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.
Michael M. Reilly (Principal)
AWC/2007007358603/December 2009
Reilly operated a securities business from an unregistered branch office, causing his member firm to violate the restriction on business expansion contained in its membership agreement with FINRA. Without requisite supervision, Reilly and others regularly used the branch office to cold-call prospective investors, open new customer accounts and/or cause securities transactions to be effected in customer accounts. Reilly was actively engaged in the management and operation of the branch and exercised control over the operations at the branch office. By actively engaging in the management and operations of the branch
office, Reilly acted in the capacity of a general securities principal
without being so registered at that time.
One individual, without requisite supervision, used the branch office to improperly solicit potential customers and made false representations, including unwarranted price predictions, omitted material facts and used misleading telemarketing scripts that a registered principal had never approved.
Reilly caused his firm to violate NASD Rule 1017(a)(5) and NASD Interpretative Material 1004.
Michael M. Reilly (Principal): Fined $12,500; Suspended 45 days; and Agreed to fully and promptly cooperate with FINRA in any and all investigations and/or disciplinary proceedings, of any person or entity, concerning conduct at and/or relating to his member firm during the time he was associated with the firm and, in connection with his cooperation, promptly produce information and documents FINRA requests and appear and testify completely and truthfully at any FINRA interview and/or disciplinary hearing.
Fortune Financial Services, Inc. and Brian Lee Daniels (Principal)
AWC/2008011697201/November 2009
Acting through Daniels, the Firm
- failed to maintain and preserve all of its business-related electronic communications;
- did not have a system, written procedures or policies relating to the retention of electronic communications in place and, as a result, failed to maintain and preserve electronic communications;
- increased the number of registered representatives associated with the firm and failed to file an application with FINRA and obtain FINRA’s approval for the material increase in sales personnel;
- conducted business at locations that constituted branch offices that were not registered with FINRA; and
- failed to establish and maintain a supervisory system, and failed to establish, maintain and enforce written supervisory procedures that were reasonably designed to achieve compliance with all applicable laws, rules and regulations regarding business-related electronic communications, material business expansions, proper registration of branch offices, a principal approval of advertisements prior to use, and maintaining records of the firm’s Web sites and advertisements.
Fortune Financial Services, Inc. Censured; Fined $125,000; Prohibited for 90 days, commencing five business days after issuance of the AWC, from registering any associated persons, except for individuals who perform only compliance and/or supervisory duties. Termination of this prohibition is contingent upon satisfaction of the following undertakings:
- The firm shall, within 10 business days after the end of the 90-day prohibition, certify in writing to FINRA that it complied with the prohibition, and,
- within 90 days of the issuance of the AWC, the firm shall certify to FINRA in writing that the firm currently has systems and procedures in place that are reasonably designed to achieve compliance with laws, rules and regulations concerning the preservation of electronic mail communications.
Brian Lee Daniels (Principal): Fined $25,000; Suspended 9 months in Principal capacity only