NOTE:  Stipulation of Facts 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 and to the entry of findings.

2007
Forms U4, U5, and RE-3 and Rule 3070 Reports

Also see the Statutory Disqualification Index

Liang willfully failed to disclose material information on his Uniform Application for Securities Registration or Transfer (Form U4). 

Dave Liang : Barred

The Firm permitted an individual subject to a statutory disqualification to be associated with the firm.

AIG Financial Advisors, Inc. : Censured; Fined $15,000

Wilderotter willfully failed to disclose a material fact on his FormU4. 

Andrew Robert Wilderotter : Fined $5,000; Suspended 6 months

Webster willfully failed to disclose material information on his Form U4; and failed to timely respond to NASD requests for information and documents. 

Bradley Dean Webster : Fined $5,000; Suspended 18 months

Valentine failed to disclose a material fact on his Form U4. 

James T. Valentine : Fined $5,000; Suspended 3 months

Timberlake willfully failed to disclose material information on his Form U4. 

Damon Cordell Timberlake : Fined $5,000; Suspended 6 months

Thoma failed to disclose a material fact on his Form U4. 

Eldon Bracton Thoma : Fined $5,000; Suspended 60 days

Stillittano willfully failed to disclose material facts on his Form U4. 

Jeffrey Andrew Stillittano : Fined $5,000; Suspended 6 months

Proulx willfully failed to disclose a material fact on his Form U4. 

Bruce Allan Proulx Jr.: Fined $5,000; Suspended 6 months

Poole willfully failed to disclose material information on his Form U4, and failed to respond to NASD requests for information.

Douglas Anthony Poole: Barred

Patterson willfully failed to disclose material information on his Form U4. 

Ronald Dale Patterson: Fined $5,000; Suspended 30 business days

Phan willfully failed to disclose a material fact on her Form U4. 

Kim Phan: Fined $5,000; Suspended 6 months 

McCurdy failed to timely amend his Form U4 to disclose material facts. 

Kevin McCurdy: Fined $5,000; Suspended 30 days in all capacities

Floore willfully failed to disclose material information on his Form U4. 

George Edward Floore Jr.: Fined $5,000; Suspended 6 months

Feronti willfully failed to disclose, or willfully failed to timely disclose, material information on his Form U4. 

Alfred James Ferontia; Fined $5,000; Suspended 6 months

Ehrenberg borrowed $120,000 from a public customer and failed to inform his member firm. Ehrenberg willfully failed to amend his Form U4 to disclose material information. Ehrenberg failed to respond to NASD requests for information. 

Donald Fred Ehrenberg Jr. : Barred

The Firm effected both a 100 percent change in its direct ownership and a material expansion of its business operations without seeking and obtaining approval for these changes as NASD Rule 1017 required. The Firm added branch offices without notifying NASD within 30 days of their opening as NASD By-Laws required, and failed to have reasonably written supervisory procedures in place to ensure compliance with NASD Rule 2711. The Firm conducted a securities business when the firm’s capital was below the minimum amount required. The Firm failed to timely report customer complaints and did not report additional complaints as NASD Rule 3070(c) required; and failed to amend, and timely amend, Forms U4 or U5 for registered representatives to reflect customer complaints. The Firm conducted an options business at a branch office with a supervisor who was not registered as either an options principal or as a limited principal – general securities sales supervisor. Westrock Advisors, Inc.: Censured; Fined $42,000

The Firm failed to report, or to timely report, to NASD statistical and summary information relating to customer complaints the firm received. 

Perrin Holden and Davenport Capital Corp. aka PHD Capital: Censured; Fined $12,500

The Firm failed to file, in a timely manner, Form U4/U5 amendments and initial Form U5 termination filings, and did not have adequate policies or procedures designed to ensure reportable items were forwarded to the firm’s registration department and filed in a timely manner with NASD. The Firm's policies and procedures failed to enumerate which types of events are reportable, had no system to monitor timely filing of Forms U4/U5 and to provide for supervisory reviews for compliance. 

Brooks and McPherson had assigned responsibility for filing amendments to a non-registered clerical employee, and the firm did not have adequate policies or procedures with respect to the individual’s duties. The Firm submitted Form U4/U5 amendments with electronic signatures before a registered principal of the firm received, reviewed and approved the amendments. Brooks signed U4/U5 amendments although he did not supervise registration functions related to filing of Forms U4/U5 or amendments, and approved of the firm’s registration department submitting Form U4/U5 filings with his electronic signature before he received, reviewed or signed these filings.

Brookstreet Securities Corporation: Censured; Fined $200,000 ($25,000 jt/sev with McPherson); Required to retain an independent examiner to conduct an audit to assess the effectiveness of its system and procedures for ensuring the timely filing of amendments to Uniform Applications for Securities Industry Registration or Transfer (Forms U4) and Uniform Termination Notices for Securities Industry Registration (Forms U5) and initial U5 termination filings, and required to implement and certify changes in its supervisory system and personnel.

Stanley Clifton Brooks" Fined $35,000; Suspended 60 days in supervisory capacity

Kathleen Margaret McPherson" Suspended 45 days in principal capacity

Vaughn falsely represented to an insurance company that a public customer had not received $74,240.41 due to him from the liquidation of his fixed annuity when in fact, the customer had received the payment and used these proceeds to purchase a fixed annuity through another insurance company. The insurance company mailed a second check to Vaughn, who forged the customer’s endorsement to the check and deposited the check to his personal bank account, thereby converting the funds to his own use and benefit. Vaughn failed to respond to NASD requests to appear for an on-the record interview; and willfully failed to amend his Form U4 to disclose material information. 

Ronald Vaughn: Barred

Simbe failed to timely disclose a material fact on his Form U4; and failed to respond to NASD requests for information. 

Jim Zabala Simbe : Barred

Kuri failed to timely amend his Form U4 with material information. 

James Simon Kuri : Fined $5,000; Suspended 45 days in all capacities

Gallardo willfully failed to amend his Form U4 to disclose material information; and failed to respond to NASD requests for information.

Emmanuel Cahot Gallardo : Barred

Fischer failed to disclose material information on his Form U4. Fischer failed to respond to NASD requests for information.

Garrett Richard Fischer: Barred

The Firm failed to preserve copies of internal and external electronic mail communications. The Firm failed to timely report 

• statistical and summary information regarding customer complaints; f
• report settlements in excess of $25,000 of customer claims against the firm and people associated with the firm; and f
• the settlement of a customer claim in excess of $15,000 against people associated with the firm. 

Finally, the Firm failed to amend, or ensure the amendment of, Forms U4 and U5 to disclose customer complaints and the resolution of the complaints. 

Sandgrain Securities, Inc. : Censured; Fined $50,000; Required to provide to NASD written certification and documentation that any filings required under NASD Rule 3070 and amendments to Uniform Applications for Securities Industry Registration or Transfer (Forms U4) or Forms U5 and are the subject of this NASD disciplinary action have been completed.

The Firm failed to timely report TRACE-eligible transactions to TRACE. The Firm failed to timely file Uniform Termination Notices for Securities Industry Registration (Forms U5) with NASD; and failed to establish, maintain and/or enforce adequate written supervisory procedures reasonably designed to achieve compliance with applicable NASD rules regarding the timely filing of Forms U5. 

McDonald Investments Inc. nka Keybanc Capital Markets Inc.: Censured; Fined $44,250

Acting through Mathis, the Firm 

• directly or indirectly, by the use of means or instrumentalities of interstate commerce or of the mails, negligently made untrue statements of material facts or omitted to state material facts necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading by 
  • distributing, or causing to be distributed, to investors or potential investors, private placement memoranda (PPM) that contained material misrepresentations or omissions, and 
  • failing to supplement or amend the PPMs during periods in which each remained in effect so that they did not contain material misrepresentations or omissions of fact that occurred after the PPMs were issued. 
• offered and sold securities without registration statements filed with the Securities and Exchange Commission (SEC). 

Acting through Geraghty, the Firm 

• failed to report a written customer complaint; 
• failed to timely report a written customer complaint; and 
• failed to report the settlement of customer complaints to NASD that involved payments in excess of $25,000;
• failed to implement, maintain and enforce an effective supervisory system that would have enabled the firm to comply with federal securities laws and NASD rules;
• failed to implement, maintain and enforce reasonable systems and procedures to ensure that PPMs did not contain material misrepresentations and omissions; 
• failed to ensure that the accounts used for deposit of contingency offerings the firm conducted complied with SEC Rule 15c2-4; and 
• failed to retain email records related to its business in compliance with Rule 17a-4 of the Securities Exchange Act and NASD Rule 3110. 

Acting through Robbins, Mathis and Geraghty, the Firm 

• violated NASD Membership and Registration rules by permitting Robbins to engage in activity requiring registration as a general securities principal and a general securities representative without obtaining the required registrations;
• failed to establish qualified escrow accounts on contingency offerings as required by SEC Rule 15c2-4 and failed to maintain its minimum net capital;
• failed to preserve complete electronic mail communications by routinely deleting the contents of electronic mail folders of all employees who left the firm and deleted portions of the contents of current employees’ electronic mail folders. 

Investprivate, Inc.: Censured; Fined $205,000 ($67,500 of which is jt/several with Mathis; $40,000 jt/sev with Mathis and Geraghty; and $15,000 jt/sev with Geraghty); Suspended 60 days from seeking or accepting new engagements to conduct or participate in the offer or sale of unregistered securities through any private offering, private placement or private investment in public equity (PIPE) transactions for 60 days (ED: the double reference to "60 days" is in the original). The firm was also required to retain an independent consultant to conduct a comprehensive review of the adequacy of the firm’s policies, systems and procedures (written or otherwise) and training relating to the offer or sale of unregistered securities through any private offering, private placement or PIPE transactions. 

Donald Geraghty (Principal): Fined $40,000 jt/sev with Mathis and the Firm; and $15,000 jt/sev with the Firm; Suspended 30 days in principal capacity

Scott Lee Mathis (Principal): Fined $67,500 jt/several with the Firm; $40,000 jt/sev with Geraghty and the Firm; Suspended 30 days in principal capacity

Ronald S. Robbins: Fined $10,000; Suspended 10 business days in all capacities

Windstein willfully failed to disclose material information in his Form U4. 

Steven John Windstein : Fined $2,500; Suspended 3 months in all capacities

Taylor submitted falsified documents to the insurance division of a state regulator that represented that her insurance licenses were in good standing when in fact they were inactive due to her failure to complete continuing education. Taylor failed to timely amend her Form U4 to disclose material information and that she failed to respond truthfully during an NASD on-the-record interview. 

Marylan Katherine Taylor: Barred

Sullivan willfully failed to disclose material information on her Form U4; and failed to respond to NASD requests to appear for an on-the-record interview. 

While registered with his member firm, Lerner did not conduct any firm business but parked his license with the firm. Lerner engaged in outside business activities and private securities transactions while his license was parked.  Lerner failed to disclose a material fact on his Form U4 and provided false testimony under oath during an NASD on-the-record interview. 

Darrell Craig Lerner : Barred

Desoto willfully failed to disclose material facts on his Form U4 and failed to respond to NASD requests for information. 

Joe Desoto: Barred

Bell willfully failed to disclose material information on his Forms U4. 

Keith Anthony Bell: Fined $5,000; Suspended 3 months in all capacities.

Alvino participated in a private securities transaction without prior written notice to his member firm. Alvino failed to amend his Form U4 to disclose material information. 

Richard Michael Alvino: Fined $10,000; Suspended 4 months in all capacities

Acting through Bennett, the Firm 

• engaged in proprietary trades that required a higher minimum net capital and failed to file the required application, and receive NASD approval, to change the membership agreement under SEC Rule 15c3-1 before engaging in the proprietary trades. 
• failed to report statistical and summary information regarding customer complaints. 

Bennett willfully failed to timely amend his Uniform Application for Securities Industry Registration or Transfer (Form U4) to disclose material facts. 

Blacklake Securities Corporation: Expelled 

and Wesley Arthur Bennett Jr. (Principal):Barred

Stefano failed to disclose material information on his Form U4.

Michael Joseph Stefano ; Fined $5,000; Suspended 3 months in all capacities

Sipes failed to respond to NASD requests for information. The findings stated that Sipes willfully failed to amend his Form U4. 

Billy Joe Sipes: Barred

McGrail failed to timely amend his Form U4 to disclose material information. 

Brian Thomas McGrail : Fined $5,000; Suspended 60 days in all capacities

Littlejohn willfully failed to disclose a material fact on his Form U4. 

Charlie Harn Littlejohn Jr.: Fined $5,000; Suspended 30 business days in all capacities

Kaweske failed to promptly return investor funds after an offering closed without meeting its sales contingency, and failed to establish an escrow account for the contingency offering. He made fraudulent misrepresentations in connection with the purchase and sale of preferred stock. Also,  Kaweske willfully failed to disclose material information on his Form U4. 

John David Kaweske: Fined $140,000; Barred

Jones failed to respond to NASD requests for information, and failed to disclose material information on his Form U4. 

Kenneth T. Jones: Barred

Hirth willfully failed to disclose material information on his Form U4. Hirth functioned as a member firm’s associated person and engaged in a securities business even though he was statutorily disqualified. Also, he failed to respond to an NASD request for information and documents. 

Gary Evert Hirth: Barred

Hanson willfully failed to disclose a material fact on his Form U4. 

Jordan John Hanson: Fined $5,000; Suspended 1 year in all capacities

Desoto willfully failed to disclose material facts on his Form U4 and failed to respond to NASD requests for information. 

Joe Desoto : Barred

The Firm failed to timely file Forms U5; and its supervisory procedures regarding the timely filing of Forms U5 were not enforced. 

Wedbush Morgan Securities Inc. : Censured; Fined $18,000

The Firm executed customer transactions in municipal securities that were not reported to the MSRB within 15 minutes of the execution time. Some transactions were reported with incorrect execution times and others were reported to the MSRB in error. Also, the Firm failed to timely amend Forms U4 to disclose customer complaints and failed to timely file Forms G-36 Offical Statement (OS) with the MSRB. (NASD Case )

Fifth Third Securities, Inc. : Censured; Fined $25,000

The Respondents were aware, or should reasonably have been aware, of “red flags” that should have triggered the firm’s AML obligations. 

Acting through Rumyantsev and Santos,the Firm 

• failed to adequately implement and enforce AML procedures, 
• failed to adequately perform due diligence, file Suspicious Activity Reports (SARs) or cease trading in multiple accounts a public customer of the firm owned and controlled. 

Acting through Santos, the Firm 

• participated in private placement distributions of securities for which the memoranda represented that the offerings were on a best efforts “part or none” basis, and failed to properly escrow purchasers’ funds in a segregated account until the minimum contingency had been satisfied. The Firm caused the release of funds before satisfaction of the contingency to sell the minimum amount of securities through bona fide transactions to non-affiliated investors, thereby rendering there presentations in the memoranda false and misleading;
• failed to timely report written customer complaints to NASD;
• failed to timely report the existence of conditions that required disclosure within 10 business days after the firm knew, or should have known, of the existence of the conditions. 

Santos failed to ensure that the firm establish and maintain an effective supervisory system, including adequate written procedures, reasonably designed to achieve compliance with federal securities laws, regulations and NASD rules relating to contingency offerings and reporting requirements. 

Nevwest Securities Corporation: Censured: Fined $100,000 ($100,000 jt/sev with Santos; $75,000 jt/sev with Rumyanstev); Required to hire an independent consultant to review the firm’s policies, controls, systems, procedures and training relating to the firm’s ability to comply with the Bank Secrecy Act, NASD Rule 3011 and other anti-money laundering (AML) statutes and regulations, and all rules and regulations related to its participation in private offerings; Ordered not to a) participate in any private offering for 30 days following the effective settlement date, and b) accept or hold customer securities until it certifies to NASD that it has adopted and implemented recommendations the consultant made in the initial written report. 

Sergey Rumyantsev (Principal): Censured; $75,000 jt/sev with Firm; Suspended 3 months in Principal capacity; Required to complete 16 hours of AML training each year for a two-year period (16 hours within six months after the settlement’s effective date)

Antony Michel Santos (Principal): Censured; $100,000 jt/sev with Firm; Suspended 3 months in Principal capacity; Required to complete 16 hours of AML training each year for a two-year period (16 hours within six months after the settlement’s effective date)

Acting through Nummi, the Firm  

• failed to establish and maintain a supervisory system, and failed to establish, maintain and enforce written supervisory procedures reasonably designed to provide a system of supervision for registered representatives with disciplinary histories of repeated customer complaints, disciplinary actions and/or arbitrations;
• failed to establish and maintain a supervisory system, and failed to establish, maintain and enforce written supervisory procedures reasonably designed to prevent and detect unauthorized trading; 
• failed to enforce the firm’s written procedures relating to telecommunications; and 
• permitted a registered representative to solicit an individual by telephone after the individual had requested to be placed on the firm’s “do not call” list. 

Acting through Saunders, the Firm 

• permitted an individual whose registration was CE Inactive to effect customer securities transactions;
• failed to report, and failed to report timely, customer-related reportable matters as NASD Rule 3070 requires, and failed to timely update Uniform Applications for Securities Industry Registration or Transfer (Forms U4) or Uniform Termination Notices for Securities Industry Registration (Forms U5) with respect to customer complaints or arbitrations against registered representatives. 

Also, Sanders failed to reasonably supervise registered representatives in a branch office of the firm to prevent and detect unauthorized trading. 

GunnAllen Financial, Inc.: Fined $100,000 ($45,000 jt/sev with Saunders; $27,500 jt/sev with Nummi; $17,500 jt/sev with Nummi and Sanders

Richard Mark Nummi, (Principal) Fined $27,500 jt/sev with Firm; Fined $17,500 jt/sev with Firm and Nummi; Suspended 60 days in Principal capacity

Brian Edward Sanders (Principal) Fined $17,500 jt/sev with Firm and Nummi; Suspended 10 business days in Principal capacity

Stephen Irvin Saunders IV, (Principal) Fined $45,000 jt/sev with Firm; Suspended 60 days in Principal capacity

Nguyen failed to disclose a material fact on his Form U4, and failed to timely respond to NASD requests for information. 

Long Bao Nguyena; Fined $5,000; Suspended 8 months in all capacities

Jeffries failed to disclose a material fact on his Form U4. 

Charles Roger Jeffries III : Fined $5,000; Suspended 3 months in all capacities.

Heyrich willfully failed to disclose material facts on his member firm’s employment application and on his Form U4. 

John Joseph Heyrich: Barred

Helm failed to respond Helm failed to amend his Form U4 with material information, and failed to respond to NASD requests for information. 

John D. Helm : Barred.

Walsh failed to disclose material information on his Form U4. 

Michael Patrick Walsh : Fined $5,000; Suspended 3 months in all capacities

Sundaresan willfully failed to disclose material information on his Form U4. 

Viswanathan Sundaresan : Fined $2,500; Suspended 30 business days in all capacities

Ohlson failed to disclose a material fact on his Form U4. 

David A. Ohlson : Barred

Harbertson willfully failed to disclose material information on his Form U4.

Dan Alan Harbertson : Fined $2,500; Suspended 3 months in all capacities

Carranza failed to disclose material information on his Form U4. 

Juan Manuel Carranza Jr. : Fined $5,000; Suspended 3 months in all capacities.

The Firm failed to establish and maintain written supervisory procedures that identified the principal responsible for reviewing customer complaints, disclosures and arbitrations. The Firm reported customer complaints late and failed to amend Forms U4 and a Form U5 in a timely manner. Acting through an individual, the Firm failed to maintain a supervisory system reasonably designed to achieve compliance with applicable rules and regulations, in that the individual responsible for the direct supervision of the firm’s equity trader was not licensed as a Series 55 trading principal. 

Summit Brokerage Services, Inc. : Censured; Fined $25,000 ($7,500 jt/se with unnamed party); Required to retain an independent consultant to conduct a complete audit of the firm’s policies, practices, and procedures regarding reporting requirements under NASD Rule 3070 and NASD By-Laws Article V. 

The Firm failed to report several matters and reported one matter late pursuant to NASD Rule 3070(c), and failed to report one disclosable event on a Uniform Application for Securities Industry Registration or Transfer (Form U4), and reported other events late on Forms U4 or Uniform Termination Notices for Securities Industry Registration (Forms U5). 

FSC Securities Corporation: Censured; Fined $30,000

Smith failed to disclose a material fact on her Form U4.

Kathleen Patricia Smith: Fined $5,000; Suspended 30 days in all capacities

Sanchez willfully failed to amend his Form U4 to disclose material information.  

John Christopher Sanchez: Fined $5,000; Suspended 3 months in all capacities

Sahni willfully failed to disclose material information on her Form U4. 

Soena Sahni : Barred

Kelly willfully failed to disclose material information on his Form U4. 

John Henry Kelly: Fined $5,000; Suspended 6 months in all capacities

Frym willfully failed to disclose a material fact on his Form U4. 

Jacques Andre Frym: Fined $5,000; Suspended 6 months in all capacities

Diego willfully failed to disclose a material fact on his Form U4. 

Sergio Diego III : Fined $5,000; Suspended 6 months in all capacities.

Clemons willfully failed to disclose material information on his Form U4, and failed to respond to NASD requests for information. 

William R. Clemons: Barred

Cardoso willfully failed to disclose material information on his Form U4 and failed to respond to NASD requests for information.

Daniel Cardoso : Barred

Bloom and Scott affixed public customers’ signatures to forms without the customers’ knowledge or consent. The Firm failed to promptly and accurately file with NASD an amended Rule 3070 Report and failed to amend Scott’s Uniform Application for Securities Industry Registration or Transfer (Form U4) to disclose a written complaint alleging forgery. 

Horace Mann Investors, Inc.:Censured; Fined $10,000

Sherman Marc Bloom: Fined $5,000; Suspended 30 days in all capacities

Jerry Deamus Scott:Fined $5,000; Suspended 60 days in all capacities

Schultz willfully failed to disclose material information on his Form U4. 

Richard M. Schultz: Fined $5,000; Suspended 1 year all capacities

Lares failed to disclose material information on his Form U4. 

George Peter Lares : Fined $7,500; Suspended 40 days in all capacities

Howe willfully failed to disclose material facts on his Uniform Application for Securities Industry Registration or Transfer (Form U4); and failed to respond to NASD requests for information. 

Geoffrey D. Howe: Barred