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 2010
Dwight John Schaefer
AWC/2008012636401/December 2010
Despite knowledge of his member firmís change in policy regarding the sale of equity indexed annuities that all business be sold and processed through the firm and representatives were only to sell specific annuities offered by firm-approved annuity companies, Schaefer sold annuities to customers, including firm customers, and did not sell or process the transactions through his firm and did not provide written notice to the firm of his intention to engage in outside business activities. The sales totaled approximately $1,856,597, and Schaefer was compensated approximately $93,163. Schaefer completed an annual questionnaire in which he falsely answered that he did not offer or sell equity indexed annuities to his clients.
Dwight John Schaefer: Fined $5,000; Suspended 4 months
Tags:  Annual Compliance Certification    EIA    Annuity     |    In: Cases of Note : FINRA
Mark William Beggs
AWC/2009018374401/December 2010
Beggs engaged in outside business activities, in that he acted on behalf of an insurance company not affiliated with his firm and engaged in sales to customers of indexed deferred annuities involving a total principal investment of $112,000, for which he was compensated approximately $10,080 in commissions. Beggs accepted compensation from the insurance company for the sales without giving his firm prompt written notice.
Mark William Beggs : Fined $5,000; Suspended 20 business days
Tags:  Annuity    Insurance     |    In: Cases of Note : FINRA
Bill Singer's Comment
These outside business activity cases involving annuity sales seem to be increasing.  You might want to consider that FINRA is focused on these matters before you run to make the sale and pocket the bucks.
November 2010
Derrick Ray Shields
AWC/2008015144801/November 2010

Shields assisted a relative, an unregistered person at the time, with the sale of a fixed and variable annuity. Shields signed and submitted the customerís annuity application to his member firm and the annuity company after discussing the matter with firm principals; Shields also signed the firmís new account application as the customerís introducing agent, thereby facilitating his relativeís violation of registration rules.

Shields certified on the annuity application that he had explained the contract to the customer even though he knew he had not done so. Shieldsí relative became registered with the same firm and the day after he became registered, the annuity transaction settled. Shields later received a commission payment for the annuity sale from his firm for approximately $50,500, he shared the payment with his relative.Shields did not disclose to the firm that he shared the commission payment, and from the time his relative became registered with the firm until the termination of Shieldsí association with the firm, it was his relative, not Shields, who was the registered representative responsible for advising the customer on the annuity and for servicing the customerís account in which the annuity was held at the firm. In addition, Shields failed to take any steps to correctly disclose on the firmís books and records that his relative was the responsible representative, rendering the firmís records inaccurate.

Derrick Ray Shields: Fined $10,000; Suspended 3 months
Tags:  Annuity    Unregistered Person     |    In: Cases of Note : FINRA
Bill Singer's Comment
You know the old saying about never getting involved in any business deals with friends or family?  Hey, just goes to show you the wisdom of some of those old nuggets.
Ryan Beck & Co. nka Stifel Nicolaus & Company, Incorporate
AWC/2008015700901/November 2010

The Firm failed to establish an effective supervisory system and written supervisory procedures reasonably designed to ensure that discounts were correctly applied on eligible UIT purchases. The Firmís written supervisory procedures had limited information regarding UIT sales charge discounts, and omitted the fact that certain UIT sponsors permitted exchange discounts for purchases made with the proceeds from a UIT holding of another sponsor; this was particularly relevant because the firmís UIT business was almost exclusively with UIT sponsors that provided this sales charge discount.

The Firm's procedures lacked substantive guidelines, instructions, policies or steps for brokers, trading personnel or supervisors to follow to determine if a customerís UIT purchase qualified for, and received, a sales charge discount. The broker and firm compensation diminished when the customer received a sales charge discount and, because of this, the firm needed to be particularly diligent in providing guidance to brokers, supervisors and trading personnel on UIT sales charge discounts.

The Firm failed to provide eligible customers with appropriate discounts on both UIT rollover and breakpoint purchases. The firm failed to identify and appropriately apply sales charge discounts in certain top-selling UITs and, as a result, the firm overcharged customers in the sample approximately $20,000.

In addition, the Firm sold UITs that imposed a deferred sales charge that was generally charged upon redemption if a customer sold a UIT before the deferred sales charges were imposed. Moreover, the Firm failed to ensure that its customersí UIT purchase confirmations included the required language stating that ďon selling your shares, you may pay a sales charge. For the charge and other fees, see the prospectus.Ē The Firm misstated on certain UIT confirmations that a sales charge discount had been applied when, in fact, it had not.

Ryan Beck & Co. nka Stifel Nicolaus & Company, Incorporate: Censured; Fined $100,000; Agreed to provide remediation to customers who purchased unit investment trusts (UITs) and qualified for, but did not receive, the applicable sales charge discount, and will submit to FINRA a proposed plan of how it will identify and compensate customers and a schedule detailing the total dollar amount of restitution provided to each customer.
Tags:  Supervisory System    UIT     |    In: Cases of Note : FINRA
Bill Singer's Comment
A concise explanation from FINRA and a sanction that seems well-suited to the violations. Nice job!
Thomas Michael Petracek
AWC/2008015144802/November 2010

Petracek recommended the purchase of a fixed and variable annuity to a customer, and since he was not registered with any FINRA member firm, he was unable to sign the annuity application. Petracekís relative became associated with a member firm, signed the customerís annuity application and submitted it to his firm, and the annuity company listed the relative as the introducing agent after discussing the matter with principals of the firm. Petracek knew his relative was not present when the customer signed the annuity application or during any of his meetings with the customer at which the annuity was discussed, and he knew that his relative never met or spoke with the customer. 

Petracek became registered at the same firm as his relative, and the annuity transaction settled the day after Petracek became registered. Petracekís relative later received a commission payment of approximately $50,500 for the annuity sale from the firm, which he shared with Petracek, and Petracek did not disclose to the firm that he shared in this commission payment.

During his employment at the firm, Petracek continuously served as the registered representative responsible for advising the customer on the annuity and for servicing the customerís account in which the annuity was held at the firm, although the relativeís name remained on the account as the responsible agent. In addition, Petracek failed to take any steps to correctly disclose on the firmís books and records that heónot his relativeówas the responsible representative, rendering the firmís records inaccurate.

Thomas Michael Petracek : Fined $10,000; Suspended 3 months
Tags:  Annuity    Variable Annuity    Unregistered Person     |    In: Cases of Note : FINRA
October 2010
Douglas Joe Barker (Supervisor)
2007009520202/October 2010
Barker recommended and effected unsuitable short-term sales in customersí accounts of closed-end funds less than six months after purchasing them at an initial public offering. Barker did not possess a reasonable basis to believe his recommendations and that the resulting transactions were suitable for his customers whose investment objectives were conservative to moderate. The findings also stated that the sales accounted for customer losses exceeding $350,000, for which he earned commissions totaling approximately $100,000.
Douglas Joe Barker (Supervisor): Fined $125,000; Suspended 6 months
Tags:  Suitability     |    In: Cases of Note : FINRA
Bill Singer's Comment

I'm not particularly thrilled with FINRA's write-up of this case.  If FINRA meant to imply that selling a closed-end fund purchased via an IPO after six months is, somehow, patently unsuitable -- well, that doesn't work for me.  There could me many explanations for the sale, not the least of which are cutting losses, profit taking, customer's need for funds, etc.  Further, FINRA seems to suggest that the fact that a customer lost $350,000 is also indicative of unsuitability if the customer's objectives were "conservative to moderate."  Again, that's too slick for me. It suggests that it's never appropriate to lose money for a client who seeks conservative or moderate objectives.

What I suspect FINRA meant to say was that it was troubled by an account where the broker generated $100,000 in commissions on sales that resulted in $350,000 in customer losses. Not sure that I would concur with the regulator that such a scenario is a "suitability" issue.  There may be other violations inherent in those facts -- excessive commissions, mark-up/down concerns, etc.  Clearly, this monthly explanation needed a bit more fleshing out to make sense.

Renee Lynn Coil
AWC/2008014756401/October 2010

Coil failed to

  • determine the surrender fees related to variable annuity exchanges she recommended to a customer, and the customer agreed to the exchanges based on his understanding that there was no penalty associated with the exchanges; 
  • perform adequate analysis on the variable annuities to determine their surrender periods and the customer was charged surrender fees totaling $26,286.84; and
  • ensure that the imposition of the surrender fees was accurately disclosed on her member firmís variable annuity switch form.

If the customer had held the variable annuities for two additional months, he would not have incurred the fees.

Renee Lynn Coil : No Fine in light of financial status; Suspended 1 month
Tags:  Surrender Charge    Variable Annuity     |    In: Cases of Note : FINRA
September 2010
Clint Harley Keener
AWC/2007009431001/September 2010
Keener made unsuitable trade recommendations in a customerís accounts by recommending purchases resulting in an overconcentration of non-investment grade bonds and other equities for a senior couple with no previous investment experience. Keener mismarked order tickets for purchases for these customers and other customers as ďunsolicitedĒ when they were ďsolicited.Ē Keener exercised discretion with verbal, but not written, authorization, in customersí accounts, and although Keener frequently spoke to these customers, he did not speak to them every time he entered a transaction in their accounts. Keener did not have the customersí or his member firmís written authorization to engage in such discretionary trading.
Clint Harley Keener : Fined $7,500; Suspended 2 months
Tags:  Suitability        Discretion    Solicited     |    In: Cases of Note : FINRA
David John DeWald
AWC/2009019041601/September 2010

DeWald participated in private securities transactions without first giving his member firm written notice of his intentions and receiving approval.

DeWald made unsuitable recommendations to customers given his complete failure to perform a reasonable investigation concerning the product and that, while reviewing the product information on the companyís website, he took its representations for face value and failed to independently verify those representations.

DeWald made negligent misrepresentations of material fact in connection with the sale of installment plan contracts; he misrepresented to customers that they could take charitable tax deductions in connection with their investments, which was not true. DeWald provided customers with sales materials containing misleading and oversimplified descriptions of the contracts, and failed to obtain a firm principalís approval prior to their use.

DeWald failed to respond to FINRA requests for documents.

David John DeWald : Ordered to pay $124,519.03, plus interest, in restitution; Barred
Tags:  Suitability    Website         |    In: Cases of Note : FINRA
Louis John Liberatore Sr.
AWC/2008013937902/September 2010

Liberatore engaged in trading in customersí accounts and did not have a reasonable basis for believing that his recommendations to the customers were suitable, based on the facts the customers disclosed as to their investment objectives and financial needs. One account was an IRA that traded in speculative and low-priced penny stocks, and the other account was a joint account and traded in options and on margin.

Louis John Liberatore Sr.: No Fine in light of financial status; Suspended 3 months
Tags:  Suitability     |    In: Cases of Note : FINRA
Marshell Earl Miller
OS/2007009413701/September 2010
Miller was the registered representative for several burial associations for which the investment objectives were income and the risk factors were conservative, investment-grade or moderate. Miller engaged in unsuitable and excessive trading in the accounts, resulting in significant commissions for him and losses for the customers.
Marshell Earl Miller : No Fine in light of financial status; Suspended 6 months
Tags:  Suitability     |    In: Cases of Note : FINRA
Bill Singer's Comment

Okay, so let's see...

  • FINRA had him dead to rights.
  • He had one foot in the grave.
  • He dug his own grave.
  • This was the last nail in the coffin.
  • He made a grave mistake.
  • [Write your own]
Michael Aaron Brady
AWC/2010022037401/September 2010
Brady converted a total of $194,424.81 from customers who entrusted him with money to invest and, instead, misappropriated the funds for his own personal use. One customer gave Brady over $90,000 to invest in an Individual Retirement Account (IRA) and in a Section 529 college tuition plan account but Brady used the money for personal purposes. In one instance, Brady created a fictitious account statement that falsely showed that the customerís account increased from about $37,000 to over $48,000 in one year; but, in fact, Brady never invested the customerís money and had converted over $56,000 of the customerís money to his personal use. In another instance, a customer surrendered a variable annuity and paid the proceeds to Brady to re-invest in another variable annuity; Brady did not do so and misappropriated the funds, which exceeded $41,000.
Michael Aaron Brady : Barred
William Gregory Slonecker
2007009442501/September 2010

Slonecker recommended and executed unsuitable variable annuity contract replacements or switches involving customers without regard for their age or financial backgrounds, and received $85,000 in commissions. Sloneckerís customers received no significant benefit from the transactions but incurred substantial surrender charges, new extended surrender periods and, in some cases, paid additional fees.

Slonecker made numerous false entries in his member firmís electronic order-entry system and on other firm records to obtain approval for the switches he recommended to the customers, causing his firm to create and maintain inaccurate books and records. Sloneckerís false entries in the firmís electronic order-entry system and suitability questionnaires were material false representations he made to his firm.

Slonecker falsely represented to customers that surrender fees associated with the switches would be fully recovered by the bonuses they would receive from their purchases of new variable annuity contracts, when he knew or should have known that the bonuses did not offset the surrender fees and he failed to disclose and explain to the customers the surrender charges associated with switch transactions.

Slonecker failed to respond to FINRA requests for information.

William Gregory Slonecker: Barred
Tags:  Variable Annuity    Suitability    Surrender Charges     |    In: Cases of Note : FINRA
William Ray Collins Jr
AWC/2008013648001/September 2010

Collins forged customersí signatures on financial documents and submitted the documents to his member firm and failed to send a copy to the customers.

Collins failed to disclose a variable annuity service fee in his discussion with customers and, when the customers inquired about the fee, Collins told them that the fee was an error; and to avoid further inquiries he used his own funds to pay the fee without informing the firm or the customers. Collins accomplished his payment of the fees when he executed money orders on the customersí behalf, forged the customersí signatures on the money orders and submitted the money orders to the firm to pay the variable annuity fees that he had not disclosed to the customers.

William Ray Collins Jr: Barred
Tags:  Signature        Forgery    Variable Annuity    Guaranteeing Against Losses         |    In: Cases of Note : FINRA
August 2010
Jarem Barry Bingham
AWC/2009017621401/August 2010
Bingham gave a member firm customer $4,421 to compensate her for tax consequences incurred as a result of his recommendation that the customer liquidate a variable annuity and purchase mutual funds with the proceeds. Bingham acted without his firmís knowledge or authorization when sharing in the customerís loss, and his firmís procedures prohibited representatives from paying or offering to pay restitution to a customer. Bingham loaned customers approximately $1,050 because of delays in processing their withdrawal requests, which the firmís procedures prohibited.
Jarem Barry Bingham : Fined $10,000; Suspended 15 business days
Tags:  Guaranteeing Against Losses    Loan    Variable Annuity     |    In: Cases of Note : FINRA
Leo Timothy Buggy (Principal)
OS/2008016455801/August 2010
Buggy misappropriated approximately $589,000 intended for investment by soliciting customers to withdraw funds from their existing firm variable annuity and/or brokerage accounts and invest the withdrawn amounts in what he represented to be safer, higher-yield investments with Buggyís member firmís affiliate. Buggy not only failed to invest the funds received from the customers in safer, higher-yield products with the affiliate, but failed to invest the funds at all.Buggy caused the funds to be deposited into an account he controlled and made improper use of the funds. Buggy failed to respond to FINRA requests for information and documents.
Leo Timothy Buggy (Principal): Barred
Tags:  Variable Annuity     |    In: Cases of Note : FINRA
Mark Andrew Jamgochian
AWC/2009018304601/August 2010
Jamgochian cut-and-pasted customersí signatures on account-related documents without the customersí authorization or consent. The documents were all variable annuity applications for transactions that the customers previously authorized.
Mark Andrew Jamgochian : Fiend $5,000; Suspended 3 months
Tags:  Signature    Variable Annuity     |    In: Cases of Note : FINRA
Michael Frederick Siegel
C05020055/August 2010
Siegel recommended and effected sales of securities to customers without having reasonable grounds for believing that the recommendations and resultant sales were suitable for such customers, and participated in private securities transactions without prior written notice to, and approval from, his member firm.
Michael Frederick Siegel : Fined $30,000; Suspended for two consecutive 6 month terms
Tags:  Suitability    NAC    Federal Appeal     |    In: Private Securities Transactions
Bill Singer's Comment

The United States Court of Appeals for the DC Circuit imposed the sanctions following appeal of an SEC decision affirming a FINRA National Adjudicatory Council decision.

I commend the DC Circuit decision to your review because it states some of the most damning language that has yet to surface in a federal court's review of NASD/FINRA and SEC conduct.  Frankly, the language is startling in its pointed criticism.

Note this language in the DC Circuit Decision:

In his petition for review to this court, Siegelís principal argument is that, because the SEC failed to properly assess the ďcauseĒ of the losses suffered by the Landrys and Downers, the agencyís decision to uphold NASDís awards of restitution was an abuse of discretion. We agree. NASD General Principle No. 5, which the SEC purported to apply in this case, describes restitution as a ďtraditional remedy used to restore the status quo ante where a victim otherwise would unjustly suffer lossĒ; and it states that restitution may be ordered when a party ďhas suffered a quantifiable loss as a result of a respondentís misconduct.Ē General Principle No. 5, FINRA Sanction Guidelines at 4 (ďPrinciple 5Ē). The SEC completely failed to articulate any meaningful standards governing the level of causation required under Principle 5.

This case involves wealthy and sophisticated customers who were under no press of time to decide whether to invest; customers who invested specifically in furtherance of a desire to speculate; and a broker who did not profit from his wrongdoing and who has been fined and suspended for his violations. There is nothing in the SECís decision to indicate why, in these circumstances, awards of restitution are appropriate under Principle 5. Indeed, the SECís decision is incomprehensible insofar as it attempts to amplify any meaningful causal connection between Siegelís putative bad acts and the Downersí and Landrysí losses. And the SEC has cited no precedent, and we have found none, supporting restitution in a case of this sort. The SECís judgment is fatally flawed for two reasons: First, the SECís judgment is not supported by reasoned decisionmaking. Second, the SEC cites to no controlling precedent that includes reasoned decisionmaking supporting restitution under Principle 5 in a case of this sort. We therefore vacate the restitution order.

We reject Siegelís remaining challenges. Substantial evidence supports the SECís findings that Siegel violated NASDís rules barring selling away and unsuitable recommendations. And the SEC did not abuse its discretion in imposing fines and consecutive six-month suspensions for Siegelís separate violations of Rules 3040/2110 and Rules 2310/2110.

. . .

In failing to articulate a comprehensible principle governing the level of causation required by Principle 5, the SEC decision borders on whimsical or rests on notions of strict liability. In either event, the decision offers no reasonable construction of the causation requirement under Principle 5. This is far short of reasoned decisionmaking. As the Supreme Court has explained, the ďevil of a decisionĒ of this sort is that it ďprevent[s] both consistent application of the law by subordinate agency personnel . . . and effective review of the law by the courts.Ē Allentown Mack, 522 U.S. at 375. The SECís decision in this case clearly fails for want of reasoned decisionmaking.

Principle 5 states, in relevant part (emphasis added):

Where appropriate to remediate misconduct, Adjudicators should order restitution and/or rescission. Restitution is a traditional remedy used to restore the status quo ante where a victim otherwise would unjustly suffer loss. Adjudicators may determine that restitution is an appropriate sanction where necessary to remediate misconduct. Adjudicators may order restitution when an identifiable person, member firm[,] or other party has suffered a quantifiable loss as a result of a respondentís misconduct, particularly where a respondent has benefitted from the misconduct.

Adjudicators should calculate orders of restitution based on the actual amount of the loss sustained by a person . . . as demonstrated by the evidence. Orders of restitution may exceed the amount of the respondentís ill-gotten gain. Restitution orders must include a description of the Adjudicatorís method of calculation.


http://www.sec.gov/litigation/opinions/2010/34-62324.pdf (SEC Order Setting Aside Restitution, June 18, 2010)

http://www.sec.gov/litigation/opinions/2008/34-58737_appeal.pdf (DC Circuit Opinion, January 12, 2010)

April 2010
Douglas Richard Smith (Principal)
OS/2008012211601/April 2010
Smith effected, without the customerís knowledge, authorization and consent, the surrender and liquidation of a variable annuity in the customerís account, and used the proceeds to purchase a variable annuity issued by another insurance company for the customerís account. To effect the unauthorized transactions for the customer, Smith, without the customerís knowledge, authorization and consent, affixed, or caused to be affixed, the customerís signature and/or initials on five documents. Smith stamped a document with the firmís medallion signature guarantee stamp and placed his signature on the stamp signature line, which had the effect of guaranteeing the customerís signature as genuine.
Douglas Richard Smith (Principal): Fined $5,000; Suspended 18 months in all capacities
Tags:  Variable Annuity     |    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 ďred flagsĒ indicating that unsuitable and excessive trading was occurring in customer accounts, Montes failed to take reasonable supervisory steps to respond to the ďred flagsĒ with a view toward preventing the unsuitable and excessive trading and did not adequately investigate the representativesí 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.
Leonard Kahn
AWC/2008013363601/March 2010
Registered Principal Kahn sold preferred stock shares of a company to investors, in the approximate amount of $127,000, without prior written notice to, and written approval from, his member firm. One investor was an elderly individual who invested $96,000 that she borrowed from a variable annuity that she had purchased through Kahn several years earlier. The company had paid her approximately $11,000 in annual interest when her Individual Retirement Account (IRA) custodian informed her that the companyís preferred shares had no value and were worthless. Kahn executed and submitted his firmís Private Securities Transactions Certification, in which he falsely certified that he had not participated in any manner in private securities transactions since his employment with the firm.
Leonard Kahn: Fined $10,000; Suspended 6 months
Tags:  Elderly    Variable Annuity     |    In: Cases of Note : FINRA
Bill Singer's Comment

Maybe it's me -- or maybe it's FINRA not fully explaining this case (or over-stating it to give a far worse appearance than it is).  You tell me?  A Principal invests an elderly client in worthless preferred stock using the proceeds of a VA that the Principal had earlier sold the elderly client -- and then the Principal lies about having been involved in any Private Securities Transactions.

Okay, so here's what's troubling me.  FINRA doesn't tell us whether the Principal knew that the elderly client used the VA proceeds to fund the Pfd stock. We also don't know if the Principal solicited the borrowing from the VA, or was even aware of the source of the funds used to buy the Pfd. shares. Frankly, those strike me as important factors.  Of course, there is that very ominous fact that Kahn lied on the certification -- was that intentional or unintentional?  Again, FINRA ain't making that clear.

What I'm trying to understand is why a Principal who engaged in a VA-proceeds transaction that ultimately put an elderly client in worthless Pfd. shares and that same Principal then lies about his PST activity -- why that Principal is only suspended 6 months.  Seems to me, if we make the likely inferences, he should be barred.  However, as with many of these cases, the actual facts may be far more benign; hence, supporting the imposition of the fine and six-months suspension.  Problem is -- we don't know from the official, published, monthly disciplinary squib.  Hide-and-seek?  Is this proper regulation?

Rani Tarek Jarkas
OS/2005003052001/March 2010
Registered Principal Jarkas recommended or, in the exercise of discretion, executed securities transactions in a customerís account at his member firm without having a reasonable basis for believing that the volume of trading he recommended was suitable for the customer in light of information he knew about the customerís financial circumstances, needs, other security holdings and investment objectives. Jarkas caused the execution of approximately 2,400 transactions in the customerís account and received commissions of approximately $240,000.
Rani Tarek Jarkas: Fined $25,000; Suspended 6 months
Tags:  Suitability     |    In: Cases of Note : FINRA
Bill Singer's Comment

Jarkas caused the execution of approximately 2,400 transactions in the customerís account and received commissions of approximately $240,000. 

Wow!!! Is there some award that we could create to give the esteemed Mr. Jarkas?  Of course, what I'm trying to figure out is what exactly does it take these days to get yourself barred from the industry. Apparently, not $240,000 worth of commissions derived from some 2,400 allegedly unsuitable trades.

February 2010
Hilda Asencio
2008014573101/February 2010
Associated Person Asencio, converted $335,250 from a customerís account by making withdrawals from the customerís variable annuity without his knowledge or consent. Asencio arranged to have the funds sent to a friend, who cashed the checks and forwarded the proceeds to Asencio, who then deposited the funds into her own bank account and used the money for personal expenses. Asencio failed to respond to FINRA requests for information.
Hilda Asencio: Ordered to pay $335,250, plus interest, in restitution to a customer; Barred
Tags:  Variable Annuity    Check     |    In: Cases of Note : FINRA
Michael Thomas DiPuppo (Supervisor) and Robert Michael DiPuppo
AWC/2008013742101/February 2010
The DiPuppos member firm had in place a supervisory system for the firmís variable annuity transactions specifying that variable annuity transactions that exceeded 50 percent of the lower end of the customerís net worth bracket required additional supervisory review concerning potential liquidity issues. The DiPuppos disagreed with the firmís policy and, to circumvent the system, they altered the net worth of customers to a higher bracket to avoid the 50 percent threshold that would have flagged them on a report and required additional review. By altering customer net worth information, the DiPuppos caused their firmís books and records to be false. Michael DiPuppo failed to carry out supervisory responsibilities to ensure that new account forms and annuity applications documents that Robert DiPuppo and other registered representatives in his branch submitted were accurate

Michael DiPuppo: Fined $15,000; Suspended 90 days in all capacities

Robert DiPuppo: Fined $10,000; Suspended 30 days in all capacities
Tags:  Variable Annuity    Supervision         |    In: Cases of Note : FINRA
Bill Singer's Comment
And, class, what do we learn from this lesson?  That's correct -- you may always disagree with your company's policy but you should never, ever circumvent it.  And for those of you who submitted that extra credit paper, you get ten bonus points for noting that you should never alter customer net worth information.
Enforcement Actions