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.
Amir Aqeel OS/2008012703401/December 2011
In completing life insurance policy applications, Aqeel placed fictitious electronic funds transfer account numbers on the accounts of customer applicants that he knew were incorrect and submitted the applications for further processing; the fictitious numbers were actually variations of Aqeelís personal checking account number. Aqeel forged two customersísignatures on electronic signature authorization forms, bank authorization forms and/or acknowledgement forms, in completing their life insurance policy applications, without their knowledge or authorization.
Based on the submission of the applications, Aqeel received credit towards his compensation; the policies subsequently lapsed due to invalid account numbers.
Aqeel created a credit guarantee document purporting to be a fully executed and authenticsurety bond for $12,500,000 by including fictitious information, and used the documentin an attempt to secure funding for the development, ownership and management of a hotel project by an entity, and Aqeel was paid approximately $155,000 as a finderís fee.
Aqeel failed to timely respond to FINRA requests to appear for on-the-record testimony
Scott Andreu Roges AWC/2010024280601/December 2011
Roges falsified a customerís signature without the customerís
knowledge or consent in an
attempt to correct the customerís social security number and
beneficiaryís birth date on
an amendment to a fixed life insurance policy. The member firmís
WSPs specifically prohibited registered representatives from
falsifying and/or forging
customersí signatures on transaction documents and/or other
Scott Andreu Roges: Fined $5,000; Suspended 30 days
Edgar Rhodes Hauser Jr AWC/2010023178101/November 2011
At Hauserís request, firm customers borrowed a total of $202,000 from the cash value accumulated in whole life insurance policies that Hauser previously sold to them. Hauser then borrowed the funds from these customers, pursuant to secured (as to two of the loans) and unsecured (as to one of the loans) promissory notes providing for annual interest. Hauser has not made interest or principal payments on the notes.
Hauser's firmís WSPs prohibit associated persons from engaging in borrowing or loaning funds with a customer, unless the customer is an immediate family member and the firm provides prior written approval; none of the customers from whom Hauser borrowed funds were members of Hauserís immediate family, and Hauser did not seek or receive prior approval for the loans.
Christensen sold approximately $650,000 in a companyís promissory notes to customers without providing his member firm with written notice of the promissory note transactions and receiving the firmís approval to engage in these transactions.
Based upon expected interest payments from the promissory notes, some of the customers also purchased life insurance policies from Christensen and another registered representative the firm employed. These customers expected to use the promissory note interest payments to pay for the life insurance premiums.
Christensen received direct commissions from the company related to the sale of the promissory notes to customers and received commissions from the sale of life insurance products to the customers, who intended to fund those policies with the interest payments from the promissory notes.
The company defaulted on its obligations and the customers lost their entire investment. The customers who also purchased life insurance based upon the expectation that they would receive interest payments from their investment relinquished their policies and the firm compensated them for the premiums paid, but the customers did not receive any reimbursement for the investments in the company that sold the promissory notes.
Christensen completed a firm annual compliance questionnaire, in which he falsely stated that he had not been engaged in any capital raising activities for any person or entity; had not received fees for recommending or directing a client to other financial professionals; had not been personally involved in securities transactions, including promissory notes, that the firm had not approved; and had not assisted a client with an application for investments not available through the firm or contracted or otherwise acted as an intermediary between a client and a sponsor of such investments without the firmís prior approval.
Finally, Christensen failed to respond to FINRA requests for documents and testimony.
Sheedy engaged in private securities transactions without providing written notice to, or obtaining written approval from, his member firm.
Sheedy facilitated two firm customersí investments in securities issued by an entity in the form of investment agreements.Sccording to the investment agreements the entity issued, the company invested in and brokered life settlement contracts. Sheedy participated in the customersí investments by reviewing the customersí investment agreements, providing the customers with wiring instructions for the issuer, providing status updates to the customers regarding their investments and telling the customers to call him if they had any questions about their investments.
Sheedy utilized an unapproved personal email account to communicate with the customers.
The customers invested a total of $350,000, and pursuant to the terms of the customersí investment agreements, the customers were to receive return of their principals plus a total of $42,000 within five days of the end of their investment period for which certain life settlement contracts were invested. Neither of the customers received the return of their investment principal or the promised investment returns. All of their funds were lost all of their funds were lost.
Daniel Scott Sheedy: Fined $25,000; Suspended 2 years
Dustin Kent Jefferies (Principal) AWC/2009018919701/March 2011
Jefferies signed or traced customersí signatures on applications to purchase life insurance or critical care insurance through an electronic application system available at his member firm, without the customersí knowledge or consent and contrary to firm policy. Jefferies submitted life insurance applications for fictitious customers and, along with creating fictitious customer names and addresses, he created fictitious social security numbers, driverís license numbers and other information about the purported customers. Jefferies submitted these applications for fictitious customers in order to give the appearance that he was meeting his required production for insurance policies sold. When Jefferies submitted each of the fictitious applications, he listed fictitious credit card numbers made up of all zeros for the initial premium payment, knowing that the credit card would be rejected with no payment being collected or the customers billed, while at the same time, his firm would give him immediate credit for submitting a new insurance policy.
When questioned by his manager about the applications, Jefferies initially denied having any knowledge of the practice and when later pressured by his manager, he then offered that newer agents may have been engaged in the activity. Only after his manager noted that almost all of the applications with zeros for credit card numbers were submitted from his office that Jefferies admitted to his misconduct, stating he did so because the applications would be credited to his production numbers more promptly that month. In addition, Jefferies also admitted that he had submitted applications using fictitious names and other information.
Dustin Kent Jefferies (Principal): Fined $10,000; Barred in Principal capacity only; Suspended 1 year in all capacities
Griffin borrowed a total of $10,000 from a friend who was also a customer of his member firm through loans against the customerís life insurance policy, contrary to his firmís written supervisory procedures that required written approval from the firm before an employee could borrow money from any customer, including friends. Griffin supplied the customer with the necessary paperwork and asked the customer not to tell anyone at his firm about the loan. Griffin failed to obtain his firmís pre-approval in writing of the loans before accepting the loans. Also, Griffin provided false responses during firm face-to-face annual compliance interviews and on questionnaires regarding borrowing or lending money to clients.
Robert John Griffin : Fined $7,500; Suspended 7 months
In a recent FINRA regulatory settlement, a Barclays research analyst got a job offer from an issuer he was covering. FINRA makes the case that the job offer posed a conflict and should have been disclosed to the employer. Fair enough -- I agree; however, when considering FINRA's charges against the analyst, I was reminded of a similar scenario involving... Read On