Enforcement Actions
Financial Industry Regulatory Authority (FINRA)
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.
December 2010
Daniel Lee Kurtz
AWC/2009020618301/December 2010

Kurtz created a false document, which he labeled a “Contract Investment Summary,” that showed a balance of $9,193.36 in an account when the actual value at the time was less than $500, and placed his firm’s logo on the document without the firm authorizing his use of either the form of the document or the information contained in it. The false document was an intentional misrepresentation of the value of a 529 plan account established for Kurtz’ relative’s benefit.

Kurtz used the document when an opposing counsel in Kurtz’ divorce case informally, not as part of the divorce proceeding, inquired about the value of the 529 plan account, and Kurtz may not have had an obligation to respond to the inquiry.

Kurtz had withdrawn funds from the account to pay for household expenses and provided the document to the counsel in a manner that suggested that it was an authentic and official document of his firm.

Daniel Lee Kurtz : Fined $5,000; Suspended 6 months
Bill Singer's Comment

This one is certainly an oddball case.  On the one hand, I fully appreciate both FINRA and the employer firm's concern about the fabrication of the 529 plan documentation.  However, given that it was, essentially, Kurtz's plan and that the false document was provided to hiw wife's divorce lawyer in response to an "informal" request, I'm not exactly sure that the remedy here is for FINRA to suspend the guy for 6 months under the totality of the circumstances.  I'm still a bit uncomfortable with FINRA viewing this as a regulatory matter but not totally. Okay -- we'll call this a "push" and leave it at that.

September 2010
Michael Aaron Brady
AWC/2010022037401/September 2010
Brady converted a total of $194,424.81 from customers who entrusted him with money to invest and, instead, misappropriated the funds for his own personal use. One customer gave Brady over $90,000 to invest in an Individual Retirement Account (IRA) and in a Section 529 college tuition plan account but Brady used the money for personal purposes. In one instance, Brady created a fictitious account statement that falsely showed that the customer’s account increased from about $37,000 to over $48,000 in one year; but, in fact, Brady never invested the customer’s money and had converted over $56,000 of the customer’s money to his personal use. In another instance, a customer surrendered a variable annuity and paid the proceeds to Brady to re-invest in another variable annuity; Brady did not do so and misappropriated the funds, which exceeded $41,000.
Michael Aaron Brady : Barred
August 2010
Raymond James Financial Services, Inc.
AWC/2007010730701)/August 2010
The firm failed to enforce its written supervisory procedures to achieve compliance with suitability requirements as they relate to the sale of Internal Revenue Code Section 529 college savings plans (529 Plans). The firm’s written supervisory procedures required its registered representatives, including producing branch managers, to submit, at the time of a client purchase of a 529 Plan, a Form #1529 (529 Plan Account Client Disclosure Form) as well as the 529 plan application to an appropriately licensed principal to ensure, among other things, that all 529 plans offered outside of a client’s state of residence were suitable in light of state tax laws, fund performance, commissions and plan fees; and the firm’s compliance department relied on the branch to forward the forms to it for tracking. Some firm branch managers functioned as municipal securities principals, reviewing and approving 529 plan transactions, while failing to be registered and/or qualified in an appropriate municipal securities principal capacity.
Raymond James Financial Services, Inc. : Censured; Fined $150,000
Tags:  529 College Savings Plan     |    In: Cases of Note : FINRA
Enforcement Actions