Request for Review b
On Appeal, Individual Disciplined for Sales Practice Violations Gregory W. Gray, Jr. Hearing Board Decision: 08-003 07 Jan 2009
Gregory W. Gray, Jr. (“Respondent”), a former registered representative with Quick & Reilly, Inc. (“Quick & Reilly”) and H&R Block Financial Advisors (“H&R Block”), both member organizations, was charged with having:
I. Violated NYSE Rule 476(a)(6) by engaging in conduct inconsistent with just and equitable principles of trade, in that he effected unauthorized trades in the accounts of one or more customers.
II. Violated NYSE Rule 476(a)(7) by engaging in acts detrimental to the interest or welfare of the Exchange in that he threatened and/or harassed one or more complaining customers and/or their family members.
The Charge Memorandum specifically identified two instances in which Respondent was alleged to have executed trades in the accounts of Customers A and B without the prior authorization of those customers. In his Answer, and at the hearing, Respondent admitted to having executed the unauthorized trade in Customer B’s account. Respondent testified that he purchased $150,000 in shares of XYZ for Customer B’s account so that he could “park” the shares until they could be transferred into the account of the customer for whom they were originally intended. Respondent stated that he was not able to purchase the shares for that customer directly because the customer’s account was restricted and Respondent’s supervisor had refused to authorize the trade, but he he believed his supervisor would later change his mind and approve the trade. The Hearing Panel accepted Respondent’s admission regarding the unauthorized trade in Customer B’s account.
Respondent denied that the trade in Customer A’s account was unauthorized. He testified that Customer A authorized the purchase of $100,000 in shares of ABC for her son’s custodian account, but later changed her mind when she learned that her father, on whom she relied for investment advice, disapproved of the purchase. When Customer A complained, he immediately sold the shares without charging Customer A a commission. Given Customer A’s history of trading inactivity, lack of sophistication regarding securities issues and conservative investment objectives, the Panel did not credit Respondent’s testimony that Customer A had agreed to such a large purchase of shares in a closed end fund that she did not understand.
The Panel took Respondent's admission of parking in Customer B's account and its finding of unauthorized trading in Customer A's account, and found Count I sustained.
Count II alleged that Customers A, C and D made complaints about Respondent to Quick & Reilly and H&R Block, Respondent called those customers and their family members and made threatening and harassing remarks in an effort to cause them to withdraw their complaints. Testimony from Customer A, Customer D’s son and Respondent’s former supervisor at H&R Block was presented at the hearing. The Panel found Respondent guilty on Count II.
The Board affirmed the Hearing Panel's sanctions.
SFC/ 08-047
Between January 2003 and March 2004 (the “relevant period”), while employed at Baseline Securities Inc. and LaBranche Financial Services, Inc. (“LFSI”), institutional sales representative Cronin engaged in an undisclosed outside business and profit- sharing arrangement with a third party, whereby Cronin would refer customers to the third party for NASDAQ trading in exchange for 50 percent of the after expense profits. During the relevant period, Cronin received monthly payments of between $60,000 and $100,000. Cronin never made a written request or received the prior written approval of LSFI to engage in this profit-sharing arrangement. When the profit-sharing arrangement ended, Cronin received a payment of $950,000 as compensation for lost profits. Subsequently, in connection with an NYSE Enforcement investigation, Cronin was asked to provide testimony concerning his outside business activities. Cronin made material misstatements in testimony to NYSE Enforcement about the profit-sharing arrangement and about the $950,000 he received. Further, in October 2004 Cronin made misstatements to his member firm employer, LFSI, on a questionnaire concerning his business relationship with another individual.
Violated NYSE Rule
- 346(b) by engaging in outside business activity by entering into profit-sharing arrangement with third party without making written request and receiving prior written consent of member organization employer;
- 476(a)(4) by making material misstatements to NYSE;
- 476(a)(6) by engaging in outside business without approval of member organization employer, making material misstatements to Exchange and making material misstatements to member organization employer about business relationship.
- 529 College Savings Plan
- AML
- Annual Compliance Certification
- Annuity
- ATM
- Away Accounts
- Bank
- Blank Forms
- Borrowing
- Broadcast
- Changes Of Address
- Checks
- CIP
- Class B Shares
- Clearing Agreement
- Communications
- Cooperation Agreement
- Corporate Credit Card
- Debit Card
- Deceased
- Disabled
- Discretion
- Elderly
- Electronic Communications
- Escrow
- Expenses
- False Professional Designation
- False Statements
- FOCUS
- Forgery
- Gifts
- Guaranteeing Against Losses
- Heightened Supervision
- Inaccurate Information To FINRA
- Increase The Number Of RRs
- Instant Messaging
- Internet
- Joint Account
- JWillfully
- Markdowns
- Markups
- Membership Agreement
- Minimum Contingency
- Mispricing
- MSRB
- Mutual Funds
- NAC
- Net Capital
- No Objections Letter
- NSF
- Orders
- OTR
- Ownership Change
- Parking
- Personal Bank Records
- Pre-arranged Trading
- Private Placement
- Private Securities Transaction
- Qualified Independent Underwriter
- Registration Of Supervisors
- Reg T
- REIT
- Retirement
- Rule 1017
- SAR
- Scripts
- Service Fee
- Sharing Commissions
- Shelf Offering
- Signature
- SIPC
- Solicited
- Statutory Underwriters
- Suitability
- Supervision
- Supervisory System
- Surrender Charge
- Surrender Charges
- Telemarketing
- Time And Price Discretion
- Timely Amend
- UIT
- Unregistered Branch Offices
- Unregistered Person
- Unregistered Principal
- Unregistered RRs
- Unregistered Securities
- Variable Annuity
- Web Sites
- Willfully
- Written Communications
- WSPs