Securities Industry Commentator by Bill Singer Esq

Between February 2010 and September 2011, Pennings, McLellan, and Boomgaardt conspired to add secret commissions to fixed income and equity trades performed for six clients of the bank's "transition management" business, which helps institutional clients move their investments between and among asset managers or liquidate large investment portfolios. The commissions were charged on top of fees that the clients had agreed to pay to the bank, and despite written instructions to the bank's traders that generally reflected that the clients were not to be charged trading commissions. Pennings, McLellan, and Boomgaardt took steps to hide the commissions from the clients and others within the bank, including by directing that the commissions not be broken out in post-trade reports. 

In June 2011, when one of the affected clients inquired about whether it had, in fact, been charged commissions in breach of its agreement with the bank, Pennings initially denied that any commissions had been charged. Later, at McLellan's direction, Pennings acknowledged only that "inadvertent commissions" had been applied to securities traded in the United States, but did not disclose that they had, in fact, been intentionally charged in both the United States and in Europe. Pennings and McLellan sought to mislead the bank's compliance staff into believing that the commissions had been charged in error and that the amount of the overcharges was limited to the commissions applied on U.S. securities.

[C]laimants asserted they transacted business with Global Wealth Management ("GWM"), bought and maintained investments with GWM, received advice and guidance on their Woodbridge securities investment from GWM, and believed that the personnel at GWM were managing them. Claimants allege that since GWM is the alter ego of Respondents Costa and Conness, who are registered representatives of Respondent Madison, Claimants were customers of Madison. In its Reply, Respondent Madison stated that it and GWM are not now, and never have been affiliated entities, and that GWM is an independent financial services firm, which was founded by its managing directors, Respondents Costa and Conness, while they were still affiliated with Respondent GFIS.

"The Panel is cognizant of FINRA's policy that, prior to the conclusion of a party's case in chief, a Motion to Dismiss is discouraged. However, after car -consideration of the Statement of Claim and the arguments presented at the prehearing conference call and in the review of all documents, the Panel found no basis for imposing liability on Respondent Madison for losses sustained by Claimants. The moving party had no connection to the purchase of the subject securities, or to any fraud or misrepresentation related thereto. There is no basis for imposition of liability for failure to supervise, as there was no duty of Respondent Madison to supervise anyone connected with the subject securities. There is no contract between Respondent Madison and Claimants. While the Panel are loathe to deny Claimants an opportunity to present their case on the merits, in this instance there is no evidence which could support an award against Respondent Madison." 

Beginning in April 2014, Polequaptewa worked at Blue Stone Strategy Group, which provided consulting services to Native American tribal governments throughout the United States. In addition to his consulting responsibilities, Polequaptewa led information technology and marketing at Blue Stone. 

In November 2014, Polequaptewa was relieved of IT and marketing duties after he began falling behind on work. Following this change in responsibilities, Polequaptewa was assigned to a consulting project in Florida for the Seminole Tribe. While on that project, Polequaptewa deleted Blue Stone's website and marketing materials that the company had developed over eight years.

Polequaptewa resigned in Florida and continued to delete Blue Stone files, including client information, Blue Stone work product, and the company's backup files held by a third-party. Polequaptewa's final deletion was done by sending a "wipe" command to a Blue Stone desktop computer in Irvine.

• Securities Industry Commentator by Bill Singer Esq