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.
Scott Stafford McLean (Principal) AWC/2010024607501/November 2011
McLean recommended to a customer that he transfer his existing mutual
funds to McLeanís member firm, and told the customer that, if he became
dissatisfied, he could liquidate the account at no expense. Shortly thereafter,
the customer accepted McLeanís recommendation and transferred the mutual funds.
Thereafter, the customer had suffered losses in those mutual fund
investments and wanted to liquidate his holdings. Accordingly, McLean reimbursed the
customer $252 for the charges he incurred in selling the mutual funds, thereby
improperly sharing in the customerís losses. The firmís written procedures expressly prohibited registered representatives from
sharing in any benefits or losses with clients resulting from securities
Scott Stafford McLean (Principal): Fined $5,000; Suspended 1 business days
Jason Forsythe Jacobs AWC/2010022262601/September 2011
Jacobs attempted to share, directly or indirectly, in the profits and/or losses of a customer account his member firm carried without his firmís and the customerís prior written authorization. Jacobs made trading errors in the customerís account and in an attempt to correct the losses that resulted from the errors, he began engaging in short-term short sale activity that resulted in further losses. Rather than report his concerns to his firm, Jacobs attempted to avoid a customer complaint by depositing funds, totaling approximately $13,398.80, into the customerís account.
Jason Forsythe Jacobs : FIned $10,000; Suspended 45 days
James Spottswood Gibson AWC/2009019827801/August 2011
Gibson met with customers of his member firm to discuss their joint securities account, which had sustained losses. At the meeting, Gibson gave them a check for $10,000 drawn against a personal bank account Gibson owned. In issuing the check, which the customers negotiated, Gibson shared in losses the customers had sustained in their joint account at Gibsonís firm.
James Spottswood Gibson: Fined $5,000; Suspended 10 business days
Simha borrowed approximately $51,000 from customers at his member firm in order to complete renovations on his house.
The loans were not reduced to writing and had no repayment terms; the customers had been Simhaís friends for many years, and one was his relative. The firm had a policy prohibiting representatives from borrowing money from customers; one of the loans was repaid before Simha disclosed it to the firm and the other loans have since been forgiven by the customers.
Simha sent an email to a former customer requesting a share of the profits that were made in the customerís account while the account was with the firm. In that email, Simha represented that FINRA was auditing the customerís account, but this was not correct; the client never sent Simha the share of the profits he requested.
Prakash Devendranath Simha : Fined $7,500; Suspended 30 business days
Searle & Co. and Robert Southworth Searle (Principal) AWC/2010022352301/July 2011
Acting through Searle, the Firm shared approximately $326,000 worth of profits in the account of a customer of another FINRA member firm. Neither the firm nor Searle contributed financially to the customerís account; and, therefore, neither could share in the profits in direct proportion to their financial contributions to the account.
The Firm failed to establish, maintain, and enforce adequate WSPs related to sharing in profits and losses in FINRA member firmsí customer accounts.
The SEC charged 15 broker-dealers with violating certain recordkeeping provisions of the Securities Exchange Act and with failing reasonably to supervise with a view to preventing and detecting those violations. Additionally, the SEC charged affiliated advisor DWS Investment Management Americas, Inc. with violating certain recordkeeping provisions... Read On