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.
June 2010
Garden State Securities, Inc.
AWC/2008011696501/June 2010

Garden State 

  • offered and sold unregistered securities that were not exempt from registration to customers;
  • made commission payments to representatives in branch offices through nonregistered entities; and
  • failed to make proper use of the Federal Trade Commission’s national do-not-call registry, permitting its registered representatives to cold-call persons on that list;

Acting through a registered principal, the Firm prepared and used a telemarketing script and issued research reports in the form of newsletters that contained exaggerated, misleading or unwarranted statements and failed to disclose required information. The script contained statements regarding the purported aggregate performance of the firm’s individual stock recommendations, but failed to include past years’ performance information and a description of the risks associated with an investment in stock, including the risk of loss, and the script touted the successful performance of one of its stock recommendations and suggested that similar opportunities would be available in the future.

The Firm’s newsletters constituted research reports, which, among other things, made oversimplified, exaggerated, unwarranted and misleading statements regarding its stock recommendations. In addition, The research reports contained or referenced performance charts that provided oversimplified and incomplete presentations of the firm’s performance track record. Moreover, the research reports did not adequately disclose any ownership interests and material conflicts of interest concerning its recommendations, and did not adequately disclose the meaning of the firm’s “buy,” “hold” and “sell” ratings. Furthermore, the research reports contained ratings and price targets for securities without including a line graph of the securities’ daily closing prices for the required period and without disclosing the risks that could impede achievement of the price targets.

Garden State Securities, Inc.: Censured; Fined $55,000
Tags:  Unregistered Securities    Scripts    Do Not Call     |    In: Research and Advertising
Bill Singer's Comment
This reminds me of those baseball and football games where the teams wear throwback uniforms of a prior generation.  With all the references to unregistered securities, non-registered payors, telemarketing scripts, touting, etc., this took me back to the '80s and '90s. 
January 2010
Kevin Patrick Brennan
AWC/2007007358604/January 2010

Registered Principal Brennan failed to reasonably supervise and respond to warning signs that registered representatives were conducting and operating a securities business from an unregistered branch office without supervision. The representatives

  • improperly solicited potential customers by telephone in connection with the offer of securities,
  • made false representations, including unwarranted price predictions,
  • omitted material facts, and
  • used misleading telemarketing scripts that a registered principal had not approved.

Brennan failed to timely amend his Uniform Application for Securities Industry Registration or Transfer (Form U4) to disclose material information.

Kevin Patrick Brennan: Fined $15,000; Suspended 6 months in Principal capacity only; Undertakes to cooperate with any and all FINRA investigations
Tags:  Supervision    Unregistered Office    Scripts    Telemarketing     |    In: Cases of Note : FINRA
Bill Singer's Comment
An interesting aspect of this case is the "undertaking" to cooperate with any and all FINRA investigations. Although once a rare component of settlements, we are seeing an increase in this obligation. 
Enforcement Actions