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.
DeMiro engaged in private securities transactions outside the scope of his employment with his firm when he sold $587,000 of promissory notes in a Regulation D offering of an entity to customers. DeMiro did not provide his firm with prior written notice of the sales and did not receive the firm’s written approval or acknowledgement for these sales.
Dante Thomas Garcia DeMiro : Fined $5,000; Suspended 9 months
Associated Person Pound participated in private securities transactions by selling promissory notes without giving prior written notice to, or obtaining prior written approval from, his member firm. He failed to timely respond to FINRA’s request for information.
Gissendaner engaged in private securities transactions when he sold ULPs in various resort properties to investors. Gissendaner participated in a sale of a total of $172,989.23 worth of ULPs to investors and received approximately $15,380 in commissions from the sales. Prior to participating in these sales, Gissendaner failed to provide his member firm with written notice of the sales of ULP products, and failed to obtain the firm’s written approval. Gissendaner completed his firm’s Outside Business Activities/Private Securities Transactions form, and submitted his firm’s Annual Compliance Questionnaire and stated that he had no outside business activities or private securities transactions to report, and that he had not engaged in any private securities transactions while associated with the firm.
FINRA found that Gissendaner also falsely answered “No” when he was asked whether he accepted compensation from any person or entity that was not a firm-approved arrangement or that was not disclosed on his Outside Business Activities Questionnaire.
Randall Allen Gissendaner : Fined $20,500 (includes disgorgement of commissions); Suspended 5 months
Moss participated in the sale of $50,000 worth of Universal Lease Programs (ULPs) without prior written notice about the sale to his member firm and his firm’s prior written approval. He earned approximately $6,000 in commissions from his sale of the ULP.
Moss participated in sales of
payphone programs totaling $65,000,
an automatic teller machine (ATM) program totaling $48,000 with an additional $2,400 for surety bonds
to members of the public and failed to provide his firm with written notice about the sales and never obtained the firm’s written approval.
Moss initialed and signed business activity statements in which he agreed that he was aware that his firm must be notified of all his business activities, even those that did not relate to the securities industry; these statements were incomplete and misleading because Moss failed to disclose his participation in the sales of the ULP, the payphone program and the ATM program.
Kersey engaged in private securities transactions when he sold securities in the form of ULPs in various resort properties to investors. Kersey participated in a sale of a total of $194,385.96 worth of ULPs to investors and received approximately $19,438.60 in commissions from the sales. Prior to participating in these sales, Kersey failed to provide his member firm with written notice of the sales of ULP products, and failed to obtain the firm’s written approval.
Ronald Laverne Kersey: Fined $24,500 (includes disgorgement of commissions); Suspended 3 months
Keating participated in private securities transactions involving the offer and sale of interests in a company, outside the scope of his employment with his member firm. Keating sold interests in the company totaling approximately $17.6 million to investors and received compensation in the approximate amount of $1.7 million for his participation. Keating failed to provide his firm with prior written notice of his proposed participation in these transactions and failed to receive the firm’s prior written approval. At all times, the firm’s written procedures prohibited employees from engaging in private securities transactions.
Keating was employed by outside businesses where he held various positions, including officer and director with these outside businesses, while he was associated with his firm, and failed to provide the firm with prompt written notice of these outside business activities.
Meister engaged in a private securities transaction without his member firm’s prior notification and completed a firm compliance questionnaire stating that he understood he could not sell securities away from the firm and falsely represented that he had not engaged in unapproved transactions. Meister omitted material information in connection with the sale of securities with the intent to deceive or defraud, and failed to provide the customer with a stock certificate or receipt for the full amount of her investment. The customer complained to Meister’s member firm after the stock issuer ceased operations and liquidated its assets, and the firm settled the customer’s complaint.
Meister’s recommendations to the customer were unsuitable in light of her financial situation and investment needs.
Adam George Meister : Fined $20,000; Suspended 15 months; Required to requalify by exam before re-entering the securities industry.
Ting participated in private securities transactions without prior written notice to, or written permission from, her member firm to engage in the transactions, for which she received compensation. Ting referred investors, some of whom were her firm’s customers, to entities from which some of these investors purchased securities in the form of promissory notes and stock. Ting received approximately $259,958 as compensation for her referrals of investors.
Julie Sheau Lin Ting : No FIne in light of financial status; Suspended 12 months
Burkemper engaged in private securities transactions when he sold $1,898,975 in ownership interests of an entity to individuals, who included his member firm’s customers. Burkemper sold the ownership interests without providing written notice to the firm of these sales and without receiving the firm’s written approval or acknowledgement for these sales.
Linge participated in private securities transactions through the sales of securities totaling approximately $395,000 in the form of promissory notes issued by a company, to which he referred firm customers and received monetary compensation from the company’s affiliate for his referrals. Linge failed and neglected to give written notice to his firm of his intention to engage in such activities, and the firm never authorized Linge to engage in such activities.
Linge engaged in business activity outside the scope of his association with his firm for which he received monetary compensation, and failed to provide the firm with prompt written notice of this outside business activity. Linge received compensation totaling $15,600 as a result of the above-mentioned outside business activities and private securities transactions.
Stephen Dee Linge : No Fine in light of financial status; Suspended 2 years
Gilman participated in private securities transactions involving the purchase by his member firm’s customer of convertible debentures another company offered, and these transactions were outside the regular course and scope of Gilman’s employment with the firm. Gilman first received a $50,000 finder’s fee and failed to provide the firm with prior written notice or receive the firm’s written permission. Gilman completed and submitted firm compliance questionnaires and, in response to the question concerning whether he sold any products or services not marketed through his firm, he answered “no” and provided incomplete information to his branch manager in response to an inquiry about activities in the customer’s account.
Thomas R. Gilman: Fined $60,000; Suspended 15 months
Mecham failed to respond to FINRA requests for information and documentation regarding a private securities transaction and improper use of customer funds.
Marsh borrowed $50,000 from a customer at her member firm and did not disclose to the customer that she already had borrowed $90,000 from another individual and that the debt was still largely outstanding. The Firm’s procedures specifically prohibited registered representatives from borrowing money from customers; Marsh did not inform her firm of this loan, which was repaid.
Marsh repaid the $50,000 loan referenced above to the customer by transferring her membership interest in a limited liability company formed to invest in real estate projects in Costa Rica. Marsh had purchased the membership interest, which is a security for $50,000, using the funds she had borrowed from the customer.
While registered at a different member firm, Marsh borrowed $3,500 and $5,600 from another customer, and the firm’s procedures specifically prohibited registered representatives from borrowing money from customers. In addition, FINRA determined that Marsh did not inform the firm of this loan, which was repaid, and falsely represented on the firm’s Annual Compliance Certification Questionnaire that she had not borrowed money from a customer.
Marsh engaged in a private securities transaction without prior written notice to, or prior written approval from, her member firm.
Woznick engaged in an outside business activity without providing prompt written notice to his member firm. Woznick engaged in a private securities transaction by selling his personal shares of a company’s stock to a customer of his firm outside the scope of his employment with the firm, and failed to provide prior written notice of this private securities transaction to the firm.
Woznick failed to respond to FINRA requests for information.
Bear William Woznick : Fined $15,000; Suspended 2 years
DeWald participated in private securities transactions without first giving his member firm written notice of his intentions and receiving approval.
DeWald made unsuitable recommendations to customers given his complete failure to perform a reasonable investigation concerning the product and that, while reviewing the product information on the company’s website, he took its representations for face value and failed to independently verify those representations.
DeWald made negligent misrepresentations of material fact in connection with the sale of installment plan contracts; he misrepresented to customers that they could take charitable tax deductions in connection with their investments, which was not true. DeWald provided customers with sales materials containing misleading and oversimplified descriptions of the contracts, and failed to obtain a firm principal’s approval prior to their use.
DeWald failed to respond to FINRA requests for documents.
David John DeWald : Ordered to pay $124,519.03, plus interest, in restitution; Barred
Hafen participated in the sales of Universal Lease Programs (ULPs) to members of the public totaling $482,015.64 and failed to provide his member firm with written notice and obtain the firm’s written approval. Hafen received approximately $42,960 in commissions from ULP sales.Hafen submitted an outside business activities questionnaire to his firm that failed to report that he was selling ULPs for compensation.
Gregory Earl Hafen (Principal): Fined $48,000 including disgorgement of commissions; Suspended 7 months
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.
Roman engaged in private securities transactions outside the course and scope of his employment with a member firm without providing his firm with the requisite notice. Roman facilitated investments by assisting in the transfer of funds to companies to fund the purchase of securities, forwarded applicable private placement memoranda and subscription agreement forms, or communicated with the companies on behalf of individuals.
Don Michael Roman : No Fine in light of financial status; Suspended 1 month
Wright engaged in a private securities transaction without prior written notice to, or prior written approval from, her member firm. The customer agreed to provide start-up capital for a corporation Wright founded, and the customer loaned the corporation $150,000 and received a promissory note evidencing the loan. Wright borrowed $30,000 from a firm customer contrary to her firm’s procedures, which specifically prohibited registered representatives from borrowing money from customers; Wright did not inform the firm of this loan, which was repaid. Wright engaged in an outside business activity without providing prompt written notice to her firm; Wright failed to disclose her position as president of the corporation and her activities with that company.
Siegel recommended and effected sales of securities to customers without having reasonable grounds for believing that the recommendations and resultant sales were suitable for such customers, and participated in private securities transactions without prior written notice to, and approval from, his member firm.
Michael Frederick Siegel : Fined $30,000; Suspended for two consecutive 6 month terms
Kwasnicki participated in a private securities transaction without prior notice to, or prior written approval from, his member firm. Kwasnicki failed to appear for a FINRA on-the-record interview.
Glover engaged in private securities transactions without providing his member firm with prior written notice. Glover recommended that his customers invest in investment funds of an entity which was not approved by his firm and was exposed by federal authorities as a Ponzi scheme.
Glover did not receive any compensation and his customers lost approximately $470,000 by investing in the funds.
Harold Lee Glover Jr. (: Fined $5,000; Suspended 4 months
Calhoun participated in a private securities transaction outside the regular course of his employment with his member firm by introducing the firm’s customer to an issuer, a private bank offering an investment in a managed foreign currency trading program, and acting as a liaison between the issuer and the customer. The customer lost the $30,000 invested in the foreign currency trading program. Calhoun failed to provide prior notice to his firm and failed to receive his firm’s written acknowledgment concerning his participation in the private securities transaction.
Paul engaged in private securities transactions without prior written notice to, or prior written approval from, his member firm. Paul's sale of convertible balloon promissory notes totaling approximately $545,000 was done outside the scope of his employment with his firm and without prior written notice to his firm.
Richard Aaron Paul : Fined $50,000; Suspended 9 months
Gilbert borrowed money from investors, including firm customers, to raise funds for a residential real estate development company he owned and controlled, and in connection with the borrowing, Gilbert participated in securities transactions when he issued promissory notes totaling approximately $1,095,072, which he signed on his company’s behalf. Gilbert’s member firm prohibited borrowing from customers, and Gilbert failed to provide his firm with written notice of his intention to engage in private securities transactions and failed to receive his firm’s written permission.
Richard Elmer Gilbert (Principal): No Fine in light of financial status: Suspended 1 year (After consideration of sanctions previously imposed by the State of Michigan of six months for the same conduct, FINRA determined to give Gilbert credit for serving six months of the suspension, but he is required to serve six months of the suspension.)
Krusheski engaged in undisclosed outside business activities, received selling commissions from one of the outside activities, and failed to disclose his roles in the outside business activities to his member firm. Krusheski engaged in private securities transactions and received a commission without providing prior written notice to, or receiving written approval from, his firm. Krusheski was responsible for supervising employees in a firm Office of Supervisory Jurisdiction (OSJ) branch office and, although he knew that a registered representative in the office was engaging in outside business activities for compensation, he failed to ensure that the representative provided written notice to the firm of his activities.
Page participated in private securities transactions, without prior written notice to, and authorization from, his member firm. Page failed to provide his firm with prompt written notice of his outside business activity.
In connection with the sale of an installment plan contract offered by an alleged charitable organization issued to a customer, Lawrence negligently misrepresented to the customer that he would receive a tax deduction. Lawrence recommended the installment plan contract without having a reasonable basis for the recommendation, and did not perform a reasonable investigation concerning the propriety of the alleged charitable organization or the installment plan contracts it offered. Lawrence engaged in a private securities transaction without providing prior written notice to, and receiving prior written approval from, his member firm.
Conrad Michael Lawrence : Fined $25,000 (includes $4,000.32 commission disgorgement); Ordered to pay $21,280 plus interest in restitution; Suspended 4 months
Halliburton participated in a private securities transaction, which consisted of his recommendation that a customer invest $10,000 in an entity, while failing to provide his member firm with prior notice of this transaction. Halliburton’s recommendation to the customer and her resulting investment of $10,000 were unsuitable given her financial situation and needs.
Ellis Gerald Halliburton : No Fine in light of financial situation; Suspended 6 months
Durand effected private securities transactions away from his member firm by soliciting firm customers to purchase securities in a private placement. Durand failed to provide written notification to his firm prior to effecting these transactions.
Guy Christian Durand Jr. : Fined $5,000; Suspended 3 months
Nelson participated in private securities transactions involving the purchasing of commercial and residential rental properties, through investing and loaning of investors’ funds in companies he controlled without prior written notice to, or written approval from, his member firm. Nelson completed his member firm’s compliance questionnaires and, in response to the question, “I have only offered for sale securities and non-securities investments, which at such time were authorized by the firm in writing,” Nelson falsely answered “Yes.”
Max Sean Nelson: Fined $5,000; In light of Nelson’s restitution being ordered pursuant to a 2009 agreement entered into with the Missouri Attorney General, no restitution sanction was imposed; Suspended 1 year
Hockensmith participated in transactions involving investment in a purported foreign currency exchange (FOREX) trading program and did not seek his member firm’s written authorization to participate, and the firm was unaware of and did not authorize his participation. The purported FOREX trading program was not a firm-approved product and the firm did not have a selling agreement with the purported trading program.
The firm’s written procedures advised representatives that prior to engaging in a private securities transaction, representatives must submit a written request to the compliance department describing the proposed transactions and that written authorization from the compliance department must be received before a representative could engage in such conduct. Hockensmith completed and executed his firm’s representative affirmations addressing the firm’s policies and procedures regarding selling away/private securities transactions, and the firm addressed the topic at multiple annual compliance meetings, as well as issuing compliance bulletins/notices to its representatives regarding selling away/private securities transactions.
Hockensmith borrowed $200,000 from a client without his firm’s knowledge or consent and contrary to the firm’s written procedures prohibiting representatives from borrowing from a customer. Hockensmith executed representative affirmations agreeing to his firm’s procedures manual regarding prohibited activities, which included borrowing from customers.
Hockensmith failed to respond to FINRA Rule 8210 requests for information.
Harwell engaged in private securities transactions without prior written notice to, or prior written approval from, his member firm. Harwell offered for sale and sold unregistered shares of stock to individuals for which he collected funds totaling approximately $130,950.
Harwell failed to respond to FINRA requests for information.
Zachary participated in a private securities transaction by introducing her member firm’s client to an issuer offering a line of credit promissory note through an entity, received a $50,000 commission for the transaction, and failed to provide her firm with prior notice of her participation in the transaction. Zachary engaged in an outside business activity by establishing a separate entity to receive the sales commission for the private transaction, but failed to provide her firm with prompt written notice of her participation in this outside business activity.
Gill engaged in private securities transactions by referring public customers to invest $266,600 in privately held companies without prior written notice to his member firm. Gill borrowed from and loaned firm customers a total of $115,000 contrary to his firm’s procedures prohibiting its registered persons from lending money to, or borrowing money from, its customers. Gill failed to respond to a FINRA request for documents and to appear for an on-the-record interview.
Bank and Bodoh and misappropriated approximately $161,000 in commissions and other payments from Bank’s member firm for their own use. Bank directed his member firm to wire money from a subsidiary to an account Bodoh controlled; Bodah, in turn, transmitted the majority of the funds to an entity Bank controlled and kept a portion for himself. Bank entered false information concerning securities transactions on his firm’s business records, willfully causing his firm to maintain inaccurate books and records. Bank and Bodoh provided false information in response to FINRA requests for information, and provided false and misleading testimony under oath in a FINRA on-the-record interview.
Bodoh participated in private securities transactions without notifying his member firm or obtaining its approval.
Meyer withdrew approximately $553,000 from a customer’s bank account by presenting withdrawal slips to bank tellers on which he wrote “at the customer’s request” and deposited the funds into his personal brokerage account for his own use. In addition, Meyer misappropriated approximately $85,000 from another bank customer by depositing the proceeds of the sale of the customer’s annuity into his personal accounts for his own use. Meyer exercised discretionary authority over a customer’s securities account without her written authorization, did not speak with the customer in connection with every transaction, and did not obtain approval from his member firm to engage in discretionary trading. Meyer engaged in private securities transactions, for compensation, without prior written notice to, or prior written approval from, his member firm. The findings also included that Meyer failed to respond to FINRA requests for information and to appear for a FINRA on-the-record interview.
Artiga engaged in private securities transactions by selling approximately $2.5 million of promissory notes to individuals, for which he received commissions of approximately $157,000. Artiga invested the sale proceeds into a company that was promising purportedly risk-free, high yield investment programs. He engaged in this activity without providing prior written notice, or any notice, to his member firm. His investors ultimately lost more than $2.2 million of the $2.5 million that they had invested.
Brown engaged in a private securities transaction outside the scope of his employment with his member firm. Brown recommended that a customer invest about $200,000 in a security in the form of a note or convertible debenture. Brown promised that the customer would receive a 10 percent return on her investment within ten months, but instead, the company defaulted and the customer lost her entire investment. Brown did not provide the firm with prior written notice of his participation in this transaction, did not obtain approval from the firm to participate in this transaction, did not give the firm the opportunity to record this transaction on its books and records or to supervise his participation in the transaction. Also, Brown failed to respond to FINRA requests for information and documents, and failed to appear for FINRA onthe- record testimony.
Snyder engaged in an undisclosed outside business activity as a limited liability company’s registered agent and manager. Snyder engaged in private securities transactions without prior written notice to, or written approval from his member firm by facilitating investments in working interests in oil and gas wells.
Richard Albert Snyder Jr. : Fined $10,000; Suspended 1 year
Taggart referred customers of a member firm to an investment entity as a potential investment, and these customers purchased the investment entity’s promissory notes. Taggart participated in private securities transactions, failed to provide prior written notice to either of his member firms and failed to receive written permission from the firms to engage in the transactions for which he received compensation.
Craig Michael Taggart : Fined $41,262 which includes disgorgement of $31,262 in commissions; Suspended 6 months
Registered Principal Armitage engaged in unauthorized transactions in a customer’s account without obtaining the customer’s prior authorization. Armitage participated in private securities transactions and failed to provide his member firm with prior written notice of the transactions. Armitage failed to respond to FINRA requests for information.
Geis participated in private securities transactions of related offerings without his member firm’s prior approval. The securities at issue consisted of oil and gas “working interests” and preferred stock. Geis sold unapproved securities in the amount of $975,271 and received commissions of $43,026.
Registered Principal Kahn sold preferred stock shares of a company to investors, in the approximate amount of $127,000, without prior written notice to, and written approval from, his member firm. One investor was an elderly individual who invested $96,000 that she borrowed from a variable annuity that she had purchased through Kahn several years earlier. The company had paid her approximately $11,000 in annual interest when her Individual Retirement Account (IRA) custodian informed her that the company’s preferred shares had no value and were worthless. Kahn executed and submitted his firm’s Private Securities Transactions Certification, in which he falsely certified that he had not participated in any manner in private securities transactions since his employment with the firm.
Kleese participated in private securities transactions outside the scope of his employment with his member firm, for compensation, and failed to provide prior written notice to, or receive approval, from his firm. Also, Kleese engaged in outside business activity and failed to provide his firm with prompt written notice.
Blake engaged in private securities transactions, for compensation, without prior written notice to, or approval from, his member firm. Blake failed to timely respond to FINRA requests for information and documentation.
Christopher Peace Blake : Fined $40,000; Suspended 11 months
The Thompsons offered and sold investments in an unregistered hedge fund and its general partner using representations and sales materials that contained materially misleading statements and omissions of fact. The information that was supplied by the hedge fund manager and used recklessly by the Thompsons to solicit investors contained materially false and misleading statements and omissions concerning, among other facts:
a pending Commodity Futures Trading Commission (CFTC) securities fraud action against the hedge fund manager,
the fund’s theoretical and unproven performance figures,
the speculative nature of the fund’s trading strategy, and
the significant risks associated with an investment in the hedge fund and its general partner.
The Thompsons solicited investors without conducting a reasonable investigation to determine whether the hedge fund and its general partner were suitable investments and without regard as to whether certain investors were capable of evaluating and bearing the risks associated with such investments. The Thompsons failed to disclose to their member firm that they were engaged in private securities transactions for compensation. Thompson Sr. failed to disclose to his firm, in writing, that he received override commissions from the hedge fund and general partner for sales that other firm salesmen made.
Dennis Ray Thompson Sr.: Barred
Dennis Ray Thompson Jr.: No Fine in light of financial status; Suspended 2 years
Nelson participated in private securities transactions, outside the regular course and scope of his employment with his member firm for which he received no compensation, and failed to provide prior written notice to the firm of his proposed participation in these private securities transactions.
Gary Nelson: No Fine in light of financial status; Suspended 3 months
Buchanan misused more than $1,523,000 in customer and non-customer funds when he failed to invest the funds in investor certificates, warrants or any other investment. Buchanan provided investors with documents falsely representing confirmation of purchases. Buchanan participated in private securities transactions without prior written notice to his member firms. Buchanan failed to respond to FINRA requests for information.
Yankie participated in a private securities transaction and failed to give prior written notice to, and receive prior written approval from, his member firm to engage in the transaction. Also, Yankie borrowed $60,000 from a public customer contrary to his member firm’s general prohibition from borrowing money from customers (the firm permitted borrowing from an immediate family member, which this customer was not).Yankie failed to respond to FINRA requests for documentsand to appear for an on-the-record interview.
Russell engaged in private securities transactions outside the regular course and scope of his employment with his member firm and failed to provide notice to, or receive approval from, his firm. Russell completed his firm’s annual compliance questionnaire and incorrectly answered “no” in response to questions regarding selling securities away from the firm. Russell received $1,248,750 from public customers for investment in promissory notes issued by another individual; the individual defaulted and the customers received none of their original investment.Russell failed to respond to FINRA requests for information.
Locrotondo engaged in private securities transactions without prior written notice to, or written consent from, his member firm.
Stephen Thomas Locrotondo : Fined $5,000; Suspended 6 months in all capacities; Ordered to disgorge $62,500 plus interest in partial restitution to a customer.
Cherry participated in the sale of Universal Lease Programs (ULPs) to public customers, received $32,495.76 in commissions, and failed to provide written notice to his member firms and obtain written approval from the firms to participate in private securities transactions. Cherry submitted an annual regulatory questionnaire to one of his member firm s that contained a statement that he had not sold or solicited any investment products or non-securities investment products, which was false.
David Nelson Cherry: Fined $37,500 (includes $32,495.76 in disgorgement of commissions); Suspended 7 months in all capacities
Before my second career as a lawyer, I was the third generation of my family in the wine and liquor industry. In 1981, I started law school; and in 1982, I was hired as a law student in Smith Barney, Harris & Upham's Legal Department. After I graduated law school, I was a regulatory lawyer with the American Stock Exchange and then with the NASD (now... Read On
