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.
November 2010
William Kevin Harrison
AWC/2008015740301/November 2010

Harrison transferred customer funds out of bank accounts linked to the firm’s securities accounts into a single online account at another broker-dealer.

Harrison transferred funds that totaled at least $6.5 million belonging to multiple customers. Harrison established the online account in a relative’s name, but he had sole control over the online account and conducted significant options trading in the account, using the customers’ funds and engaging in the trading without the affected customers’ knowledge or consent. Harrison subsequently transferred some of the funds out of the online account to unknown destinations.

Harrison failed to respond to FINRA requests for information and failed to appear for a FINRA on-therecord interview.

William Kevin Harrison : Barred
Tags:  Options    Conversion     |    In: Cases of Note : FINRA
Bill Singer's Comment

How do you steal $6.5 million from numerous customers without attracting attention?  Wow, pretty impressive stuff -- too bad Harrison didn't use his powers for good.  Of course, in a fairly perverted sort of way, I'm wondering whether he made any money trading options with other people's money.

Gee -- what a great title for a book: How to trade options profitably with other people's money.

October 2010
NWT Financial Group, LLC, David Eric Niederkrome (Principal), and Stephen Rudolph Rodgers (Principal)
AWC/2009016295901/October 2010

Acting through Rodgers,NWT:

  • allowed opening options transactions in accounts without signed options agreements;
  • allowed accounts to day-trade prior to firm approval;
  • failed to evidence that accounts had been approved for daytrading;
  • failed to evidence that customers had been furnished a risk disclosure statement prior to engaging in day-trading activities.

Each of the above noted accounts came to the firm as part of a mass transfer of accounts from a former member firm.

Acting through Rodgers and Niederkrome, the firm failed to implement portions of its supervisory control procedures, in that Rodgers and Niederkrome failed to test and verify that the firm’s supervisory control procedures and policies were reasonably designed to achieve compliance with applicable rules; and, prepare and submit a report to senior management detailing the firm’s system of supervisory controls, the summary of the test results, significant identified exceptions and any additional or amended supervisory procedures created in response to the test results.

Rodgers and Niederkrome failed to complete an annual certification pursuant to NASD Rule 3013(b), verifying that the firm had in place processes to establish, maintain, review, test and modify written compliance policies and written supervisory procedures to comply with applicable securities rules and regulations.

Censured; Fined $10,000 jt/sev with Niederkrome and Rodgers; Fined additional $5,000 jt/several with Rodgers

David Eric Niederkrome: Censured; Fined $10,000 jt/sev with NWT and Rodgers;

Stephen Rudolph Rodgers: Censured; Fined $10,000 jt/sev with NWT and Niederkrome; Fined additional $5,000 jt/sev with NWT

Tags:  Options    Day Trading    Annual Compliance Certification     |    In: Cases of Note : FINRA
March 2010
George Albert Montes
AWC/2005000346105/March 2010
Registered representatives at Registered Principal Montes' member firm who used options strategies in their customer accounts, repeatedly became subject to active account surveillance and appeared on compliance department spreadsheets when their customer accounts sustained losses from voluminous stock and options transactions. Despite being made aware of “red flags” indicating that unsuitable and excessive trading was occurring in customer accounts, Montes failed to take reasonable supervisory steps to respond to the “red flags” with a view toward preventing the unsuitable and excessive trading and did not adequately investigate the representatives’ options trading.
George Albert Montes: Fined $15,000; Suspended 1 year in Principal capacity only; Required to requalify by examination before acting in any principal capacity with a FINRA member.
Tags:  Suitability    Supervision    Options     |    In: Cases of Note : FINRA
Bill Singer's Comment
Another in an ever increasing line of cases in which Supervisors/Principals are being held accountable for failing to reasonably supervise.
Enforcement Actions