Securities Industry Commentator by Bill Singer Esq

Tastyworks Eats $2 Million Worth Of Not-So-Tasty ZOOM Options (BrokeAndBroker.com Blog)

Unsettling Settlement Puts FINRA's Board of Governors in Troubling Light (BrokeAndBroker.com Blog)

Co-Founder And Chief Investment Officer Of London-Based Hedge Fund Charged With FX Market Manipulation And Fraud (DOJ Release)

San Diego Corporate and Securities Attorney Indicted for Securities Fraud, Assisting Planned Pump-and-Dump Scheme (DOJ Release)

San Bernardino County Man Sentenced to 14 Years in Federal Prison for Multimillion-Dollar Investment Fraud and Cheating on His Taxes (DOJ Release)

SEC Charges Florida Man for His Role in $196 Million Ponzi Scheme (SEC Release)

Arizona and California Men Sentenced for $20 Million Investment Fraud (DOJ Release)

'Modern-day Bonnie and Clyde' admit to fraud charges related to pilfered mail, stolen funds / Defendant faces up to 30 years in prison (DOJ Release)

Georgia Man Sentenced to Over 7 1/2 Years in Prison for Synthetic Identities Scheme That Defrauded Banks Out of Nearly $2 Million (DOJ Release)

California Man Arrested for $7 Million Securities Fraud (DOJ Release)

SEC Files Subpoena Enforcement Action Against South Florida Man, His Sister and Their Companies (SEC Release)

SEC Charges Advisory Firm and Executives with Devising an Elaborate Scheme to Defraud Clients out of More Than $75 Million (SEC Release)

SEC Files Subpoena Enforcement Action Against Issuer for Failure to Produce Documents (SEC Release)

SEC Charges Hedge Fund Portfolio Manager with Fraud (SEC Release)

FINRA Arbitrators Award About 2/10ths of a Percent of Claimants' Damages Demand Against Raymond James and Rep

In the Matter of the Arbitration Between Christina and Erik Elwell, Claimant, v. Raymond James Financial Services, Inc., Wells Fargo Advisors Financial Network, Wells Fargo Clearing Services, LLC, and Daniel Lawrence Pimental, Respondents (FINRA Arbitration Award)

FINRA Censures, Fines Orders Restitution from Robert W. Baird & Co. for Unfair Commission Charges

In the Matter of Robert W. Baird & Co., Respondent (FINRA AWC)

FINRA Fines and Suspends Former Joseph Stone Capital Rep for Excessive/Unsuitable Trading

In the Matter of Miguel Angel Murillo, Respondent (FINRA AWC)

FINRA Fines and Suspends Former Mutual of Omaha Investor Services Rep for Sending Customer Info Via Email

In the Matter of Kyle Luebeck, Respondent (FINRA AWC)

FINRA Fines and Suspends Former Huntington Rep for Tax Preparer OBA

In the Matter of Ossama Mohamed Helal, Respondent (FINRA AWC)

FINRA Fines and Suspends Former Thrivent Rep for Sales Coaching/Training OBA

In the Matter of Simon Dude Granner, Respondent (FINRA AWC)

FINRA Fines and Suspends Former Joseph Stone Rep for Willfully Failing to Disclose the Judgment, Two Liens, and Bankruptcy Petition

In the Matter of Christopher Stephen Perrillo, Respondent (FINRA AWC)

Background on Hedge Fund-1 and the FX Markets

At all relevant times, PHILLIPS was the co-founder and co-Chief Investment Officer of a hedge fund based in the United Kingdom ("Hedge Fund-1"), which was a global "macro" fund that focused on macroeconomic trends and emerging markets, foreign currency exchange ("FX") markets, and currency and commodity products.  Hedge Fund-1 was at all relevant times a registered commodity pool operator with the Commodity Futures Trading Commission (the "CFTC") and PHILLIPS was himself registered with the CFTC as well.

The FX market is a global market in which participants trade currencies in pairs.  In a currency pair, each currency is valued relative to the other, and the ratio that expresses the value of one currency against the other is referred to as the "exchange rate" or the "rate."  FX "spot" trades involve one party agreeing to receive a particular currency in exchange for delivering a different currency, at an agreed-upon price and quantity. 

The $20 Million One Touch Option

In late October 2017, Hedge Fund-1 purchased a "one touch" digital option for the USD/ZAR currency pair that was set to expire on January 2, 2018.  The option had a notional value of $20 million and a barrier rate of 12.50 ZAR to USD (the "$20 Million One Touch Option").  Under the terms of the $20 Million One Touch Option, if the USD/ZAR exchange rate went below the rate of 12.50 at any point prior to January 2, 2018, Hedge Fund-1 would be entitled to a $20 million payment.  Hedge Fund-1 subsequently allocated a portion of the $20 million notional value to a client ("Client Fund-1"), thereby entitling Client Fund-1 to receive $4,340,000 in the event that the $20 Million One Touch Option was triggered.

Other financial institutions were party to the transaction:  Hedge Fund-1 purchased the $20 Million One Touch Option through a financial services firm ("Intermediary Firm-1") that facilitates trades on behalf of underlying clients; a subsidiary of a bank headquartered in Manhattan, New York ("Bank-1") was obligated to pay the $20 million in the event the $20 Million One Touch Option was triggered; and a bank headquartered in Manhattan, New York ("Bank-2") acted as Hedge Fund-1's prime broker in connection with the $20 Million One Touch Option.

Hedge Fund-1 and Bank-2 entered into a letter agreement that set forth the terms and conditions of the transaction.  This letter agreement provided that Hedge Fund-1 would be "acting in good faith and in a commercially reasonable manner" as the "Calculation Agent" in connection with the $20 Million One Touch Option and that Hedge Fund-1 would determine whether a barrier event occurred in good faith and in a commercially reasonable manner.

PHILLIPS Intentionally Manipulates the USD/ZAR Rate on Boxing Day 2017

With the $20 Million One Touch Option set to expire in a matter of days without having been triggered, on December 26, 2017 (Boxing Day), PHILLIPS engaged in a scheme to intentionally and artificially manipulate the USD/ZAR rate to drive the rate below 12.50 and trigger payment under the $20 Million One Touch Option.  PHILLIPS caused and sought to cause the USD/ZAR exchange rate to fall below 12.50 by engaging in FX spot trades in which he caused hundreds of millions of USD to be exchanged for ZAR.  PHILLIPS engaged in this USD/ZAR FX spot trading for the express purpose of artificially driving the USD/ZAR rate below 12.50.  On December 26, 2017, in the hours that followed the completion of the USD/ZAR FX spot trading directed by PHILLIPS, the USD/ZAR rate once again increased and returned to levels above the 12.50 barrier and did not go below that rate for the remainder of the day.

In particular, during the span of less than an hour between shortly before midnight London time on December 25, 2017 (Christmas day), and approximately 12:45 a.m. London time on December 26, 2017 (Boxing Day), PHILLIPS personally directed a Singapore-based employee ("CC-1") of a bank ("Bank-3") to sell, on behalf of Hedge Fund-1, a total of approximately $725 million USD in exchange for approximately 9,070,902,750 ZAR.  During the course of that approximately one-hour period, PHILLIPS, through his trading, caused the USD/ZAR rate to fall substantially until the rate went just below 12.50.  As soon as PHILLIPS had achieved his objective and the USD/ZAR rate fell below 12.50 due to PHILLIPS' manipulative spot trading activity, PHILLIPS immediately directed that CC-1 cease trading.  PHILLIPS provided trading instructions to CC-1 through Bloomberg chat messages while PHILLIPS was located in South Africa and while CC-1 was located in Singapore.  In these Bloomberg chat messages, PHILLIPS explicitly directed CC-1 to continue selling until the USD/ZAR rate fell below 12.50 and PHILLIPS expressly stated that PHILLIPS' purpose in directing these trades was to drive the USD/ZAR rate below 12.50 stating, among other things, "my aim is to trade thru 50," "[n]eed it to trade thru 50. 4990 is fine," and "[g]et it thru."  Once PHILLIPS was informed by CC-1 that the USD/ZAR had traded at below 12.50, PHILLIPS immediately instructed CC-1 to "stop" trading and asked for proof "of the print."

PHILLIPS Causes the Fraudulent Triggering of the $20 Million One Touch Option

Minutes after PHILLIPS artificially caused the USD/ZAR exchange rate to fall below 12.50 through his manipulative trading, PHILLIPS instructed another employee of Hedge Fund-1 ("CC-2") to notify Intermediary Firm-1 that the $20 Million One Touch Option had been triggered.  Consistent with PHILLIPS' directive, CC-2 contacted an employee of Intermediary Firm-1 to confirm that the $20 Million One Touch Option had been triggered and, in so doing, omitted the fact that the triggering event - the USD/ZAR rate falling below 12.50 - had occurred as a result of the manipulation of the USD/ZAR exchange rate by PHILLIPS.  Furthermore, Bank-2, which was serving as Hedge Fund-1's prime broker in connection with the $20 Million One Touch Option and with whom Hedge Fund-1 had executed the relevant letter agreement governing the transaction, required confirmation from both the executing broker and from Hedge Fund-1 that the $20 Million One Touch Option had, in fact, been triggered.  In this regard, on or about December 27, 2017, an employee of Hedge Fund-1 notified Bank-2, that "[t]he below option level of 12.50 was hit yesterday" and sought to process payment in connection with the triggering of the $20 Million One Touch Option.  This representation by Hedge Fund-1 to Bank-2 that the $20 Million One Touch Option had been triggered likewise omitted the fact that the triggering event - the USD/ZAR exchange rate falling below 12.50 - had occurred as a result of the manipulation of the USD/ZAR exchange rate by PHILLIPS.

As a result of the fraudulent triggering of the $20 Million One Touch Option by PHILLIPS, Hedge Fund-1 ultimately received a wire transfer of $15,660,000 and Client Fund-1 received a wire transfer of $4,340,000. 

[C]oldicutt worked with other individuals from 2017 through 2019 to prepare and execute a pump-and-dump stock fraud scheme. Coldicutt thought the individuals with whom he was working were associated with a shady hedge fund. In reality, he was working with undercover FBI agents and sources gathering evidence against Coldicutt, the indictment said.

To carry out his role in the scheme, Coldicutt created a sham company and a business model - which supposedly focused on backyard fruit harvesting - and prepared and filed registration statements with the SEC for an initial public offering of the company's stock. According to the indictment, the registration statements contained false and misleading information about the company, its business plans, and the people who owned and controlled the company. 

Burnell falsely claimed to have accumulated tens of millions of dollars from lawsuits he purportedly won against the San Bernardino County Sheriff's Department and Kaiser Permanente; from selling a patent for an air-cooled, bullet-resistant vest to Oakley Inc.; and through investments in small businesses and money-lending opportunities. Burnell left the San Bernardino County Sheriff's Department in May 2008. The scheme began no later than November 2010 and continued until September 2017.

After deceiving victims into believing he was a wealthy businessman, Burnell then induced victims to invest up to hundreds of thousands of dollars at a time with him by offering exclusive investment opportunities that promised rates of returns as high as 100% to be repaid in a few weeks. In some instances, Burnell asked the victim for an initial trial investment with him, during which he would fulfill his promised returns - and gain the victim's trust - only to ask for a larger amount from them.

"But these investment opportunities did not actually exist," prosecutors argued in a sentencing memorandum. "Rather, [Burnell] would spend the money on maintaining a life of luxury for himself and his Hooters calendar model girlfriends, gambling, and private jets."

Burnell spent victims' money on gambling and luxury items, including losing more than $2 million in gambling at the San Manuel Casino in Highland, $500,000 in private jet trips, $70,000 on Louis Vuitton merchandise, and $175,000 on luxury cars and an apartment lease for his then-girlfriends. Burnell continued this investment fraud scheme for years until he could not identify new victims to defraud and the money from his victims ran out.

As victims began to raise concerns to him about a lack of repayment and defaults, Burnell claimed that his money had been tied up in a trust fund and his remaining assets had been seized by federal authorities. He then cheated some of the victims out of additional funds by falsely claiming he needed loans to pay for his then-wife's cancer treatment, a child custody dispute with his father-in-law, and other personal expenses.

To alleviate victims' concerns, Burnell showed many victims a fabricated Wells Fargo bank statement that said he had more than $150 million in his account that he would use to pay back victims once his funds were no longer tied up. In truth, Burnell had less than $6,500 in that account.

Burnell's victims lost a total of $7,592,491, which included their retirement and other savings and investment funds. According to court documents, some victims became depressed and suicidal, others lost their businesses, some were forced to sell their family homes and move into smaller residences, some had to tell their children they could no longer pay for their college education, and some suffered marital problems and got divorced. Some victims had their retirement plans shattered.

[F]from at least June 2020 until August 2021, Ruiz and his team of about 70 sales agents solicited and raised at least $46 million from over 5,100 MJ Capital investors. The complaint alleges that Ruiz and his sales team represented to investors that their money would be used to make small business loans called "merchant cash advances," and that in exchange, investors would receive monthly returns of 10% to 15%. In reality, according to the complaint, Ruiz knew, or was severely reckless in not knowing, that MJ Capital was using new investor money to pay purported returns to existing investors in a classic Ponzi scheme fashion. The complaint further alleges that Ruiz misappropriated or misused about $6.5 million of investor money, a portion of which he spent on various personal expenditures. In addition, the complaint alleges that Ruiz's sales team received at least $5.3 million, and Ruiz directly received another $292,000, in commission payments from MJ Capital for promoting these investments.

[F]rom approximately 2011 through 2017, David Alcorn, 78, of Scottsdale, Arizona, and Aghee William Smith II, 70, of Roseville, California, were part of an investment fraud conspiracy that operated out of California, Arizona, Florida, Idaho, and Hampton Roads, among other locations across the country. Alcorn, Smith, and their co-conspirators-including Kent Maerki, 78, and his wife Norma Jean Coffin, 60, of Arizona; Daryl Bank, 51, of Florida; insurance salesman Tony Sellers, 62, of Idaho; insurance salesman Tom Barnett, 69, of California; attorney Billy Seabolt, 56, of Williamsburg; Raeann Gibson, 49, of Florida; and Roger Hudspeth, 51, of Suffolk - deceived hundreds of unsuspecting investors, most of whom were at or near retirement age, by convincing them to invest in or send money to companies owned and controlled by Alcorn, Bank, and Maerki. Alcorn and others then misappropriated significant portions of the investment funds to pay for their criminal enterprise and lavish lifestyles, as well as to pay exorbitant commissions to Smith and other salesmen.

Smith began selling these fraudulent investments in 2011 for Alcorn, Maerki, and Bank. The conspirators used material misrepresentations to sell illiquid, highly speculative investments that were then used as vehicles for fraud. Trusting the conspirators' fraudulent misrepresentations, unsuspecting investors cashed out of 401(k) and other retirement accounts to invest without knowing that Alcorn, Bank, and Maerki were immediately transferring 20%-70% of the funds to other companies they controlled in the form of purported "fees." As a result of this investment fraud scheme, the victims suffered losses in excess of $20 million.

Bank was convicted after trial of conspiracy, mail and wire fraud, selling unregistered securities, securities fraud, and money laundering, and was sentenced in September 2021 to 35 years in prison. Maerki pleaded guilty to conspiracy and was sentenced in March 2021 to 16 years in prison. Seabolt was convicted after trial of conspiracy and mail fraud and sentenced in September 2021 to 10 years in prison. Gibson pleaded guilty to conspiracy and was sentenced in February 2020 to 10 years in prison. Hudspeth pleaded guilty to investment advisor fraud and money laundering and was sentenced in May 2018 to over 12 years in prison. Sellers pleaded guilty to conspiracy and was sentenced in January to 5 years in prison. Coffin pleaded guilty to conspiracy and was sentenced in April to 5 years in prison. Barnett will be sentenced in September.

[B]oatwright and Napier called themselves the "Modern Day Bonnie and Clyde" when, in a period from about November 2020 to June 2021, they drove around Georgia, South Carolina, and Florida to steal mail from mailboxes, capturing personal identifying information from the stolen mail, and then using that information to gain access and control of their victims' bank accounts.

Using that information, the two stole, or attempted to steal, hundreds of thousands of dollars from victims, including those residing in the Statesboro area, with actual and attempted financial losses of nearly $1.5 million.

No later than 2017, Cato joined conspiracies to defraud banks and illegally possess credit cards. Cato and his co-conspirators created "synthetic identities" by combining false personal information such as fake names and dates of birth with the information of real people, such as their Social Security numbers. Cato and others then used the synthetic identities and fake ID documents to open bank and credit card accounts at financial institutions. Cato and his co-conspirators used the unlawfully obtained credit cards to fund their lifestyles.

As part of the scheme, Cato maintained a commercial mail receiving agency space called "Pak Mail" in Georgia where he and his co-conspirators received correspondence related to the synthetic identities, including bank account and credit card statements, while insulating their personal addresses from detection.

Using a stolen social security number and fake California driver's license, Cato rented an apartment in Atlanta under the name "Jason Brown," where, in February 2019, he possessed credit cards and financial information in the names of synthetic identities like "Adam M. Lopez" and "Carlos Rivera."

The total losses to the banks totaled approximately $1.9 million.

[P]adilla is a one-time stockbroker who was barred from the securities industry in 2012 by the U.S. Securities and Exchange Commission. It is alleged that, between February and April 2021, Padilla participated in a sophisticated and lucrative pump-and-dump fraud scheme involving the shares of Charlestowne Premium Beverages Inc., a thinly-traded microcap company that traded under the stock ticker symbol FPWM. As part of the scheme, Padilla is alleged to have orchestrated the fraudulent inflation (or "pump") of Charlestowne's stock price using his brokerage account and the accounts of several other individuals. He then allegedly facilitated the sale (or "dump") of millions of Charlestowne's shares at pumped up prices to unsuspecting investors in Massachusetts and throughout the United States.

[T]he SEC is investigating whether Empirex, its officers and others violated the federal securities laws in connection with an unregistered securities offering.  The filing states evidence uncovered in the investigation indicates Empirex and Rafael Vargas may have used AKC - a limited liability company created by Paola Vargas - to raise funds from investors to funnel to Empirex.  As stated in the filing, SEC staff served Empirex, Rafael Vargas, and AKC with investigative subpoenas requiring the production of certain documents and served Paola Vargas with an investigative subpoena compelling her testimony.  According to the filing, despite multiple accommodations by the SEC, Empirex, Rafael Vargas and AKC have failed to comply with the document production obligations of the subpoenas and Paola Vargas has failed and refused to comply with the testimonial obligation of the subpoena.

[F]rom July 2017 through 2018, Lindberg and Herwig, through Standard Advisory, breached their fiduciary duties to their advisory clients by fraudulently causing them to engage in undisclosed related-party transactions that were not in the best interest of their clients. The SEC's complaint further alleges that the defendants misappropriated more than $57 million in client funds and that Standard Advisory collected more than $21.4 million in advisory fees generated in connection with these schemes. In an attempt to conceal the fraud, Lindberg allegedly orchestrated the schemes through complex investment structures and a web of affiliate companies and allegedly used the proceeds to pay themselves or to divert the funds to Lindberg's other businesses.

[T]he SEC is investigating, among other things, whether Ignite violated the federal securities laws by making false or misleading statements in reporting its 2020 financial results. The filing states that the SEC has reason to believe that Ignite improperly recognized and reported certain revenues as part of its 2020 financial statements. The filing alleges that SEC staff served Ignite with an investigative subpoena requiring the production of certain documents, but that, despite multiple accommodations by the SEC staff, Ignite has failed to produce the full set of requested documents.

The SEC seeks an order from the court directing Ignite to show cause why the court should not compel it to produce documents as required by the subpoena. The SEC further seeks an order from the court, following its ruling on the order to show cause, directing Ignite to comply fully with the subpoena. The SEC is continuing its fact-finding investigation and, to date, has not concluded that any individual or entity has violated the federal securities laws.

[F]rom at least November 2016 through February 2018, Lee A. Bressler served as portfolio manager for the Carbon Master Fund, L.P. The SEC alleges that Bressler represented to investors that the fund followed a conservative investment strategy emphasizing capital preservation and low risk. The SEC further alleges, however, that while making these misrepresentations, Bressler engaged in unauthorized high-risk trading in two undisclosed accounts that were margined against the fund's assets. As alleged, this trading not only violated the fund's stated investment mandate but also exposed the fund's assets to extreme risk of loss, which came to fruition in February 2018. According to the SEC, Bressler's unauthorized trading caused the complete loss of investor capital in the fund.

From June 2019 to December 2020, Baird used a published commission schedule pursuant to which the firm charged commissions on low-principal transactions that were not fair and reasonable. For all equity transactions, Baird imposed a minimum commission of $100, in addition to a handling fee. For example, one customer purchased two shares of Apple Inc., a liquid Nasdaq-traded stock, for a principal amount of $772 and was charged a $100 commission, equating to 13% of the principal amount. As a result of the minimum commission, Baird charged at least $266,481 in unfair commissions, in a total of 7,277 transactions on behalf of 4,623 customers. The commissions charged ranged from over five percent to 93% of the transactions' principal value. The average overcharge per transaction was $37. 

In addition, Baird's supervisory system was unreasonable because in establishing its commission schedule and in setting commissions on transactions, the firm did not appropriately consider the factors set forth in Rule 2121.01 for transactions when the minimum $100 commission was imposed. Specifically, while the firm generally flagged transactions where customers were charged over five percent of principal and reviewed those transactions for excessive commissions, the firm's supervisory system did not flag for review transactions when the firm charged the minimum $100 commission. 

Therefore, Baird violated FINRA Rules 3110, 2121, and 2010. 

In June 2011, FINRA accepted an Offer of Settlement from Murillo in which he consented to findings that he excessively and unsuitably traded and unsuitably recommended the use of margin in a customer's account, in violation of NASD Rules 2110, 2310, and IM-2310-2. Through that Offer of Settlement, Murillo was suspended from associating with any FINRA member firm in all capacities for 20 business days and ordered to pay restitution of $35,000.

During the relevant period, Murillo engaged in quantitatively unsuitable trading in five customers' accounts. Murillo caused one such customer, Customer A, to place 60 trades in his account between September 2016 and December 2018, with a total principal value of more than $800,000. During that period, Customer A's average monthly equity was less than $25,000, yet Murillo's recommended trades caused the customer to pay more than $17,000 in commissions and other trade costs. Murillo's recommendations resulted in an annualized cost-to-equity ratio of approximately 30 percent-meaning that Customer A's account would have had to grow by more than 30 percent annually just to break even. 

Murillo recommended similarly unsuitable and excessive trading in four other customers' accounts. 

• Murillo caused Customer B to place 35 trades in his account between January 2017 and September 2019. Although Customer B's account had an average monthly equity of approximately $13,000, Murillo's recommended trades caused him to pay more than $12,000 in commissions and other trade costs and resulted in an annualized costto-equity ratio of more than 38 percent. 
  
  
• Murillo caused Customer C to place 100 trades in his account between January 2015 and September 2018. Although Customer C's account had an average monthly equity of approximately $63,000, Murillo's recommended trades caused him to pay more than $39,000 in commissions and other trade costs and resulted in an annualized costto-equity ratio of more than 25 percent. 
  
  
• Murillo caused Customer D to place more than 35 trades in his account between January 2015 and January 2016. Although Customer D's account had an average monthly equity of approximately $29,000, Murillo's recommended trades caused him to pay more than $15,000 in commissions and other trade costs and resulted in an annualized cost-to-equity ratio of more than 47 percent. 
  
  
• Murillo caused Customer E to place more than 45 trades in his account between January 2017 and October 2017. Although Customer E's account had an average monthly equity of approximately $11,000, Murillo's recommended trades caused him to pay more than $17,000 in commissions and other trade costs and resulted in an annualized cost-to-equity ratio of more than 58 percent. 

Each of the customers described above relied on Murillo's advice and accepted his recommendations. Those recommended transactions, which collectively caused Customers A through E to pay $101,508.10 in commissions and other charges, were excessive and unsuitable. Therefore, Murillo violated FINRA Rules 2111 and 2010.

In May 2020, in anticipation of joining another FINRA member firm, Luebeck improperly removed his customers' nonpublic personal information from Mutual of Omaha, without Mutual of Omaha's or the customers' knowledge or consent. Specifically, on May 14 and May 15, 2020, while associated with Mutual of Omaha, Lue beck sent emails from his Mutual of Omaha email account to an outside email account that he controlled. The emails contained customers' nonpublic personal information as defined by Regulation S-P that Luebeck received as part of his employment with the firm. Luebeck retained this information after the termination of his association with Mutual of Omaha during which time he was not entitled to possess the information. Among other things, the emails contained customers' dates of birth, social security numbers, investment account numbers, life insurance policy numbers, tax filings, and a driver's license number. Luebeck resigned from Mutual of Omaha on May 15, 2020, and associated with another FINRA member firm the same day. 

By virtue of the foregoing, Luebeck failed to observe high standards of just and equitable principles of trade in violation ofFINRA Rule 2010.

In June 2015, Helal sought approval to engage in an outside business activity as a tax preparer. In July 2015, Huntington informed Helal that his outside business activity would not be approved. 

Helal was aware of the firm's WSPs and that his request for approval had been denied, but worked as a tax preparer earning approximately $60,000 in compensation for the tax years 2015 through 2020.

Helal also made false statements to Huntington regarding his outside business activity in quarterly compliance acknowledgements and annual compliance certifications between October 2015 and May 2021. 

Therefore, Helal violated FINRA Rules 3270 and 2010. 

Between January and September 2020, Granner failed to timely and fully disclose an outside business activity for which he received compensation. In early January 2020, without providing prior written notice to Thrivent, Granner formed a consulting services company. Granner was aware that Thrivent's written supervisory procedures required its associated persons to provide written notice and receive prior approval for all outside business activities. When Granner belatedly sought his firm's approval of his outside business activity in late February 2020, he failed to fully disclose the nature of his business. Specifically, he failed to disclose that through this business he would provide financial sales coaching and training to Thrivent-registered persons, activities he knew or should have known his firm would not approve because the firm prohibits third-party financial sales training and had denied Granner's prior request for approval of substantially similar outside business activity in 2019. 

Nonetheless, Granner solicited 186 firm-registered persons to become coaching clients of his consulting business, of which nine became clients who paid Granner approximately $28,000. Granner also falsely attested in an annual compliance questionnaire that he had completely and accurately disclosed his outside business activities to the firm. 

Therefore, Granner violated FINRA Rules 3270 and 2010.  

Respondent understands that this settlement includes a finding that he willfully omitted to state a material fact on a Form U4, and that under Section 3(a)(39)(F) of the Securities Exchange Act of 1934 and Article III, Section 4 of FINRA's By-Laws, this omission makes him subject to a statutory disqualification with respect to association with a member.

In January 2020, Perrillo learned of, through correspondence from FINRA, two unsatisfied liens filed against him. Specifically, Perrillo learned of an unsatisfied lien against him by the homeowner's association of his condominium in the amount of $8,890.14 and an unsatisfied tax lien against him by the State of Tennessee in the amount of $634.97. Although Perrillo was required to disclose the unsatisfied liens via the filing of an amended Form U4 within 30 days of learning of them, he never amended his Form U4 to disclose these liens. 

On or around January 28, 2020, Perrillo learned that a civil judgment had been entered against him in the amount of $355,014. The judgment remained outstanding against him until October 2021. Although Perrillo was required to disclose the unsatisfied judgment via the filing of an amended Form U4 within 30 days of learning of it, Perrillo never amended his Form U4 to disclose this judgement. 

In September 2021, Perrillo filed a bankruptcy petition. Although Perrillo was required to disclose the bankruptcy petition via the filing of an amended Form U4 within 30 days, he never amended his Form U4 to disclose it. In November 2021, the bankruptcy was dismissed after Perrillo filed a Notice of Voluntary Dismissal. 

By willfully failing to disclose the judgment, two liens, and bankruptcy petition, Perrillo violated Article V, Section 2(c) of FINRA's By-Laws and FINRA Rules 1122 and 2010.

• Securities Industry Commentator
• Bill Singer