NASD REGULATION, INC.

OFFICE OF HEARING OFFICERS

SOURCE CITE

RR found liable for impersonating his employer for purposes of facilitating the latter's passage of the Series 7 and 24 exams. Barred from industry.

Respondent, a native of Columbia, South America, successfully lived in Columbia for eight years as a financial advisor and professor of international finance. Unfortunately, he was abducted by terrorists, who looted all of his assets and caused him to borrow in excess of $200,000.  Subsequently, in May 1999,  Respondent was forced to relocate with his wife, mother-in-law, and three children to Miami, Florida, where he was introduced to Bayard Spector, who owned American First Capital (an NASD member firm) and agreed to employ Respondent as a financial advisor.  

Spector indicated that American First Capital could not afford to pay Respondent a fixed salary, but it would sponsor Respondent to obtain his NASD “licenses” and would provide Respondent with advances against anticipated commissions as needed to support his family. For the seven months of May 1999 to December 1999, Spector advanced Respondent only $14,000; however, on occasion, he also bought groceries for Respondent’s family, paid telephone bills and electric bills, paid the costs of emergency medical services for Respondent’s epileptic child, and paid back rent to prevent Respondent and his family from being evicted. 

In November 1999, NASD Staff advised Spector that he needed to become registered if he were to continue in an ownership capacity of AFC.  Approximately five days before the scheduled exam, Spector asked Respondent to take the Series 7 exam for him --- Spector did not think he could pass the Series 7 exam and, accordingly,  feared American First Capital would be closed down. Respondent thought Spector's proposal was a joke. but when he realized otherwise, he refused the request.  However, Spector eventually convinced Respondent that he owed it to him to take the exam.  Respondent testified that, on November 29, 1999, using Spector’s driver’s license, he impersonated him and took the NASD Series 7 qualification examination.  He passed the Series 7.Subsequently, Spector insisted that Respondent take the Series 24.  When Respondent balked, Spector threatened to report him for having impersonated him for the Series 7.  Respondent took the Series 24 and passed.  

The Hearing Panel noted that in the more typical exam cheating cases, i.e., where an individual cheats on his or her own qualification examination, the NASD Sanction Guidelines provide that a bar should be standard. The Panel then wrestled with whether such a severe sanction was merited against an individual who acted as an imposter.  

Respondent argued for mitigation in light of the duress to which he was subjected (and apparently pointed to his cooperation with the investigation). The Panel seemed troubled by the fact  that on two separate occasions Respondent circumvented the integrity of the examination/registration process.  Further, the Panel noted that Respondent understood the import of the examinations because he was aware that NASD Staff had advised Spector that absent his passing the exams, he would not be permitted to continue to own the firm.   Although the Hearing Panel expressed it sympathy for Respondent's predicament, they suggested that given his educational background (specific reference was made to his Master's degree from Brown University), he could have explored other alternatives to engaging in misconduct.  I believe that Panel implied that the option was to get another job and quit rather than do wrong.  Fearing that Respondent's conduct demonstrated a predilection to similar misconduct in the future, the Panel decided to bar him from the industry.  

RETURN TO REGULATORY CASES OF NOTE INDEX