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.

2007
OUTSIDE BUSINESS ACTIVITIES

 

 
Terrence Paul Riely (Principal) 
AWC/#2005001640301/September 2007

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

Terrence Paul Riely: Barred

Scott Allen Hobson 
AWC/#2006004720001/September 2007

Hobson engaged in outside business activity for compensation and failed to provide prompt written notice to his member firm.

Scott Allen Hobson: Fined $5,000; Suspended 3 months in all capacities

Kevin Irving Zinn 
AWC/#2005003286801/August 2007

Zinn participated in a private securities transaction without prior written notice to, or prior approval from, his member firm; and engaged in an outside business activity without providing prompt written notice to his member firm. Zinn failed to respond to NASD requests for documents and information. 

Kevin Irving Zinn : Barred

Brett Steven Spitalny 
AWC/#2005003286802/August 2007

Spitalny participated in private securities transactions without prior written notice to, or prior written approval from, his member firm. Also,  Spitalny engaged in outside business activities without prior written notice to his member firm. 

Brett Steven Spitalny : Fined $30,945 (includes $20,945 disgorgement of commissions); Suspended 1 year in all capacities

Michael L. Dilk 
AWC/#2006004813901/August 2007

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

Michael L. Dilk: Fined $5,000; Suspended 30 business days.

Asa Williams (Principal) 
AWC/#2005002812901/July 2007

Williams engaged in a private securities transaction without prior notice to, and approval from, his member firm. Williams engaged in outside business activities, for compensation, without prompt written notice to his member firm.

Asa Williams : Fined $20,000 (includes $10,000 disgorgement); Suspended 4 months in all capacities.

Eric Richard Radez
AWC/#20050000292-01/July 2007 

Radez engaged in an outside business activity, for compensation, without prompt written notice to his member firm. Radez provided false testimony during an NASD on-the-record interview. 

Eric Richard Radez:Barred

Jeffrey John Kobak
AWC/#2006004470601/July 2007 

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

Jeffrey John Kobak: Fined $10,000; Suspended 90 days in all capacities.

Joseph Marshall Francis Jr. 
AWC/#20060066655-01/July2007

Francis opened brokerage accounts on a foreign citizen’s behalf without disclosing that the citizen was the accounts’ true beneficial owner. Francis failed to disclose to the member firms at which the accounts were opened that he was a registered representative of another firm and lied to a representative of one firm about the source of the funds he used to open the account. Francis failed to properly notify his member firm of the existence of the outside securities accounts. Francis engaged in an outside business activity without notifying his member firm. 

Joseph Marshall Francis Jr. : Barred

James Russell Day
AWC/#2006005543701/July2007 

Day engaged in outside business activities without prompt written notice to his member firm. Day accepted $35,000 in loans from public customers without his member firm’s approval. 

James Russell Day: Fined $10,000;Suspended 2 months in all capacities

James Young Shin (CRD #3192988, Registered Representative, Rosemount, Minnesota) 
AWC/#20060056863-01/June 2007

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

James Young Shin : Fined $5,000; Suspended 30 business days in all capacities

Darrell Craig Lerner 
OS/#2005000440701/June 2007

While registered with his member firm, Lerner did not conduct any firm business but parked his license with the firm. Lerner engaged in outside business activities and private securities transactions while his license was parked.  Lerner failed to disclose a material fact on his Form U4 and provided false testimony under oath during an NASD on-the-record interview. 

Darrell Craig Lerner : Barred

Nancy Ky Cheng
AWC/#2006003840801/June 2007

Cheng engaged in an outside business activity without providing prompt written notice to her member firm. 

Nancy Ky Cheng: Fined $2,500; Suspended 20 business days all capacities

Jeffrey Arthur Smith Sr
AWC/#2005002264701/May 2007

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

Jeffrey Arthur Smith Sr: Suspended 1 month in all capacities

James W. McCann 
AWC/#20060045919-01/May 2007

McCann engaged in outside business activities and failed to notify his member firm, in writing, of the activity and that he would be compensated for his services. Also,  McCann failed to respond to an NASD request to appear for an on-the-record interview. 

James W. McCann : Barred

Kenneth Eugene Marsh (Principal) 
OS/#E062005017501/April 2007

Marsh engaged in outside business activities without providing his member firm with notice, written or otherwise, and indicated on firm compliance forms that he was not engaged in, and had no intent to engage in, outside business activities. Also, he failed to respond to NASD requests for information. 

Kenneth Eugene Marsh: Barred

Thanh Viet Jeremy Cao  
AWC/#20050021917-01/April 2007

Cao failed to provide his member firm with prompt written notice of his outside business activities; and he participated in private securities transactions without providing prior written notice to, and receiving prior written approval from, his member firm. 

Thanh Viet Jeremy Cao: Fined $10,000; Suspended 1 year in all capacities

Kevin Eugene Beamon 
AWC/#2005003331601/April 2007

Beamon engaged in outside business activities, for compensation, without providing prompt written notice to, and receiving approval from, his member firm. 

Kevin Eugene Beamon : Fined $5,000; Suspended 4 months in all capacities

Richard Joseph Alderman Jr. 
AWC/#2006005141601/April 2007

Alderman failed to provide any notice to his member firm of his outside employment with another member firm. The findings stated that Alderman also failed to disclose his continuing employment with his member firm to the new firm. The findings also stated that Alderman failed to appear for an NASD on-the-record testimony

Richard Joseph Alderman Jr. : Barred

Travis Donald Wakeley 
AWC/#2005001267501/March 2007

Wakeley engaged in 

  • private securities transactions without providing prior written or verbal notice to his member firm describing in detail the proposed transactions, his role therein and whether he had received, or might receive, compensation in connection with the transactions; and
  • outside business activities without providing prompt written notice to his member firm. 

Also,Wakeley made an unsuitable investment recommendation to a public customer.

Travis Donald Wakeley : Barred

Randall Dean Poe
AWC/#20060045558-01/March 2007 

Poe 

  • made a withdrawal of $23,501.33 from a public customer’s account without her authorization, knowledge or consent, with the purpose of earning commissions for himself;
  • forged the customer’s signature on annuity contracts without her authorization, knowledge or consent; and
  • engaged in outside business activities, for compensation, and failed to provide prompt written notice to his member firm. 

Randall Dean Poe: Barred

Robert Allen Frost 
AWC/#20050013646-01/March 2007

Frost engaged in outside business activities, for compensation, without providing prompt written notice to his member firm. Frost maintained a desk in a local bank, falsely told a public customer that he was a salaried bank employee, and failed to disclose that he was a registered representative with a firm and received transaction-based commissions. Frost recommended a securities transaction to a public customer without having a reasonable basis for believing the transaction was suitable for the customer based upon her age, financial objectives, situation and needs. Also, he failed to fully and timely respond to NASD requests for information. 

Robert Allen Frost : Barred

Joseph Abbondante (Principal) 
#C1020020090-01/ March 2007 Upheld by US Ct. App., which sustained SEC affirmation of NASD NAC findings.

Abbondante engaged in 

  • private securities transactions without providing prior written notice to, and obtaining prior written approval from, his member firm;
  • an outside business activity without providing written notice to his member firm; and
  • material misrepresentation and omission of material facts in connection with his recommendation of an investment to public customers. 

Also, Abbondante caused to be created, and knowingly facilitated an individual in providing, fictitious account statements purporting to show pertinent information to their investments.

Joseph Abbondante: Barred; Ordered to pay $276,265 (plus interest) in restitution to customers.

Tony Seokoo Paik 
AWC/#2005003466101/February 2007

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

Tony Seokoo Paik : Fined $2,500; Suspended 30 days in all capacities

Mark Kovler
AWC/#2006005195601/February 2007

Kovler engaged in an outside business activity and failed to provide his member firm with prompt written notice of the transaction and the compensation he received. 

Mark Kovler: Fined $5,000; Suspended 10 business days in all capacities

Norman Albert Harris
#2005001824501/February 2007 

Harris failed to provide his member firm with prompt written notice of his outside business activities, and  failed to respond to NASD requests for information.

Norman Albert Harris: Barred

Ronald Dwight Gooding
AWC/#2005000979601/February 2007 

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

Ronald Dwight Gooding: Fined $5,000; Suspended 10 business days all capacities

David Lee Clark
AWC/#2006004838201/February 2007 

Clark engaged in outside business activities, for compensation, without providing prompt written notice to, and receiving approval from, his member firm. 

David Lee Clark: Fined $14,000; Suspended 6 months in all capacities

Prudential Equity Group, LLC fka Prudential Securities, Inc. and Gary Earl Evans 
AWC/#2005001720501/200500172 0502/February 2007

A branch office of the Firm failed to establish and maintain a system to supervise its registered representatives’ activities reasonably designed to achieve compliance with applicable securities laws, regulations and NASD rules. The Firm’s supervisory system 

  • failed to detect the activities of a registered representative engaged in an outside business activity (Evans did not review correspondence the representative received and facsimile correspondence he sent), and
  • was deficient in that it had inadequate procedures regarding review of customer account statements to detect irregular activity in the representative’s customer accounts (failed to follow up on a “red flag“ that might have uncovered the representative’s Ponzi scheme). 

Acting through Evans, the Firm failed to adequately investigate the nature of a business entity and to monitor the entity’s account that would have revealed additional “red flags.“ Evans failed to conduct any further investigation regarding the representative’s outside business activities including calling customers, reviewing statements and verifying financial arrangements, but instead relied on the representative’s statements

Prudential Equity Group, LLC fka Prudential Securities, Inc.: Censured; Fined $125,000 

and Gary Earl Evans: Fined $7,500; Suspended 45 days in Principal capacity

Bill Singer's Comment: For once we get a fairly helpful explanation from NASD as to exactly what should have been done, rather than the typical finger wagging.  I have highlighted in "red" the Principal's unsatisfactory conduct and would urge all compliance departments to note the shortcomings.  What should be a Compliance 101 fact is that a key aspect of supervision is to review incoming and outgoing correspondence.  What are you supposed to do about faxes?  Many Compliance Dept. simply forbid the use of any fax other than one located in their office or immediately nearby.  You should maintain a log of transmissions in and out (which is normally a feature in most fax machines) and compare the daily handwritten logs to the total of incoming/outgoing transmissions.  Additionally, many firms require copies of all such transmissions to be provided to a supervisor before sending and upon receipt.  Finally, in the event of a red flag involving a registered rep, firms are now advised that the NASD expects the minimal follow-up of calls to customers, statement reviews, verification of financial arrangements.  It is pointedly NOT sufficient to simply ask the RR to explain his or her conduct.
Richard Martin Northcote Mason
AWC/#20050033823-01/January 2007

Mason engaged in an outside business activity, for compensation, and did not provide his member firm with prompt written notice. 

Richard Martin Northcote Mason: Fined $5,000; Suspended 31 days in all capacities

Douglas Walter Campbell Jr. (Principal)
OS/#ELI2004039101/January 2007

Campbell engaged in an outside business activity and participated in private securities transactions without providing prior written notice to his member firm. 

Douglas Walter Campbell Jr. : Fined $5,000; Suspended 35 days in all capacities

 

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