Securities Industry Commentator by Bill Singer Esq

The Government entered into this resolution due, in part, to SG's acceptance and acknowledgement of responsibility under the laws of the United States for its conduct, as exhibited by its undertaking of a thorough internal investigation, collecting and producing voluminous evidence located in other countries to the full extent permitted under applicable laws and regulations, and its enhancement of its compliance program and sanctions-related internal controls both before and after it became the subject of a U.S. law enforcement investigation. These factors and SG's willingness to enter into the commitments set forth in the  Agreement, along with all other relevant factors and considerations, collectively weighed in favor of deferral of prosecution, and outweighed in this particular case SG's failure to self-report all of its violations of United States sanctions laws in a timely manner, as described below.

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Despite the awareness of both SG's senior management and Group Compliance that SG had engaged in this unlawful conduct, SG did not disclose its conduct to OFAC or any other U.S. regulator or law enforcement agency until well after the commencement of the Government's investigation. 

This investigation was triggered by the blocking by other U.S. financial institutions, in March 2012, of two transactions that SG processed on behalf of a Sudanese sanctioned entity, and a subsequent February 2013 voluntary disclosure by SG regarding $22.8 million in transactions with the Sudanese entity and a small number of transactions with other sanctioned entities that violated U.S. sanctions. The Bank did not, however, disclose the existence of the Cuban Credit Facilities at that time, but rather did so only in October 2014, after SG performed a detailed forensic analysis based on the scope of investigation required by the Government and the other investigating agencies. 

[T]he Firm permitted Nicholson to request and obtain reimbursement for mileage expenses he incurred to travel by car for this purpose. On multiple occasions during the Relevant Period, Nicholson intentionally submitted false expense reports to the Firm, overstating the miles he actually traveled and claiming that he incurred fictitious mileage expenses, in order to obtain funds from the Finn that he was not entitled to receive. For example, during November 2015, Nicholson represented that he incurred mileage expenses totaling $2,268. However at least $1,355 of those expenses were fictitious. In addition, in October 2016, Nicholson misrepresented that he incurred mileage expenses totaling $604.80, even though he never actually incurred those expenses. Based on the false expense reports, Nicholson obtained at least $1,959.80 from the Firm that he was not entitled to obtain.

In September 2014, shortly after Basile joined Waddell, his elderly mother opened a brokerage account at Waddell. Basile served as the broker on his mother's account. Between January 2015 and October 2017, Basile withdrew funds from the account and used over $130,000 to pay his own living expenses without his mother's knowledge or consent.

FINRA Rule 2150(a) provides that "[n]o member or person associated with a member shall make improper use of a customer's securities or funds." By converting funds from his mother, Basile violated FINRA Rules 2150(a) and 2010.

[O]n June 22, 2018, Waddell filed an amended Uniform Termination Notice For Securities Industry Registration (Form U5) reporting that, on May 31, 2018, Waddell had initiated an internal review after being notified that Basile "was arrested for 'theft by caretaker' related to an elder abuse investigation."

• Securities Industry Commentator
• Bill Singer