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
Patrick Francis Harte Jr. (Principal)
2006003672401/December 2009
Harte failed to supervise registered representatives who engaged in the sale of unregistered securities. Harte failed to take adequate measures to ensure that the registered representatives and employees he supervised complied with the requirements of Section 5 of the Securities Act.
Patrick Francis Harte Jr. (Principal): Fined $10,000; Suspended 6 months in Principal capacity only; and Ordered to requalify as a Principal before functioning in any principal capacity
Tags:  Unregistered Securities     |    In: Cases of Note : FINRA
Peter Herbert Hackstedde and Ross William Sindelar
OS/2006004707201/December 2009
Hackstedde and Sindelar acquired unregistered and non-exempt shares from an issuer with a view to distribution and, therefore were statutory underwriters. They distributed,or caused the distribution of, unregistered and non-exempt securities to the public.

Peter Herbert Hackstedde: Fined $301,896.93 (includes $286,896.93 disgorgement of profits) Suspended 30 business days in all capacities
Ross William Sindelar:
Fined $418,904.91 (includes $$403,904.91 disgorgement of profits) Suspended 30 business days in all capacities
November 2009
Alan Frank Pacella
AWC/2007009934702/November 2009
Pacella participated in the sale of unregistered securities. Before entering sales orders, Pacella relied on his member firmís compliance department to review whether the shares were freely tradable. The compliance department conducted its tradability review in the ordinary course of business and incorrectly approved the securities for public resale, even though the shares were restricted. Pacella had or should have had the companyís Articles of Incorporation and press release, thereby allowing him to determine that the securities were not registered for public sale and not subject to an exemption.
Alan Frank Pacella: Censured; Fined $10,000
Tags:  Unregistered Securities         |    In: Cases of Note : FINRA
Bill Singer's Comment

I dunno about this one. Okay -- no question that an RR should undertake basic due diligence to determine whether shares that he or she are proposing to buy/sell are freely tradable/exempted.  However, when that same RR stands back from order entry and allows the compliance department to investigate the same issue and is given a "good to go" clearance, I'm not sure that the RR has violated any rules or regulations.  However, even assuming that I give FINRA the point that Pacella should have or could have determined the critical issue, I think that the facts as presented by the regulator don't support the imposition of a $10,000 fine. Seems to me that a Censure or even a Letter of Caution would have sufficed under these unusual circumstances.

Enforcement Actions