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.

2006
OUTSIDE BUSINESS ACTIVITIES

 

Mary Frances Spears 
#E3B20040231-02/December 2006

Spears participated in private securities transactions and also engaged in an outside business activity for compensation without providing her member firm with the requisite prior written notification. Also, she recommended securities transactions to public customers without having reasonable basis for believing the investment was suitable based on the customers’ financial situations and needs. 

Mary Frances Spears : Barred

James Clayton Mulholland Jr. 
AWC/#20050020324-01/December 2006

Mulholland engaged in an outside business activity without providing his member firm with prompt written notice. 

James Clayton Mulholland Jr.: Fined $10,000; Suspended 90 days in all capacities

Richard Albert Hellmann 
AWC/#20050016607-01/December 2006

Hellman engaged in outside business activities for compensation and failed to provide his member firm with prompt written notice. 

Richard Albert Hellmann : Fined $5,000; Suspended 30 business days in all capacities

Greg B. Whittington
AWC/#2005000731201/November 2006 

Whittington engaged in outside business activities, for compensation, without providing prior written notice to his member firm. 

Greg B. Whittington: Fined $5,000; Suspended 10 business days in all capacities

Brian T. Ungerer
AWC/#2005002435801/November 2006

Ungerer engaged in outside business activities without providing prompt written notice to his member firm. 

Brian T. Ungerer: Fined $5,000; Suspended 60 days in all capacities

Marvin Ray Koerselman 
AWC/#2005001737201/November 2006

Koerselman engaged in outside business activities and failed to provide his member firm with prompt written notice. Koerselman completed and submitted questionnaires to his member firm wherein he falsely indicated that he was complying with the firm’s requirement that he not accept customer checks made payable to him

Marvin Ray Koerselman : Fined $10,000; Suspended 3 months in all capacities

Ryan Michael Jindra (Principal)
AWC/#20060045274-01)/November 2006

Jindra participated in outside business activities, for compensation, without providing his member firm with prompt written notice. 

Ryan Michael Jindra : Fined $5,000; Suspended 30 business days in all capacities

Carmine DePalma (Principal) 
#ELI20040233-01/November 2006

DePalma 

  • made an unsuitable recommendation to a public customer in light of the customer’s financial status, investment objective and risk tolerance;
  • engaged in private securities transactions without providing prior written notice to, and obtaining written authorization from, his member firm; 
  • participated in outside business activities from which he received compensation and failed to provide prompt written notice to his member firm; and 
  • falsified records in that he provided confirmations of the customer’s investments that bore the corporate insignia of an entity that had no connection to the customer’s transactions.

Carmine DePalma : Barred

Claude Eugene Crump (Principal) 
AWC/#2005003350801/November 2006

Crump engaged in an outside business activity from which he received compensation and failed to provide prompt written notice to his member firm. The findings stated that Crump disseminated sales literature to public customers without his member firm’s written approval. 

Claude Eugene Crump : Fined $8,000; Suspended 30 business days in all capacities

Tyrone Vandelle Burroughs 
# E072004082401)/November 2006

Burroughs engaged in outside business activities for compensation without providing prompt written notification to his member firm. He gave false written statements to NASD. 

Tyrone Vandelle Burroughs : Barred

Arthur Daryll Pryor 
AWC/#2005000553701/October 2006

Pryor engaged in an outside business activity and failed to provide prompt written notice to his member firm. 

Arthur Daryll Pryor : Fined $10,000; Suspended 45 days in all capacities

Daniel Keith Poland
AWC/#2005003207201/October 2006

Poland engaged in an outside business activity without providing prompt written notice to his member firm. 

Daniel Keith Poland: Fined $7,500; Suspended 60 days in all capacities

Juan Carlos Murillo
AWC/#2005001916001/October 2006

Murillo engaged in outside business activities without providing prompt written notice to his member firm. 

Juan Carlos Murillo: Fined $5,000; Suspended 30 days in all capacities

Bruce Paul Knopp
AWC/#2005000119301/October 2006

Knopp participated in outside business activities and failed to provide prompt written notification to his member firm.

Bruce Paul Knopp: Fined $5,000; Suspended 3 months in all capacities

Humberto Daniel Advincula
#2005001178801/October 2006

Advincula received $20,000 from public customers for investment purposes, but failed to invest the customers’ funds as intended or return the funds to the customers. Advincula engaged in outside business activities and failed to provide prompt written notice to his member firm. Also, he failed to respond to NASD requests for information.

Humberto Daniel Advincula: Barred

Queen Esther Robinson
AWC/#20050008859-01/September 2006

Robinson engaged in an outside business activity without providing her member firm with prompt written notice. 

Queen Esther Robinson: No fine in light of financial status; Suspended 30 days in all capacities

Charles Lowell Hedrick, Jr.
AWC/#2005002282601/September 2006 

Hedrick engaged in outside business activities, for compensation, without providing his member firm with prompt written notice. 

Charles Lowell Hedrick, Jr.: Fined $12,000; Suspended 6 months in all capacities

Thomas James Czarnik 
AWC/#E8A2004084701/September 2006

Czarnik engaged in outside business activities, for compensation, and failed to provide prompt written notice to his member firm. 

Thomas James Czarnik : Fined $5,000; Suspended 30 days in all capacities

Richard Henry Angelotti 
AWC/#E072004089701/September 2006

Angelotti participated in an outside business activity, for compensation, and engaged in private securities transactions without providing his member firm with prompt written notice. 

Richard Henry Angelotti: Fined $10,000; Suspended 3 months in all capacities

Brad Allan Weaver (Principal)
#E8A2004050201/August 2006

Weaver permitted an unregistered person who was also barred from the securities industry to engage in securities transactions. Weaver failed to maintain complete, accurate and current books and records. Weaver guaranteed a public customer against loss in his securities account. Weaver engaged in outside business activities, for compensation, without providing his member firm with prompt written notice. 

Brad Allan Weaver : Barred

Bill Singer's Comment: Frankly, this is an impressive accomplishment.  One rarely sees so many varied violations credited to one individual.  
Stacey Joe McBee
#E072004088201/August 2006 

McBee opened a securities account with another NASD member firm and failed to disclose to that firm that he was associated with his member firm. He failed to give his member firm written notification that he opened a securities account with another member firm. McBee engaged in outside business activities, for compensation, without giving his member firm prompt written notice of his outside business activities. He failed to respond to NASD requests for information and documents. 

Stacey Joe McBee: Barred

Matthew Jay Forry (Principal)
AWC/#2005003237501/August 2006

Forry engaged in outside business activities, for compensation, without providing his member firm with prompt written notice. 

Matthew Jay Forry: Fined $5,000; Suspended 30 business days in all capacities

Herbert Hunt Covington, III
AWC/#E8A2004080201/August 2006 

Covington engaged in outside business activities and failed to provide prompt written notice to his member firm. Also, he engaged in private securities transactions, for compensation, and failed to give prompt written notice to, or receive written approval from, his member firm. Covington failed to respond to NASD requests for documents and to appear for an on-the-record interview. 

Herbert Hunt Covington, III: Barred

Larry Steven Capstick 
AWC/#2005001908901/August 2006

Capstick engaged in an outside business activity for compensation without providing his member firm with written notice. 

Larry Steven Capstick: Fined $5,000; Suspended 30 business days in all capacities.

Steven John Balog (Principal)
AWC/#E9A2004049802/August 2006 

Balog engaged in outside business activities, for compensation, without providing prompt written notice to his member firm.

Steven John Balog: Barred

Eugene Gilbert Abeyta, Jr. 
#E3A2004036101/August 2006

Abeyta engaged in outside business activities and failed to provide prompt written notice to his member firm. Also, he failed to respond to NASD requests for documents and information.

Eugene Gilbert Abeyta, Jr. : Barred

Scott John Van DeHey
AWC/#E8A2003084809/July 2006

Van DeHey engaged in outside business activities, for compensation, and failed to give prior written notice to his member firm. 

Scott John Van DeHey: Fined $10,000; Suspended 60 days in all capacities

Todd Michael Tomac (Principal)
AWC/#2005003621101/July 2006 

Tomac engaged in outside business activities, for compensation, and failed to give prompt written notice to his member firm. 

Todd Michael Tomac: Fined $5,000; Suspended 2 months in all capacities

Steven M. Strube 
AWC/#E8A2003084804/July 2006

Strube engaged in outside business activities, for compensation, and failed to give prior written notice to his member firm. 

Steven M. Strube : Fined $5,000; Suspended 10 business days in all capacities

Anthony Carl Richter
AWC/#E8A2003084807/July 2006

Richter engaged in outside business activities, for compensation, and failed to give prior written notice to his member firm. 

Anthony Carl Richter: Fined $5,000; Suspended 10 business days in all capacities.

Richard William Radez
AWC/#20050000292-01/July 2006

Radez recommended purchases of an unseasoned OTCBB security through false representations and omissions of material facts as well as baseless and unrealistic price projections. He recommended the security without reviewing the company’s available current publicly filed financial statements and current material business information, and without determining if there was a reasonable basis for the recommendation. Also,  Radez made unauthorized purchases of the security in public customers’ accounts. Additionally, he engaged in a business activity outside the scope of his relationship with his member firm and failed to provide written notice to his firm.  Radez failed to respond to NASD requests for documents and to testify truthfully in NASD on-the-record interviews.

Richard William Radez: Barred

Gordon Ralph Kutz, III 
AWC/#2005000537401/July 2006

Kutz engaged in business activities for compensation outside the scope of his business relationship with his member firm without providing prompt written notice of his activities. 

Gordon Ralph Kutz, III : Fined $5,000; Suspended 4 months in all capacities

Russell John Kramer
AWC/# 2005001902001/July 2006 

Kramer engaged in outside business activities for compensation without providing prompt written notice to his member firm. 

Russell John Kramer: Fined $5,000; Suspended 3 months in all capacities

Paul Martin Hoag 
#E8A2004101701/July 2006

Hoag engaged in an outside business activity for compensation without disclosing it to his member firm or updating his member firm’s outside business activity disclosure form and admitting as much when his firm questioned him. (

Paul Martin Hoag : Barred

Phillip Austin Christian 
#C1020050061/July 2006

Christian engaged in an outside business activity without providing his member firm with prior written notice. 

Phillip Austin Christian : Barred

Timothy Patrick Barry
AWC/#E8A2003084802/July 2006 (CRD #2267209

Barry recommended and effected Class B share mutual fund purchases for a public customer without reasonable grounds for believing that the resultant transactions were suitable for the customer, in that Class A shares would have been more beneficial to the customer. Also, Barry engaged in outside business activities for compensation without providing his member firm with prior written notice while he was employed there. 

Timothy Patrick Barry: Fined $12,578.10 (includes $2,578.10 commissions disgorgement); Suspended 10 weeks in all capacities

Andrew Paul Schneider
#E1020021320/C1020030088/June 2006 NAC Decision

Schneider engaged in outside business activities without providing prompt written notice to his member firm. 

Andrew Paul Schneider: Fined $5,000; Suspended 60 days in all capacities.

Bernardo Misseri
OS/#E102003213801/June 2006

Misseri effected private securities transactions and failed to provide written notification to, or obtain written approval from, his member firm. He engaged in an undisclosed outside business activity without providing prior written notification to his member firm. 

Bernardo Misseri: Fined $15,000; Suspended 2 years in all capacities

Eric Spencer Martin
AWC/#2005002541201/June 2006 

Martin engaged in outside business activities for compensation without providing his member firm with prior written notification. 

Eric Spencer Martin: Fined $5,000; Suspended 30 business days in all capacities

Paul Martin Hoag
#E8A2004101701/June 2006 

Hoag failed to respond to NASD requests for information and documents. Also, he engaged in outside business activities, for compensation, without providing his member firm with prompt written notice. 

Paul Martin Hoag: Barred

Charles Michael Chiodo, Jr.
OS/#2005000887902/June 2006 

Chiodo engaged in outside business activities and failed to provide prompt written notice to his member firm. Also, he failed to respond to NASD requests for information.

Charles Michael Chiodo, Jr.: Barred

Dennis James Vanbuskirk
AWC/#20050013644-01/May 2006 

Vanbuskirk engaged in outside business activities for compensation and failed to provide prompt written notice to his member firm. Also, he failed to fully and promptly respond to NASD requests for information. 

Dennis James Vanbuskirk : Fined $5,000; Suspended 60 days in all capacities

James Bernard L’Esperance 
OS/#E8A2002124001/May 2006

L'Esperance engaged in outside business activities for compensation without providing his member firm with prompt prior notice. 

James Bernard L’Esperance: $2,500 (apparently imposed after consideration of financial status); Suspended 10 business days

Roy Golladay, Jr.
AWC/#2005001378601/May 2006

Golladay participated in private securities transactions and failed to provide his member firm with prior written notification of his participation in these transactions describing them in detail, his proposed role therein, whether he had received, or might receive, selling compensation in connection with the transactions. He also engaged in outside business activities without providing prompt written notice to his member firm. Golladay solicited $2,000,000 from public customers to fund mortgages, but failed to maintain documentation evidencing what he did with these funds, did not use all the money collected for the stated purpose and transferred portions of the money into other business accounts he controlled, thereby commingling customer funds with the funds of other businesses. Finally, Golladay failed to fully respond to NASD requests for documents and information. 

Roy Golladay, Jr: Barred

David Michael Nelson
AWC/#20050010082-01/April 2006 

Nelson engaged in outside business activities, for compensation, without providing prompt written notice to his member firm. 

David Michael Nelson: Fined $5,000; Suspended 10 business days in all capacities.

Taihwa Terry Ho
OS/#20042000053-01/April 2006

Ho participated in a manipulative scheme or course of business designed to inflate the share price of OTC Bulletin Board-traded issuers and to create the false appearance of active trading in those securities. The manipulative scheme involved the entry of customer buy orders at progressively higher prices and the entry of matched orders to buy and sell shares of the companies. Also, Ho failed to disclose his outside business activities to his member firm. 

Taihwa Terry Ho: Barred

John Alan Wood (Supervisor)
AWC/#2005002268201/March 2006 

Wood participated in outside business activities for compensation without providing written notice to his member firm. Wood’s suspension began on February 21, 2006, and will conclude on May 20, 2006. 

John Alan Wood: Fined $5,000; Suspended 3 months in all capacities.

Bruce Allan Hager (Principal)
AWC/#E0420040447-01/March 2006

Hager participated in outside business activities for compensation without providing prompt written notice to his member firm. He also provided misleading information to NASD. 

Bruce Allan Hager: Barred

Eric Matthew Grace (Principal)
AWC/#E0220040695-01/March 2006

Grace engaged in outside business activities without providing prompt written notice to his member firm. Grace participated in private securities transactions and failed to provide prior written notice to, and receive prior written approval from, his member firm. 

Eric Matthew Grace: Fined $10,000; Suspended 1 year in all capacities.

Richard Prim
SFC/NYSE Hearing Panel 05-166/February 1, 2006

While employed with Merrill Lynch, Pierce, Fenner & Smith (the "Firm"), Prim sold insurance products to several customers who had been his insurance customers prior to his joining Merrill, and who were not Firm customers. He received approximately $2,000 in commissions for those sales. Prim did not report his outside activity or compensation to Merrill, nor did he make a written request to Merrill, or ever receive oral or written consent from Merrill to engage in such business or to be compensated by any person other than Merrill.

On or about December 6, 2002, Prim sold an annuity to LA, a Merrill customer, for a premium of $20,000, which she paid for by check drawn on her Merrill account.  On or about May 20, 2003, Prim sold an annuity to VV, a Merrill customer, for a premium of $25,000, which she paid for by wire transfer from her Merrill account.  Prim received between $750 and $1,000 in total compensation for the sales to LA and VV. Neither of the above sales was made through the Firm.

Prim was advised of Merrill's policies prohibiting him from engaging in such outside sales at the times he caused them. Prim did not report the above outside sales or compensation to Merrill nor did he make a written request to Merrill, or receive oral or written consent from Merrill to engage in such business or to be compensated by any person other than Merrill.

At all relevant times, Merrill’s procedures required Prim to complete a Compliance Disclosure Form-Employee Activity Review System annually. One of the questions on that form was "Do you hold any outside employment, business interests…".  Prim annually replied in the negative to the question outlined in paragraph 14 above. He completed such a disclosure form on May 27, 2003. Prim’s negative response to the above quoted question on that form was false.  

On or about August 21, 2003, the Division of Enforcement of the New York Stock Exchange, Inc. ("Exchange") received a Form U5 (Uniform Termination Notice for Securities Industry Registration) from Merrill stating that Prim had been permitted to resign on July 22, 2003 for selling securities away from the Firm and for having failed to advise that he had received outside compensation.

The Hearing Panel found that Prim violated

  1. NYSE Rule 346(b) in that on one or more occasions he engaged in an outside business without making a written request and receiving the prior written consent of his member organization employer; and
  2. Engaged in conduct inconsistent with just and equitable principles of trade in that on one or more occasions he made misstatements to his member organization employer concerning an outside business activity.

Richard Prim: Censure; Barred 5 months in all capacities

Charles William Naron 
# C07050048/February 2006

Naron engaged in outside business activities for compensation without providing his member firm with prompt written notice. 

Charles William Naron: Barred

Lawrence Nallie 
#C8A050004/February 2006

Nallie misused public customers’ funds, and engaged in outside business activities and failed to provide his firm with prompt written notification of his activities. He failed to respond to NASD requests for information. 

Lawrence Nallie: Barred

Susan Lynne Kankaras (Principal) 
AWC/#2005001707-01/February 2006

Kankara engaged in outside business activities without providing her member firm prompt written notice. 

Susan Lynne Kankaras: Fined $5,000; Suspended 90 days in all capacities

Michael Soden
SFC/NYSE Hearing Panel 06-12/January 30, 2006

In early 2002, A, one of RR Soden’s clients at Merrill Lynch, Pierce, Fenner & Smith Incorporated (the "Firm"), invited Soden to participate in a business enterprise that he was establishing, known as “XYZ.” This business would be involved in “staffing and consulting”, specifically with regard to “high level minority candidates.” Soden’s primary responsibility would be to act as a billing service.

In or about August 2002, Soden took steps to establish XYZ as a business entity, including obtaining a tax identification number, opening a post office box, and establishing a bank account. When Soden established the bank account, he listed himself as the “managing member” on account documents.  Soden also prepared bills for XYZ clients and when payments were made payable to XYZ were received, Soden deposited them in the XYZ bank account.

In 2003, at A’s direction, Soden hired an accountant to prepare the taxes for both XYZ and Soden.  During his involvement with XYZ, Soden received approximately $30,000 in compensation for his XYZ activities. He received this compensation by writing checks against the XYZ bank account made payable to himself.

During the relevant period, Merrill Lynch policies and procedures stated that employees were expected to devote their undivided professional attention to their position at Merrill Lynch.  In addition, Merrill Lynch policies and procedures required employees to complete an “Outside Interest Questionnaire” (“Questionnaire”), detailing a proposed interest or activity for written approval, prior to investing or engaging in an outside business activity.

In a Questionnaire dated March 20, 2003, Soden disclosed his positions with two charitable organizations, but did not disclose his affiliation with XYZ. Soden did not seek prior approval for his association with XYZ, nor did he discuss his association with XYZ with his supervisor or anyone else at Merrill Lynch.

The NYSE Hearing Panel found that Soden violated

  1. NYSE Rule 346(b) by engaging in an outside business activity without making a written request and receiving the prior written consent of his member organization employer; and
  2. NYSE Rule 476(a)(6) by engaging in conduct inconsistent with just and equitable principles of trade in that he made material misstatements and/or omissions of fact to his member organization employer concerning his outside business activity.

Michael Soden: Censure; Barred 3 months in all capacities

Glen Niel Harding (Principal)
AWC/E9A2004042901/January 2006

Harding engaged in outside business activities for compensation without providing prompt written notice to his member firm.

Glen Niel Harding: Fined $5,000; Suspended 3 months in all capacities

Regina Eades
SFC/NYSE Hearing Panel 06-2/January 17, 2006

Relatives of those interred at a certain cemetery established a trust (the "Trust") for the purpose of paying the costs of maintenance and upkeep of the cemetery. In January 2002, Eades, who was a non-registered employee with Edward Jones (the "Firm"),  was elected secretary/treasurer of the Trust and she reported her appointment as an officer of the Trust to the Firm. At that time, the Trust did not have an account with the Firm. After the Firm learned from Eades that she did not have any authority to handle monies or write checks on behalf of the Trust, it approved her affiliation with the Trust. 

In August 2003, Eades re-applied to the Firm for approval of her position as secretary/treasurer for the Trust. In September 2003, the Firm gave Eades permission to continue her position with the Trust. In November 2003, Eades sought approval to open an account at the Firm on behalf of the Trust. The Firm permitted Eades to open the account but required her to resign her position as secretary/treasurer for the Trust because Firm policies prohibit its employees from holding treasurer positions in organizations that have accounts with Edward Jones.

On or about July 2003, Eades entered into a loan agreement with KG, whereby Eades agreed to become a partial owner of KG’s business and share in the company’s future profits. KG was not a customer of the Firm. Over the next several months, Eades loaned KG over $100,000 and thereby acquired an ownership interest in the business. Both Exchange Rule 346(b) and the Firm’s written policy required Eades to obtain the Firm’s written approval before engaging in any outside business activity. Eades never informed the Firm about her business association with KG’s business. 

Between November and December 2003, Eades borrowed over $80,000 from three customers without the Firm’s prior approval. Eades never notified the Firm that she obtained personal loans from clients. On December 12, 2003, Eades made an unsuccessful bid to borrow money from two elderly customers. A family member of one of the customers contacted Eades’ branch manager and complained about Eades’s attempt to procure a personal loan. The second customer contacted the branch to complain about Eades’ loan solicitation. The Branch Manager, in turn confronted Eades, inquiring whether she solicited loans from two elderly customers. Eades denied asking customers for money. Eades’ denial was a misstatement.  The Firm terminated her on December 13, 2003.

Shortly after Eades’s termination, the Firm discovered that two checks from the Trust, totaling nearly $8,000, were deposited in Eades’s personal account at the Firm, rather than the Trust’s account. The Firm contacted a trustee for the Trust, who confirmed that the checks deposited in the Eades account were intended for the Trust’s account. Eades’s family fully reimbursed the Trust. 

The Hearing Panel found that Eades violated

  1. NYSE Rule 476(a)(6), by engaging in conduct inconsistent with just and equitable principles of trade in that she:
    (A) misappropriated customer funds;
    (B) borrowed funds from customers without disclosing the loans to her member firm employer; and
    (C) made misstatements to her member firm employer; and
  2. NYSE Rule 346(b) in that she engaged in an outside business without prior approval from her member firm employer.

Regina Eades: Censure; Permanent Bar 

Bill Singer's Comment: A truly breath-taking case involving a prodigious number of serious violations.  The only question I have is whether a non-registered employee is given adequate training about industry rules to know that what many non -Wall  Streeters take for granted --- that you can freely engage in outside business activity and freely borrow money --- is prohibited in our industry.  I'm not suggesting that she needed to be trained as to the wrongfulness of stealing money.  That's a given.  However, since we see so many of these outside business and borrowing cases, one has to wonder if newbies are getting adequate training.
Stephen James Congdon
AWC/E8A2004075001/January 2006

While employed with a member firm, Congdon engaged in outside business activities, in that he received a check from a public customer for “financial counsel services” without giving his firm prompt written notice of these outside business activities. 

Stephen James Congdon: Fined $5,000; Suspended 10 business days all capacities

 

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