NOTE: Stipulations of Fact and Consent to Penalty (SFC) are entered into by Respondents without admitting or denying the allegations, but consent is given to the described sanctions and to the entry of findings.
INDUSTRY REGULATORY AUTHORITY
WALL STREET'S LEADING ONLINE COMMUNITY
DEVELOPING ENFORCEMENT TRENDS AS NOTED BY BILL SINGER
Peter Vassos Eliades
SFC/Hearing Board Decision: 08-013 May 17, 2008
Eliades, an institutional equity sales trader with about 60 accounts, established an e-mail distribution list, which included approximately 79 e-mail addresses related to approximately 45 client accounts. Eliades utilized this list to send electronic communications to a group of individuals via a single e-mail.
In 2005, the Firm’s Equity Syndicate Desk typically distributed internal use only documents via e-mail to its sales force in connection with developing equity transactions, for educational purposes. To prevent external distribution, these e-mails were marked “INTERNAL USE ONLY” and the Firm’s e-mails systems prevented such e-mails from being forwarded (the “no-forwarding block”). On or about April 26, 2005, Eliades circumvented the no-forwarding block on an April 18, 2005 internal-use-only E-mail (from his firm's syndicate desk involving a pending XYZ IPO launch) by cutting and pasting portions of that communication, including the attachments, into a new electronic document that he then forwarded to the persons on his Accounts Distribution List (the “April 26, 2005 E-Mail”).
On or about April 27, 2005, the Firm’s e-mail technology surveillance group detected the April 26, 2005 E-Mail which Eliades sent based on a routine keyword search of Firm e-mails. Efforts by the technology surveillance group, assisted by Eliades to recall the April 26, 2005 E-Mail were unsuccessful. As a consequence of Eliades’ actions, counsel for XYZ as well as for the Firm communicated Eliades’ conduct to staff of the Securities and Exchange Commission, who permitted the parties to proceed with the XYZ offering. However, recipients of Eliades’ April 26, 2005 E-Mail were not permitted to participate in the XYZ IPO allocation.
Peter Vassos Eliades: Censure and 60-day suspension.
James Joseph Wolf
SFC/Hearing Board Decision: 08-011 April 9, 2008
During the period of November 2001 through July 2005, former H&R Block Financial Advisors, Inc.'s (the Firm) RR Wolf operated websites that advertised certain investment products to the public, without prior approval of member firm employer, and disseminated correspondence containing sales literature to prospective Firm customers, without approval of member firm employer.
The Firm became aware of one of the unapproved investment related websites on July 18, 2005 when a prospective client contacted the Firm to inquire about a fixed income product displayed on a site that advertised certain H&R Block products, listed Wolf’s cellular telephone number and misrepresented Wolf’s as a Vice President (he was only a financial advisor).
The second website that Wolf operated was launched when he was employed at Sands Brothers. This website advertised Sands Brothers’ products and contained descriptions of various certificates of deposit and municipal bonds. Wolf did not obtain the approval of Sands Brothers’ to operate this website. Wolf continued to operate this second website after leaving Sands and while at the Firm.
By email, dated April 28, 2005 (and not approved by the Firm), Wolf advised one prospective client to visit his investment related website and provided the web address. Wolf disseminated a second objectionable email that contained three attachments of sales literature, which had also not been approved by the Firm.
Wolf violated NYSE Rule 472(a)(1) when he operated certain unauthorized websites that advertised investment products and disseminated emails to prospective Firm customers, without the prior approval of his member firm employer.
James Joseph Wolf: Censure; Suspended 4 months
Robert Jonas Tart
SFC/Hearing Board Decision: 08-004 March 12, 2008
While employed as a registered representative at UBS Financial Services, Inc., Tart serviced two individual trust accounts owned by customers IJ and AJ (collectively, the “Js”). The Js, an elderly married couple, also maintained an irrevocable charitable remainder trust account (“CRUT”) at the Firm and appointed a financial institution Trustee as the trustee. The Js gave Trustee authorization to make trading decisions in the CRUT.
Between 2004 and 2005, Tart mismarked order tickets for solicited orders as “unsolicited.” Additionally, Tart improperly accepted orders in the AJ account from IJ without first obtaining the written discretionary authority authorization of AJ (AJ never provided IJ with authority to place trades on her behalf). In 2005, Tart also engaged in unauthorized trading in the CRUT by liquidating and acquiring mutual fund positions, without first obtaining prior authorization from the trustee.
Robert Jonas Tart: Censured; Barred 5 months
SFC/NYSE Hearing Board Decision: 07-162 February 13 2008
On May 24, 2005,Credit Suisse Research Analyst Galeon obtained certain information from the CEO of XYZ relating to XYZ’s expected updated earnings guidance. That was the day before the official public release of the company’s updated earnings guidance. Galeon selectively disseminated emails to 17 Firm clients and 31 Firm sales personnel, conveying the information the CEO had disclosed to him. All but one email contained an admonition to keep the information confidential. Subsequently, Credit Suisse and two clients of Credit Suisse who received the information in Galeon’s email traded in shares of XYZ, prior to the public release of such information.
On August 5, 2005, a Uniform Termination Notice for Securities Industry Registration (“Form U-5”) was filed noting that Galeon was permitted to resign on July 7, 2005, and had violated Firm policy and demonstrated poor judgment in sending emails to Firm colleagues and clients.
By selectively disseminating the information he obtained from the CEO, Galeon engaged in conduct inconsistent with just and equitable principles of trade in violation of NYSE Rule 476(a)(6).
Mary E. Hahn
NYSE Hearing Board Decision: 07-160 January 9, 2008
Hahn violated NYSE Rules 476(a)(6) and 477 by misappropriating approximately $525.87 from a co-worker at her member firm by using the Co-worker's credit card to make purchases of goods and/or services. Respondent made these credit card purchases for Respondent's own uses and purposes, and without permission or authority of the Co-worker. Also, Hahn violated NYSE Rules 476(a)(11) and 477 by failing to comply with written requests for information.Mary E. Hahn: Censure; Permanent Bar
Jason N. Slezak
was charged with having:
NYSE found that Slezak caused a violation of NYSE Rule 342.16 by failing to get prior approval before sending a letter soliciting a potential customer’s market timing business.
JASON N. SLEZAK: NOT GUILTY on Charges I,II,and IV; Charge III: Censure.
Former Assistant Branch Office Manager
Charged with having: violated NYSE Rule 405(1) and (2) by failing to use due diligence to learn essential facts about customer and failing to diligently supervise registered representative’s handling of his customer’s accounts; violated NYSE Rule 342 by failing to appropriately supervise and control business activity of registered representative and his customer to ensure that they were in compliance with NYSE Rules and firm’s internal policies; caused violation of NYSE Rule 440 and Rules 17a-3 and 17a-4 under Securities Exchange Act of 1934 by approving customer’s fictitious new account documents, thereby causing books and records maintained by firm to be inaccurate.
X: NOT GUILTY
Y: NOT GUILTY
Comment: An absolutely wonderful case that shows the extent to which an
SRO Hearing Board will go to do its job of providing a fair adjudication
of a case. Having accumulated more than a quarter of a century on Wall
Street's regulatory scene, I can unequivocally state that this is one of
the finest -- if not the finest -- decision I have read. Beautifully
explained. Fairly and fully reasoned. Written with some
artistry. I urge you to read the decision.
Consider some of these helpful and incisive comments from the Hearing Board.