approximately 950 early rollovers recommended by Levine, more than 600 were "series-to-series" rollovers. In other words, on more than 600 occasions, Levine recommended that his customers roll over a UIT before its maturity date in order to purchase a subsequent series of the same UIT, which, as noted above, generally bad the same or similar investment objectives and strategies as the prior series. 

As one example of a recommended "series-to-series" rollover, Levine recommended that a customer purchase a UIT issued in the first quarter of 2014 that had an investment objective of "above-average capital appreciation" and an investment strategy of investing in a "diversified portfolio of common stocks" (the "2014 Q1 Series"). Although the 2014 Q1 Series UIT had a 24-month maturity period, Levine recommended that his customer sell it after holding it for 77 days and use the proceeds to purchase a later series of the same UIT issued in the second quarter of 2014 (the "2014 Q2 Series"). The 2014 Q2 Series had the same or a similar investment objective and strategy as the 2014 Q1 Series. Levine's recommendation that his customer sell the 2014 Q1 Series more than 21 months prior to its maturity and use the proceeds to purchase the 2014 Q2 Series caused his customer to incur increased sales charges to purchase what was, essentially, the same investment. 

Levine's recommendations caused his customers to incur unnecessary sales charges, and were unsuitable in view of the frequency and cost of the transactions.