NOTE: Stipulations of Fact and Consent to Penalty (SFC); 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 & to the entry of findings. Additionally, for AWCs, if FINRA has reason to believe a violation has occurred and the member or associated person does not dispute the violation, FINRA may prepare and request that the member or associated person execute a letter accepting a finding of violation, consenting to the imposition of sanctions, and agreeing to waive such member's or associated person's right to a hearing before a hearing panel, and any right of appeal to the National Adjudicatory Council, the SEC, and the courts, or to otherwise challenge the validity of the letter, if the letter is accepted. The letter shall describe the act or practice engaged in or omitted, the rule, regulation, or statutory provision violated, and the sanction or sanctions to be imposed.

Stanley Mark Kobin (Principal)
OS/2008011678304

As his member firm’s AMLCO, Kobin failed to

• implement policies and procedures reasonably expected to detect and cause the reporting of transactions required under 31 USC 5318(g) and implementing regulations;
• provide AML training for firm personnel, failed to adequately review customer activity for compliance with AML rules and to adequately review suspicious activity and file timely SARs where appropriate;
• fulfill his responsibility to access the Financial Crimes Enforcement Network (FINCEN) of the United States Department of Treasury to review requests for information, under Section 314(A) of the USA Patriot Act, relating to possible money laundering or terrorist activity;
• search firm records to determine whether the firm maintained, or had maintained, any account for, or had engaged in any transactions with, any individual, entity or organization named in FINCEN’s requests.

As a result of the firm’s inadequate AML program, the firm, acting through Kobin, failed to timely detect, investigate and report suspicious activity to achieve compliance with the Bank Secrecy Act.

Kobin failed to

• identify red flags in connection with suspicious account activity, did not timely investigate or review the red flags, and caused his firm’s failure to timely report the suspicious activity;
• implement the firm’s procedures for suspicious activity detection and reporting, monitor and investigate approximately $6 million in suspicious wires to and from one of its branches,
• detect and timely report suspicious activity and maintain documentation evidencing a review for suspicious activity of securities transactions, money movements and securities transfers;
• ensure that a designated principal review and approve all correspondence to and from branch offices, including electronic correspondence.
• failed to properly create, maintain and timely file records and reports of customer complaints, and failed to timely update Forms U4 and Forms U5 relating to persons who were registered with FINRA through his firm in his capacity as his firm’s Chief Compliance Officer (CCO), .
• take adequate steps to comply with the Firm Element of the Continuing Education Requirement and, as a result, his firm did not conduct the required annual needs analysis or develop a written training plan.
• ensure that each registered person was clearly assigned to an appropriately registered representative and/or principal responsible for supervising that person’s activities,
• conduct an annual compliance interview or meeting,
• implement an adequate supervisory control system over the firm’s branch office managers, sales managers or any person performing a similar function; specifically, the firm’s written supervisory procedures failed to identify producing managers for purposes of review and supervision of their customer account activity; assign a person who was either senior to, or otherwise independent of, the producing manager to perform such supervisory reviews; and reasonably ensure that the firm calculate, on a rolling, twelve-month basis, whether heightened supervision requirements were triggered with any respect to any producing managers.

Stanley Mark Kobin (Principal): Suspended 9 months in Principal capacity only; Required to requalify as GSP/Series 24; Required to complete 16 hours of AML education training; Required to fully and promptly cooperate with FINRA in any and all investigations and/or disciplinary proceedings of any person or entity, concerning conduct at and/or relating to the firm at issue during the time period he was associated by promptly providing requested information and documents and to appear and testify fully, completely and truthfully at any FINRA interview and/or disciplinary hearing.

Tags: AML  CE  Cooperation Agreement    

Intermountain Financial Services, Inc. and Kent Duane Sweat (Principal)
OS/2008011579401

Acting through Sweat, the Firm failed to

• enforce its written supervisory procedures pertaining to its annual compliance meeting, branch office inspections, outside business activities, outside securities accounts, Regulation SP, hiring practices and the use of personal computers; and
• maintain records of its Firm Element Continuing Education Needs Analysis and Written Training Plan for multiple years, and
• maintain continuing education (CE) records to evidence that the firm’s representatives participated in the Firm Element CE program during one year.

Sweat and the firm failed to maintain copies of registered representatives’ incoming and outgoing correspondence with the public relating to its securities business, and failed to maintain evidence of review as NASD rules and firm procedures required.

The Firm failed to implement

• procedures concerning the capturing, preservation, maintenance and storage of all original and copied communications the firm received and sent;
• a written anti-money laundering (AML) compliance program reasonably designed to achieve the firm’s compliance with the laws, rules and regulations to which it was subject; and 
• its AML procedures by failing to provide AML training in a manner specified in its written AML program, and did not properly update its AML compliance officer contact information as required.

Intermountain Financial Services, Inc.:  Censured; Fined $12,750

Kent Duane Sweat: Fined $7,500; Suspended in Principal Capacity only for 5 business days 

Tags: WSP  Electronic Communications  Email  AML  

Jeffrey David Rosen (Principal)
AWC/2009021029611

Because certain states began requiring individuals to successfully complete a LTC CE course before selling long-term care insurance products to retail customers, Rosen created an answer key for a long-term care exam for one state and also instructed some of his direct reports to create answer keys for exams. Rosen distributed answer keys to the exams to firm employees and instructed his direct reports to obtain from and provide answer keys to other firm employees; the direct reports provided the answers to financial advisors at other firms and Rosen was aware that they had done so. Rosen failed to supervise his direct reports, in that certain registered individuals who reported to him created answer keys to LTC CE exams, obtained from, and provided answer keys to, other employees, provided the answers to financial advisors and Rosen was aware that they had done so.

Jeffrey David Rosen (Principal): Fined $10,000; Suspended 3 months in all capacities; Suspended 6 months in Principal capacity only

Tags: Testing  CE  

April N. Berkholder
AWC/2009021029609

Berkholder requested and received an answer key to a state long-term care continuing education (LTC CE) exam from another firm employee. Berkholder asked an external wholesaler for the test and answers to the exam, which he sent to her via email.

April N. Berkholder: Fined $5,000; Suspended 5 business days

Tags: Testing  CE  

Randall Charles Ciesielski (Principal)
AWC/2009021029608

Ciesielski requested and received answer keys to state insurance LTC CE examinations from other employees at his firm who created them.

Randall Charles Ciesielski (Principal): Fiend $5,000; Suspended 5 business days

Tags: Testing  CE  

Brookville Capital Partners LLC fka New Castle Financial Services LLC
AWC/2008011678303

Acting through its chief compliance officer (CCO), the firm: 

• failed to establish and implement an adequate AML program and related procedures; adequately identify, investigate and respond to red flags of suspicious activities;
• timely file a Suspicious Activity Report (SAR); and
• provide AML training for firm personnel for one year.

Acting through a registered representative, the firm

• improperly facilitated the distribution of approximately 20 million shares of various unregistered securities;
• operated an unregistered branch office, in violation of the restriction on business expansion contained in its membership agreement, and
• engaged in improper telephone solicitations (from the unregistered office) by making materially false representations and omitting material facts in connection with the offer of securities and by using misleading telemarketing scripts that a registered principal had not approved.

Acting through the registered representative and CCO, the firm failed to perform adequate searching inquiries and take necessary steps to ensure that transactions did not involve distributions of unregistered and/or restricted securities.

Acting through a registered representative and firm principal, the firm sold securities to public investors using a private placement memorandum that omitted to disclose a convicted felon’s association with the issuer, a material fact to any reasonable investor.

Acting through various FINOPs, the firm

• failed to maintain accurate financial books and records,
• filed inaccurate FOCUS reports and
• operated a securities business while under minimum net capital requirements.

Acting through the CCO and other compliance officers, the firm

• failed to forward customer funds it received in connection with contingency offerings to an escrow agent by noon of the next business days after receipt of such fund;
• adequately review and approve customer correspondence;
• timely and accurately report customer complaints;
• timely update Uniform Applications for Securities Industry Registration or Transfer (Forms U4) and Uniform Termination Notices for Securities Industry Registration (Forms U5);
• comply with the Firm Element of the Continuing Education Requirement for a year;
• conduct an annual compliance meeting; and
• establish an adequate business continuity plan, which consequently led to the loss of access to certain customer records upon termination of its relationship with a particular clearing firm.

The firm had additional supervisory deficiencies, including that

• its written supervisory procedures failed to establish adequate procedures for review of producing managers’ customer account activities,
• it failed to have written supervisory procedures for identifying producing managers that should be subject to heightened supervision, and
• failed to place certain producing managers on heightened supervision, in that, acting through various individuals, the firm failed to clearly assign each registered person to an appropriately registered representative and/or principal responsible for supervising that person’s activities, and designate principals with actual authority to carry out the supervisory responsibilities over the firm’s business.

Acting through a supervising principal, the firm failed to reasonably supervise registered representatives working out of the unregistered branch office.

Acting through firm officers, the firm failed to establish and maintain a supervisory system reasonably designed to supervise the sales activities of firm personnel conducted outside of its registered offices, and failed to establish and maintain a supervisory system for determining whether customer securities were properly registered or exempt from registration.

Acting through its CCO, the firm failed to implement adequate procedures to ensure that the firm did not telephone persons who stated they did not wish to receive calls and/or who registered on the national do-not-call registry, and failed to adequately update and maintain a do-not-call list.

Acting through various supervisors, the firm failed to perform heightened supervision over numerous individuals.

Brookville Capital Partners LLC fka New Castle Financial Services LLC : Brookville Capital Partners LLC fka New Castle Financial Services LLC : Censured; FIned $200,00; Required to retain an independent consultant to conduct a review of the adequacy of its policies, systems, procedures and training regarding AML rules and regulations; compliance with Section 5 of the Securities Act of 1933; and rules and regulations relating to private placements, financial requirements, customer complaints and supervision. In addition, the firm was required to have its associated persons complete 16 hours of AML continuing education training and to fully and promptly cooperate with FINRA in any and all investigations.

Tags: AML  SAR  Unregistered Securities  Unregistered Office  Telemarketing  Private Placement  Felony  Annual Compliance Meeting  Contingency Offering  Producing Manager  

CMG Institutional Trading, LLC and Shawn Derrick Baldwin (Principal)
2006006890801

Acting through Baldwin, CMG Institutional Trading

• participated in securities related activities without employing a qualified municipal securities principal;
• failed to timely file quarterly lists of issuers with which it engaged in a municipal securities business;
• failed to adopt, maintain and enforce written supervisory procedures reasonably designed to ensure that the conduct of the broker and associated persons in municipal securities activities are in compliance with Municipal Securities and Rulemaking Board (MSRB) rules and that the procedures shall codify the broker’s supervisory system for ensuring compliance;
• had an inadequate Anti-Money Laundering (AML) compliance program, in that it failed to
• verify customer identification information,
• conduct independent testing of its AML program,
• designate a person to transmit contact information to FINRA and
• to provide AML training for two years;
• failed to timely create and maintain a business continuity plan and engaged in securities transactions without a qualified financial and operations principal (FINOP);
• conducted a securities business while its net capital was below the required minimum;
• failed to prepare an accurate general ledger, trial balances and books and records; and failed to file an annual audit report and a quarterly Financial and Operational Combined Uniform Single (FOCUS) report; and
• failed to file an application for approval of a material change in its business operations even though it participated in an offering as an underwriter on a firm commitment basis, and disseminated sales literature that contained numerous inaccuracies and misrepresentations.

Also, the firm permitted Baldwin to engage in its securities business even though his registration was inactive because he had failed to complete a continuing education course.

FINRA's National Adjudicatory Council (NAC) imposed these sanctions following appeal of an Office of Hearing Officers (OHO) decision:

CMG Institutional Trading, LLC: Expelled

Shawn Derrick Baldwin (Principal): Barred

Tags: Unregistered Principal  WSP  MSRB  AML  NAC  FINOP  FOCUS  Material Change Of Business  

Jason R. Locke
AWC/2009021029606

Locke created an answer key by saving a copy of his answers to a state insurance LTC CE examination and sent the answer key to another firm employee.

Jason R. Locke : Fined $5,000; Suspended 60 days

Tags: Testing  

Jason Thomas Plunkett
AWC/2009021029605

Plunkett requested and/or received different answer keys for a state insurance LTC CE examination from firm employees who created them and Plunkett then distributed one of the answer keys to financial advisors outside of the firm.

Jason Thomas Plunkett : Fined $5,000; Suspended 1 month

Tags: Testing  

Mathew Valente
AWC/2009021029604

Valente requested that another wholesaler send him an answer key for a state insurance LTC CE examination, and Valente improperly distributed the answer key to other firm employees.

Mathew Valente : Fined $5,000; Suspended 10 business days

Tags: Testing  

Stephen Denton
AWC/2009021029607

Denton improperly distributed the answer key for a state insurance long-term care continuing education (LTC CE) examination to firm employees and financial advisors outside of the firm.

Stephen Denton : Fined $5,000; Suspended 1 month

Tags: Testing  

Eric Spencer Cott (Supervisor)
AWC/2009021029701

Cott allowed another individual to improperly assist him in completing a Florida long-term care (LTC) continuing education (CE) requirement by taking the majority of an LTC CE exam for him. Cott obtained the Florida LTC CE requirement and then sold a universal life insurance policy with LTC benefits to a client.

Eric Spencer Cott (Supervisor): Fined $5,000; Suspended 1 month

Tags: Testing  

Daniel Walsh
AWC/2009021029602

Walsh took an online state continuing education (CE) examination for financial advisors working for another FINRA member firm. The financial advisors provided their driver’s license and social security numbers to Walsh, who used the information to log onto the examination Web site and take the exam for them. Walsh assisted other financial advisors to take the CE examination by sitting with them in their offices and providing assistance to complete the examination. Walsh possessed and distributed an answer key to a financial advisor and permitted the answer key to be distributed to other financial advisors. Walsh did not report his conduct to his member firm.

Daniel Walsh: Censured; Fined $5,000; Suspended 90 days

Tags: Testing  

Valores Finamex International, Inc. and Vincent Anthony Buchanan (Principal)
AWC/2009016196001

Acting through Buchanan, Valores Finamex failed to produce evidence of Buchanan’s review of a registered representative’s correspondence. The Firm’s written supervisory procedures failed to

• identify the registered representative as a producing manager,
• contain procedures reasonably designed to provide heightened supervision over the activities of each producing manager who is responsible for generating 20 percent or more of the revenue of the business units supervised by the producing manager’s supervisor, and 
• assign a qualified supervisor to supervise the registered representative.

The Firm permitted Buchanan to conduct a securities business while he was “Continuing Education Inactive.”  Also, the Firm failed to

• send an annual privacy notice to its customers;
• provide an explanation to its customers of their right to opt out of disclosure of nonpublic personal information to nonaffiliated third parties; and
• establish policies and procedures that address and review administrative, technical and physical safeguards for the protection of customer records and information involved in the outsourcing of compliance and operations functions to nonaffiliated third parties.

The Firm effected Trade Reporting and Compliance Engine-eligible securities trades and failed to report, or properly report, those transactions.

Valores Finamex International, Inc.: Censured; Fined $27,500 ($10,000 of which was jointly and severally with Buchanan).

Vincent Anthony Buchanan: Fined $10,000 jointly and severally with Valores Finamex; Suspended in Principal capacity only for 20 business days. 

Tags: Producing Manager  WSP  Supervision  Correspondence  

Alvarez & Marsal Securities, LLC
AWC/2008011639901

Acting through a registered principal, the Firm it failed to

• conduct inspections of its main office,
  
• reduce inspections and reviews to a written report, and
  
• conduct annual compliance meetings.
  

For one year, the firm failed to

• document that it had administered a continuing education program in accordance with its evaluation of its training needs and written training plan for its covered registered personnel, and
  
• conduct a needs analysis and prepare a written training plan or administer a continuing education program for its covered registered personnel.
  

Alvarez & Marsal Securities, LLC : Censured; Fined $15,000 ($5,000 joint/several with unnamed party)

Tags: Inspections  Annual Compliance Meeting  Continuing Education