Zamecki was the registered principal at his member firm responsible for reviewing and approving the firm’s registered representatives’ private securities transactions and outside business activities. Zamecki failed to supervise a registered representative’s private securities transactions. The registered representative disclosed his outside business sales of secured real estate notes to the firm and discussed them with Zamecki, at which time the representative stated that attorneys for the note issuer had determined that the notes were not securities; in reality, the notes were securities. Zamecki allowed the registered representative to continue selling the notes without inquiring further into the matter and thereby failed to enforce the firm’s written supervisory procedures.
The representative made numerous sales of the notes to various investors, and Zamecki did not review, approve or otherwise supervise these sales. The representative completed an Outside Business Questionnaire in which he disclosed his sales of the notes; after reviewing the form, Zamecki questioned the representative in detail about the nature of the notes, determined that the notes could be securities and prohibited the representative from engaging in any further sales of the notes.