NOTE: Offers of Settlement (OS) and Letters of Acceptance, Waiver, and Consent (AWC) 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.
Millennium Brokerage, LLC
The Firm allowed
Also, the firmís supervisory system and procedures were not reasonably designed to ensure that the required written consent was obtained before pre-registration searches on Web CRD and that the firm retained the required documentation. The firm did not maintain and preserve all electronic instant messaging as required and failed to report trades within 90 seconds of execution.
Censured; Fined $125,000
Gryphon Financial Securities Corp. (CRD #100420, Palm Beach, Florida) and
Younis Zubchevich (Principal)
Acting through Zubchevich, the Firm failed to
Also, the firm failed to develop and implement an anti-money laundering (AML) program that was reasonably designed to achieve and monitor compliance with the requirements of the Bank Secrecy Act and the regulations promulgated thereunder.
Gryphon Finanical Securities Corp.: Censured and Fined $17,500 (includes $12,500 joint/several with Zubchevich
Younis Zubchevich: Fined $12,500 joint/several with Gryphon
Great Eastern Securities, Inc. and Alphonse Mekalainas, Jr.
Acting through Mekalainas, Great Eastern Securities failed to timely report on registered representatives Forms U4 (Uniform Applications for Securities Industry Registration or Transfer) :
Also, the firm permitted excessive commissions to be charged in agency transactions. Additionally, the firm permitted its president to conduct a securities business while his securities registration was inactive due to his failure to satisfy the continuing education regulatory element in a timely manner.
Great Eastern Securities, Inc.: Censured; Fined $15,000 (includes $5,000 joint and several with an unnamed individual and $5,000 joint/several with Mekalainas, Jr.)
Alphonse Mekalainas, Jr.: Fined $5,000 joint and several with Great Eastern Securities, Inc.; Suspended 5 days in Principal/Supervisory capacities
|Bill Singer's Comment: These types of violations drive me crazy. I mean, it's one thing for a BD and its ownership to do a cost-benefits analysis and decide to engage in a massive fraud because they think you can make millions and if they get caught it's only a fine and suspension. That's wrong, but at least you can sort of understand the mind-set involved. However, when a firm and its principals get whacked for minor compliance failures, you simply have to wonder. There are often a whole host of explanations and reasons for such miscues --- staffing problems, communication failures, etc. Nonetheless, as I previously noted, the regulators are making a point of checking up on your timely reporting of customer complaints.|
Joe Manuel Fernandez (Principal)
Fernandez learned that another registered representative of his member firm had
However, Fernandez failed to take any action to correct the firmís books and records or to report the other representativeís misconduct.
Fined $5,000; Suspended 18 months in all capacities
|Bill Singer's Comment: Oh, please. How thoughtful of the "other" RR to complete the Firm Element on behalf of Fernandez. I simply can't imagine why Fernandez failed to take any action. If that's the version the NASD wishes us to accept, fine --- maybe there are other facts at work here that the regulator hasn't set forth and I'm being just a bit too cynical.|
Zions Investment Securities, Inc.
Censured; Fined $35,000
Multitrade Securities LLC
AWC/ C10050056/August 2005
Firm permitted a registered person to act in a capacity that required registration while that personís registration status with NASD was inactive due to his failure to complete the Regulatory Element of NASDís Continuing Education Requirement. Also failed to show the required time of receipt, entry, and/or execution of order tickets; and conducted a securities business while failing to maintain its minimum net capital after its debt to debt-equity ratio had exceeded 70 percent for a period greater than 90 days.
Censured; Fined $13,500
MML Distributors, LLC
The Firmís supervisory system and procedures were not reasonably designed to ensure
The findings also stated that the Firm permitted individuals to perform duties as a registered person while their registration with NASD was inactive due to their failure to complete the Regulatory Element of NASDís Continuing Education Program.
Censured; Fined $200,000; Required to review its written supervisory procedures and establish a supervisory system to address deficiencies relating to pre-registration Web CRD researches and its procedures regarding the preservation of electronic mail communications for compliance with NASD rules and federal securities laws and regulations.
|Bill Singer's Comment: Now here's one we don't see everyday. Even though the Street tends to treat the unauthorized search of Web CRD as something "everyone does," this case shows that the NASD may no longer be willing to turn a blind eye --- let's see if this is the start of a trend.|
|The Lugano Group Incorporated, Harold
Emanuel Doley, III (Principal), and Amir Mireskandari (Principal)
The Firm permitted Doley and Mireskandari to perform duties as registered persons when they failed to complete the Regulatory Element of NASDís Continuing Education Requirement.
Acting through Doley, the Firm failed to
Acting through Doley and Mireskandari, the Firm failed to make required disclosures and certifications in a research report that reported on a publicly traded entity.
|The Lugano Group Incorporated
Fined $25,000 ($20,000 joint and several with Doley and $5,000 joint and several with Mireskandari); Firm will provide no research services to its clients for two years and will retain an outside consultant to review and make recommendations concerning the adequacy of the firmís current polices and procedures.
|Harold Emanuel Doley, III
Fined $20,000 joint and several with Lugano Group; Suspended 10 business days in all capacities; Suspended 2 months in principal capacity
Fined $5,000 joint and several with Lugano Group); Suspended 10 business days in all capacities
|Bill Singer's Comment: The sanction of no research services for 2 years is a restriction I suspect we'll be seeing more and more of in months to come. Still --- how come we didn't see such teeth when the NASD when after the Big Boys for their research lapses? Anyone recall a major BD being prohibited from issuing research for 2 years?|
|Monex Securities, Inc.
Censured; Fined $10,500; Fined $7,500 joint/several with an unnamed individual
|First Global Securities, Inc. and Noble Bradford Trenham
First Global Securities failed to develop and implement a written anti-money laundering (AML) program in a manner that was reasonably designed to achieve and monitor compliance with the Bank Secrecy Act.
Acting through Trenham and other individuals, the firm effected transactions in securities and/or induced or attempted to induce the purchase or sale of securities when the firm failed to have and maintain sufficient net capital.
Acting through Trenham, the firm
|First Global Securities, Inc. Censured; Fined $28,500 joint/several with||Trenham Noble Bradford Trenham Fined $28,500 joint/several with firm; Suspended 30 business days in all capacities|
|Bill Singer's Comment: By now it should seem apparent to all industry Compliance/Legal staff that NASD is no longer giving a wide berth to Principals. We are seeing increasing numbers of cases holding Principals personally liable, and imposing fines and suspensions.|
Redwood Securities Group, Inc. and Aditya B. Mukerji (Principal)
Redwood Securities Group, Inc. allowed Mukerji to engage in securities activities, earn commissions, and review and approve securities transactions in his capacity as a registered principal of the firm when he was inactive for failing to fulfill his continuing education requirements. Acting through Mukerji, the firm
Redwood Securities Group, Inc. and Aditya B. Jukerji were Censured and Fined $16,000 joint/several
Magellan Securities Inc. and Terry Michael Laymon (Principal)
Magellan Securities permitted Laymon to
Acting through Laymon, the Firm failed to
Laymon intentionally, recklessly, or negligently created false account statements with incorrect or inflated valuations to induce a public customer to continue to maintain accounts with the firm. He also failed to respond completely and timely to NASD requests for information.
Magellan Securities was Expelled
Terry MIchale Laymon was Barred
Nexus Financial, Inc.
The Firm permitted individuals to function in a principal capacity while their registrations were inactive for failing to sit for the Regulatory Element of the Continuing Education requirement by the specified date. The Firm failed to establish and maintain supervisory procedures, written or otherwise, reasonably designed to achieve compliance with rules pertaining to Regulatory Element Continuing Education.
Nexus Censured and Fined $15,000
GunnAllen Financial, Inc. and Stephen Irvin Saunders, IV (Principal)
The Firm failed to implement its anti-money laundering (ďAMLĒ) program in a manner that was reasonably designed to achieve and monitor compliance with the requirements of the Bank Secrecy Act and the implementing regulations promulgated thereunder by the Department of Treasury. Acting through Saunders and an unnamed other individual, the Firm permitted registered representatives to act in a capacity requiring registration when such persons were deemed inactive for failing to complete the Regulatory Element of Continuing Education.
Acting through Saunders, the Firm failed to
Acting through an unnamed individual, the Firm failed to update in a timely manner the Forms U4 and U5 of registered representatives to disclose customer complaints, settlements, and/or arbitrations, as well as the Form U4 of Registered Representatives.
GunnAllen and Saunder Censured and Fined $11,250 (jointly/severally); GunnAllen additionally fined $18,750 (of which $8,750 was jointly/severally with an unnamed other individual)
Brian Patrick Taggart
Taggart allowed an individual to sign roster sheets indicating that the individual had attended insurance continuing education sessions taught by Taggart when he had not. and then he provided the individual with Insurance Department Course Completion documents for courses the individual had not completed.
Taggart was Fined $10,000 and Suspended 45 days in all capacities.
|Bill Singer's Comment: I'm not quite understanding the sanction here. Look at the Raymond case, for example. Taggart must have had a superb lawyer.|
Thor Capital LLC and Peter Kambolin
Acting through Kambolin, Thor Capital failed to
Thor Capital and Kambolin were Censured and Fined $10,000, jointly and severally
Harrison Securities, Inc., Frederick Clark Blumer (GSP),
and Raymond Alan Leventhal (GSP)
AWC/CLI040039, CLI040040, CLI040042/February 2005
Acting through Blumer and Leventhal, Harrison Securities failed to
Harrison Securities and Blumer:
Additionally, Blumer failed to respond to NASD requests for information and or documents.
Harrison Securities and Leventhal permitted a registered representative to continue to conduct a securities business while his registration was inactive due to his failure to complete the Regulatory Element of the Continuing Education Requirement, and they failed:
Harrison Securities, Inc. was expelled from NASD
|Bill Singer's Comment: I'm into my third decade on Wall Street and, frankly, I'm not sure I can recall too many regulatory cases that presented a more panoramic range of violations. To that extent, this decision is impressive.|