The Wall Street Legal & Regulatory Feed

Securities Industry Commentator by Bill Singer Esq

June 18, 2021





http://www.brokeandbroker.com/5896/insecurities-aegis-frumento-bailey/
Guest Blogger Aegis Frumento takes a moment to recall famed litigator F. Lee Bailey, who died a couple of weeks ago. It was as a high schooler when Aegis first heard of Bailey; and it may have been Bailey who inspired him to become a lawyer (or perhaps its was Atticus Finch, Perry Mason, Clinton Judd or Owen Marshal). Frankly, it's been a long time since Aegis was in High School. Be that as it may, F. Lee Bailey was high drama personified. 

https://www.sec.gov/news/press-release/2021-105
In a Complaint filed in the United States District Court for the Southern District of Florida
https://www.sec.gov/litigation/complaints/2021/comp-pr2021-105.pdf, the SEC charged Ramiro Jose Sugranes, UCB Financial Advisers Inc., and UCB Financial Services Limited with violating the antifraud provisions of the federal securities laws. Ramiro Sugranes Hernandez and Thelma Lanzas de Sugranes were named as Relief Defendants. As alleged in part in the SEC Release, Ramiro Jose Sugranes and the two UCB entities: 

engaged in a scheme since at least September 2015 to divert profitable trades to two accounts believed to be held by Sugranes' relatives and saddle other clients with losing trades. The defendants allegedly used a single account to place trades without specifying the intended recipients of the securities at the time they placed the trades. As alleged, after the defendants established a position, if the price of the securities increased during the trading day, the defendants usually closed out the position and allocated those profitable trades to the two preferred accounts. Conversely, the complaint alleges that if the price of the securities decreased during the trading day, the defendants usually allocated the unprofitable trades to other client accounts. According to the complaint, the preferred clients, who are named as relief defendants, received approximately $4.6 million from profitable trades while other clients sustained more than $5 million in first-day losses.


https://www.advisorhub.com/finra-sanctions-ex-lpl-broker-over-outside-notary-biz/
As Advisor Hub's Rozen reports, FINRA is trying to sell the image that it's supposedly laser focused on rooting out so-called Outside Business Activities ("OBA") Unfortunately, FINRA seems to be stumbling around when it comes to what it targets as the subject of its OBA. In a recent FINRA AWC settlement, we come across a stockbroker being fined and suspended for acting as a Notary Public. Imagine if Bernie Madoff had only provided notarizations for a couple of bucks each -- why FINRA might well have been on to his entire nefarious fraud. Then again, if FINRA is going to keep hunting down wayward Notaries Public then that sort of increase the chances that the like of Madoff escape detection, no? Also read: "All Along The Watchtower FINRA Defends Against The Invading Notaries" (BrokeAndBroker.com Blog /  June 15, 2021) http://www.brokeandbroker.com/5905/finra-awc-notary/

https://www.finra.org/sites/default/files/fda_documents/2020065347501
%20Dennis%20Domingo%20Cummings%20Perez%20CRD%202923607%20AWC%20sl.pdf
For the purpose of proposing a settlement of rule violations alleged by the Financial Industry Regulatory Authority ("FINRA"), without admitting or denying the findings, prior to a regulatory hearing, and without an adjudication of any issue, Dennis Domingo Cummings Perez submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA accepted. The AWC asserts that Dennis Domingo Cummings Perez was first registered in 1997, and by 2008, he was registered with Popular Securities, LLC. In accordance with the terms of the AWC, FINRA found that Cummings Perez violated FINRA Rules 4511 and 2010 and  imposed upon him a $5,000 fine and a 45-business-day suspension from associating with any FINRA member in all capacities.  As alleged in part in the FINRA AWC:

Cummings obtained a pre-signed but otherwise blank LOA from two customers, who were a married couple. On seven occasions, from May 2016 through December 2018, he instructed his sales assistant to use the previously signed, but otherwise blank, LOAs to effect transfers of funds among the customers' accounts. Cummings instructed his sales assistant to make the transfers after receiving instructions from the customers, who authorized the transfers. 

https://www.finra.org/sites/default/files/fda_documents/2021071514101
%20Marc%20R.%20Lippman%20CRD%201575995%20AWC%20sl.pdf
For the purpose of proposing a settlement of rule violations alleged by the Financial Industry Regulatory Authority ("FINRA"), without admitting or denying the findings, prior to a regulatory hearing, and without an adjudication of any issue, Marc R. Lippman submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA accepted. The AWC asserts that Marc R. Lippman was first registered in 1987, and between December 2009 and January 2021, he was registered with Folger Nolan Fleming Douglas Incorporated. In accordance with the terms of the AWC, FINRA found that Lippman violated FINRA Rules 8210and 2010 and  imposed upon him a Bar from associating with any FINRA member in all capacities.  As alleged in part in the FINRA AWC:

FINRA conducted a prior investigation into Lippman concerning whether he knew a
customer was deceased at the time he entered a securities order in the customer's
account. Pursuant to FINRA Rule 8210, FINRA took his OTR testimony under oath.
During his OTR testimony, Lippman falsely stated that he was unaware of his customer's death at the time of entering a securities transaction in the customer's account. 
 . . .

On February 25, 2017, the customer referenced above died. On February 27, 2017, Lippman was aware that the customer had died and placed a trade in the customer's account, selling approximately $80,000 in securities. Despite knowing that the customer died, Lippman effectuated this transaction without permission or consent. Following the transaction, Lippman distributed the funds to one of the customer's family members.  

http://www.brokeandbroker.com/5908/finra-citigroup-awc/
When it comes to Wall Street's Big Fish, FINRA is oh-so cautious and oh-so solicitous before asserting that the firm has prior, relevant disciplinary history, But that same caution and that same solicitousness just doesn't arise for FINRA's smaller firms or the industry's hundreds of thousands of registered persons. Pointedly, when the charge of failed supervision raises its ugly head, it seems that if a Large Member Firm is involved, only that firm's name appears in FINRA's regulatory caption; but when that same violations occurs at smaller broker-dealers, we often seen the names of individual C-suiters, compliance staff, and supervisors tagged as Respondents. 

http://www.brokeandbroker.com/5906/finra-sec-giles/
Among the mysteries of the Universe is whether a revocation of a license is the same as a bar of a license.  On top of that puzzler, if something happens but you didn't know about it at the time but you eventually learn about it, does that mean you had failed to timely report what you didn't know had happened but now do?  Finally, we are asked to ponder the ethical and legal implications of whether the SEC should stay a determination by FINRA that someone has become statutorily disqualified after that same individual voluntarily reported the facts that prompted FINRA's determination.

http://www.brokeandbroker.com/5905/finra-awc-notary/
Some say that FINRA stands all along the watchtower and protects the investing public from the oncoming hordes of Wall Street. Some say that FINRA is perched atop the castle walls, enjoying a smoke of a dubious substance, sippin' a glass of wine, and mesmerized by the sunset. Others say that FINRA had some other regulator punch in for them and blew off the whole standing on the bulwarks thing. In any event, today's blog features yet another example of FINRA discharging its role as the protector of the realm. We don't have raging hordes threatening to storm the castle. No, today's attackers are from the fearsome tribe of the Notaries. And as the joker said to the thief, there's too much confusion and I can't get no relief.

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