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 2009
First Financial Equity Corporation and George Edward Fischer (Principal)
OS/2006004707201/December 2009
Acting on the firm’s behalf, Fischer
  • approved registered representatives’ participation away from the firm in raising capital for a company by selling its stock, but imposed conditions on their participation and required that the stock certificates not bear restrictive legends;
  • failed to take reasonable steps to monitor or determine compliance with these conditions, including conducting an inquiry of “red flags” that suggested violations of federal securities laws; and
  • Fischer failed to detect and prevent the representatives’ distribution of unregistered securities in their capacity as underwriters.
Although Fischer was aware these transactions constituted private securities transactions for compensation, he did not cause the firm to record the transactions on its books and records and supervise them as if they were firm transactions. Further, Fischer failed to supervise the registered representatives in a manner reasonably  designed to achieve compliance with applicable laws, rules and regulations. Acting through Fischer, the Firm failed to supervise and record the representatives’ private securities transactions.

First Financial Equity Corporation: Censured; Fined $20,000

George Edward Fischer: Fined $20,000; Suspended 15 business days in Principal capacity only

Bill Singer's Comment

As holiday time nears, pass around the fruitcake, enjoy the egg nog, and pull out your festive AML policies and procedures and make sure that they are fully implemented and being followed.  You should also cross-reference your WSPs to make sure that there aren't any differences.

Also, FINRA is apparently on a tear about fraudulent private placements.  Make sure that you have a comprehensive punch-list for such offerings, and be particularly attentive for improperly extended mini-max offerings, non-compliant escrow accounts, and receiving payments directly to the firm from customers.

Enforcement Actions