It's summertime and your mind has probably turned to thoughts about barbecues and the beach — assuming that you can afford either these days. But the last thing you are likely thinking about is regulatory cases. Thankfully, I remain on the job and ever vigilant.
And so, for a change of pace, I'm holding a Financial Industry Regulatory Authority Summer Sanctions Contest. Sort of like the games at the boardwalk on the beach — except for, well, you know, this isn't a game, there's no boardwalk and there's no beach. Anyway, step right up, read the FINRA disciplinary cases below and guess the sanctions (see answers at the end). Win a prize!
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Michael Ross Berkoff (AWC) failed to enter a stop-loss order requested by a customer, and borrowed $8,000 from the customer in violation of his firm's procedures and NASD rules.
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Young Jin Chun (OS) created false documents by misrepresenting that a customer had not been previously declined life insurance (the customer had) on variable life insurance applications.
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David Garcia (AWC) directed an individual to telephone the insurance affiliate of his member firm for a client history interview and to impersonate an insurance customer in order to obtain approval of life insurance policies for the customer prior to the deadline date.
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Carol Ann Geske (AWC) learned that a customer's enrollment form in a mutual fund had been rejected because it was submitted more than 30 days after it had been signed. Subsequently, Geske signed the customer's name on a new enrollment form without the customer's authorization or consent rather than asking the customer to sign a new application.
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Patrick James Jensen (AWC) paid $18,000 to another firm's trader and the trader's relative so that the trader would continue to conduct his firm's securities transactions through its account with Jensen. Also, while serving as the registered representative of record on a customer's corporate account, Jensen shared in losses and gains in the account without written authorization from his firm or the customer, and not in direct proportion to his financial contributions to the account.
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Matthew T. McKinney (OS) was assigned a corporate credit card by an affiliate of his member firm and, without the knowledge, authorization or consent of the affiliate or the firm, used the card to purchase merchandise for his personal benefit (the purchases were billed directly by the vendors to the affiliate). Thereafter, McKinney sold some of the merchandise that he obtained and retained the proceeds. He failed to respond to FINRA requests for information.
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Robert Brian Meadows (AWC) borrowed $30,000 from a customer who was also a personal friend, but without his firm's prior consent. The firm's written procedures prohibited registered persons from borrowing from customers except under certain circumstances and also required the firm's prior review and approval. Moreover, Meadows failed to disclose the loan when completing the firm's annual compliance questionnaires
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Charles James Moni (AWC) recommended concentrated positions in the security of a clinical-stage drug development company to customers of his member firm. The concentrated positions were unsuitable for Moni's customers in light of their financial profile, personal circumstances and limited ability to withstand loss.
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Joseph Aloyisius Pramer III (AWC) deleted or inaccurately updated the telephone numbers on his customer records in order to slow down other registered representatives at his firm that he believed would be assigned to call his customers after he resigned. The alterations caused the member firm to create and maintain inaccurate books and records.
Note: 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 and to the entry of findings.
ANSWERS:
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Fined $10,000; Suspended 30 business days
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Fined $10,000; Suspended 1 year
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Fined $5,000; Suspended 30 business days
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Fined $5,000; Suspended 1 month
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No fine in light of financial status; Suspended 1 year
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Barred
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Fined $7,500; Suspended 90 days
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Fined $10,000; Suspended 3 months
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Fined $5,000; Suspended 30 business days
PRIZES:
- Compliance All-Star: 9 right
- Chief Compliance Officer: 7 right
- Branch Manager: 5 right
- General Counsel: 3 right
- Hedge Fund Feeder: 1 right
- Hedge Fund Manager: 0 right
Writer's BIO:
Bill Singer
is the publisher of RRBDLAW.com and BrokeAndBroker.com
