Enforcement Actions
Financial Industry Regulatory Authority (FINRA)
CASES OF NOTE
2009
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.
November 2009
Lisa Ann Tomiko Nouchi and Marc Winters
E102004083705/E102004083704/November 2009

On appeal from an Office of Hearing Officers Decision (OHO), the National Adjudicatory Council (NAC) imposed the sanctions based on findings that Nouchi and Winters caused their member firmsí books and records to contain inaccurate information about customers selling Class B mutual fund shares by entering sales charge waivers for those customers that falsely represented that these customers were disabled.

Lisa Ann Tomiko Nouchi: Fined $10,000; Suspended 90 days

Marc Winters: Fined $19,882; Suspended 90 days

 

Tags:  Class B Shares    Disabled    NAC     |    In: Cases of Note : FINRA
Bill Singer's Comment

The NAC's Decision is commendable for showing a meaningful effort to truly understand the nuances of this case. There are times when the most intelligent ruling falls under the "Yes, but . . ." line of cases. This appears to have been one such instance. On Page 5 of the NAC Decision, it is noted by the Panel that

We find the nature of the customer order information that Nouchi falsified to be an aggravating factor in this case. It is essential for registered representatives to provide their firms with accurate information. See Charles E. Kautz, 52 S.E.C. 730, 734 (1996) (stating that "[t]he entry of accurate information on official Firm records is a predicate to the NASD's regulatory oversight of its members [and] lilt is critical that associated persons, as well as firms, comply with this basic requirement"). By miscoding order tickets, Nouchi deliberately ignored this fundamental responsibility. It also is aggravating that Nouchi had no good faith belief that her falsification ofthe order tickets was authorized by UBS. Indeed, Nouchi consistently has admitted throughout the proceedings that she knew her conduct was improper, and there is no evidence that she had any belief that she had authority to miscode the order tickets. In addition, we find it aggravating that Nouchi's misconduct lasted for a period of approximately six months.

There are, however, several factors that when considered together lead us to conclude that the sanctions for Nouchi's violations should fall within the lower range ofthe Guidelines. First, it appears that Nouchi's violations were motivated in part by her desire to assist her clients, some ofwhom needed monei immediately, but could not redeem the mutual funds at issue without incurring a penalty. 1 Second, Nouchi consistently accepted responsibility for her actions. I3 Third, we have considered the fact that Nouchi's 21 violative transactions generated less than $5,000 in CDSC waivers. 14 Finally, the Hearing Panel found Nouchi's expression of sincere remorse to be mitigating, and we do not disturb this finding.15

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