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.
Morgan Stanley & Co. Incorporated AWC/2007011134001/December 2009
Branch offices utilized communications that failed to provide either adequate balancing language or a sound basis for evaluating the information provided. The communications contained statements that were promissory of successful investment results and contained exaggerated, misleading or unwarranted statements. The firmís communications contained oversimplified and incomplete comparisons, failed to disclose the member firmís name, and failed to provide required Securities and Exchange Commission (SEC) or Securities Industry Protection Corporation (SIPC) disclosures in conformance with SEC and/or SIPC rules.
Morgan Stanley & Co. Incorporated: Censured; Fined $120,000
Peter Christian Dunne OS/2007011937002/December 2009
Dunne posted electronic messages on an Internet message board concerning a company which constituted advertisements on his member firmís behalf. Dunne posted the advertisements without a registered principalís prior approval and none of the advertisements named the firm or reflected Dunneís relationship with the firm.
The advertisements constituted purchase recommendations for the company and
failed to provide, or offer to furnish upon request, available investment information supporting each recommendation;
failed to disclose that
Dunneís firm was a market maker in the company;
that the firm and/or its officers or partners had a financial interest in the company,
the nature of the financial interest; and
failed to provide a fair and balanced assessment, referring only to the companyís upside without any disclosure of the risks.
Dunne opened securities brokerage accounts at other firms, failed to notify the firms in writing that he was associated with other firms, and failed to notify his member firms in writing that he opened accounts at other firms.Dunne falsely represented to his member firms that he had no outside brokerage accounts and did not use or participate in chat rooms,message boards or other unapproved electronic communications.
Peter Christian Dunne: Fined $25,000; Suspended 1 year
TransAmSecurities, Inc. AWC/2008011723701/December 2009
The Firm failed to establish, maintain and enforce a supervisory system and procedures reasonably designed to preserve and review its business-related electronic communications. The Firmís electronic media storage system was deficient in that electronic business-related communications could be deleted from the system prior to being preserved in the requisite non-rewriteable, non-erasable format.
The Firm allowed its associated persons to use outside email addresses to send or receive electronic business-related communications, but the firmís system did not preserve communications from outside email addresses unless the communications were sent from or forwarded to a firm-provided email address, and the firm did not require its associates to route all business-related communications from outside email addresses through its system. The Firm did not have written procedures in place to ensure that its associated persons were routing all electronic business-related communications sent from or received in outside email addresses through the system.
Fortune Financial Services, Inc. and Brian Lee Daniels (Principal) AWC/2008011697201/November 2009
Acting through Daniels, the Firm
failed to maintain and preserve all of its business-related electronic communications;
did not have a system, written procedures or policies relating to the retention of electronic communications in place and, as a result, failed to maintain and preserve electronic communications;
increased the number of registered representatives associated with the firm and failed to file an application with FINRA and obtain FINRAís approval for the material increase in sales personnel;
conducted business at locations that constituted branch offices that were not registered with FINRA; and
failed to establish and maintain a supervisory system, and failed to establish, maintain and enforce written supervisory procedures that were reasonably designed to achieve compliance with all applicable laws, rules and regulations regarding business-related electronic communications, material business expansions, proper registration of branch offices, a principal approval of advertisements prior to use, and maintaining records of the firmís Web sites and advertisements.
Fortune Financial Services, Inc. Censured; Fined $125,000; Prohibited for 90 days, commencing five business days after issuance of the AWC, from registering any associated persons, except for individuals who perform only compliance and/or supervisory duties. Termination of this prohibition is contingent upon satisfaction of the following undertakings:
The firm shall, within 10 business days after the end of the 90-day prohibition, certify in writing to FINRA that it complied with the prohibition, and,
within 90 days of the issuance of the AWC, the firm shall certify to FINRA in writing that the firm currently has systems and procedures in place that are reasonably designed to achieve compliance with laws, rules and regulations concerning the preservation of electronic mail communications.
Brian Lee Daniels (Principal): Fined $25,000; Suspended 9 months in Principal capacity only
failed to record and maintain the time of receipt for customer orders on brokerage order memoranda, and mismarked trades as solicited or unsolicited;
did not preserve instant message communications in connection with the firmís securities business;
failed to establish,maintain and enforce a supervisory system, including written supervisory procedures with respect to supervision of registered representativesí and other associated personsí activities; trading, including order tickets, order entry, best execution and trade review; review and retention of instant messages; and branch office activities;
had a deficient supervisory system regarding trades passing through the firmís inventory account, and was unable to readily identify and match off setting transactions related to particular customer orders requiring multiple executions, and consequently, was unable to compare, and did not compare, the customerís price to the firmís costs to ensure than any markups or markdowns were fair and reasonable. (Since the firm did not capture and record when orders were received, it was unable to adequately review the quality of the executions of its customer orders, and failed to ensure that it accurately reported its trading capacity to the TRF).
Legend Merchant Group, Inc: Censured; Fined $150,000; Required to certify that it has reviewed the adequacy of its
procedures regarding recording and maintaining required memoranda of customer orders, including, but not limited to, times of receipt of orders; ensuring that order memoranda are accurate, including, but not limited to, designations of orders as solicited or unsolicited; preservation and review of electronic correspondence; each area of the firmís business; ensuring, in connection with transactions passing through the firmís inventory account that sales charges are fair and reasonable based on the firmís contemporaneous costs, the quality of the executions of customer orders, including the timeliness of executions, and that the firm correctly reports its trading capacity to the TRF; clear delegation of supervisory responsibilities and reviews to ensure the supervisors are performing their assigned responsibilities, including, but not limited to, with respect to trading, including supervisory review of order tickets, order entry, and best execution, review of electronic correspondence, including, but not limited to, instant messages, and branch office and non-branch office activities; established systems and procedures reasonably designed to achieve compliance with applicable securities laws, regulations and FINRA rules concerning the aforementioned activities.
Wadsworth Investment Co., Inc. and William Frederick Wadsworth (Principal) OS/2006003806202/November 2009
The Firm and Wadsworth
permitted an individual to act as an unregistered principal and permitted individuals to be registered as General Securities Representatives or Investment Company and Variable Contracts Products Representatives through the firm without being active in the firmís securities business;
sent written communications to customers and prospective customers containing language that failed to provide a sound basis for evaluating the claims within the communications, and that omitted material information and/or contained unwarranted statements;
failed to record a
general securities principalís approval on mutual fund and variable
completed and signed a materially inaccurate FINRA
Information Request form; and
provided inaccurate information to FINRA
Acting through Wadsworth, the Firm failed to
establish and , maintain a supervisory system and written supervisory procedures reasonably designed to achieve compliance with applicable securities laws and regulations;
conduct annual reviews of any of the business in which the firm engaged
review registered representativesí business-related email correspondence with customers;
establish any written procedures providing for the review of its registered representativesí electronic correspondence;
designate and specifically identify at least one principal to FINRA who would establish, maintain and enforce a system of supervisory control policies and procedures, a
establish, maintain and enforce written supervisory controlpolicies and procedures
required information on new account forms, and on mutual fund and
variable annuity applications.
Acting through Wadsworth, the Firm
maintained forms of various types that were blank except for customersí
filed inaccurate Financial
and Operational Combined Uniform Single (FOCUS) reports setting forth
the firmís net capital position that was accurate by failing
to maintain accurate financial books and records; and
did not file an
application with FINRA for approval of an ownership change until after
the ownership change took place.
The Firm failed to
implement anti-money laundering compliance procedures, including independent testing and provide training;
enforce the Customer Identification Procedures;
retain electronic communications; and
failed to provide written confirmations to customers at or before the completion of securities transactions acted as an unregisteredmunicipal securities broker-dealer.
The Firm executed municipal securities transactions without creating and retaining order tickets to properly recordthe transactions, and failed to report municipal securities trades to the MSRB.
Wadsworth Investment Co., Inc.: Censured; Fined $100,000 ($77,250 jt/sev with William Wadsworth); Required to hire an independent consultant to review its policies,
systems, procedures (written and otherwise) and training related to its
violations of federal securities laws, FINRA and MSRB rules, and
implement the consultantís recommendations. William Frederick Wadsworth: Fined $77,250 jt/sev with the Firm; Suspended 1 month in all capacities; Suspended 1 year in Principal capacities only.
Anthony Basir Shakoor AWC/2007009449201/October 2009
Shakoor posted messages to an electronic bulletin board using the email his member firm assigned to him, which identified him to other users as an employee of his member firm. Since the messages discussed securities, identified Shakoor as a firm employee and were disseminated to the public, he was required to obtain a firm principalís approval but failed to do so. Shakoor failed to disclose material information in posted messages and/or the messages were misleading because they failed to include a sound basis for the securities, and failed to disclose that he held positions in some of the securities for which he made recommendations. Shakoor posted messages that contained claims that were false, exaggerated, unwarranted and/or misleading; and posted messages containing recommendations without providing a reasonable basis, and predictions or projections of future stock.
Anthony Basir Shakoor: Fined $10,000; Suspended 6 months in all capacities
By way of preamble, this blog is about Goldman, Sachs & Co. and the Financial Industry Regulatory Authority's ("FINRA") Board of Governors. This is about a multinational investment bank and financial services company. This is about Wall Street's largest self-regulatory-organization. This is about a sexual discrimination Class Action f... Read On