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.

FINANCIAL INDUSTRY REGULATORY AUTHORITY
FINRA
2008

UNDISCLOSED SETTLEMENTS/GUARANTEEING AGAINST LOSSES

Read NASD Conduct Rule 2370 and NYSE Rule 352

VISIT WALL STREET'S LEADING ONLINE COMMUNITY
BrokeAndBroker.com

 

 
Lee Alexander Gold (Principal)
AWC/2006006719101/November 2008

Gold settled a customer complaint outside of his member firm without immediately informing his firmor obtaining its consent to do so. 

Lee Alexander Gold: Fined $5,000; Suspended 40 days in all capacities

Braden Scott Hill (Principal)
AWC/2007010706601/October 2008

Without informing his member firm and without the firmís approval, Hill deposited $3,200 into a public customerís bank account to compensate the customer for a loss incurred in the purchase of securities

Braden Scott Hill: Fined $5,000; Suspended 10 business days in all capacities.

Charles Lewis Bloom (Principal)
AWC/2006007507001/September 2008

Bloom made multiple payments totaling $33,000 to a public customer in order to settle a potential claim by the customer.

Charles Lewis Bloom: Fined $5,000; Suspended 20 business days in all capacities

Clifford Lee Weaver (Principal)
AWC/2007011240801/July 2008 

Weaver entered materially false and/or inaccurate public customer information on firm documents, thereby causing his member firm to maintain false or inaccurate records. Weaver signed a customerís name on investment-related forms without the customerís authorization or consent. Weaver made a $550 payment to the customer in settlement of her complaint without his member firmís knowledge. 

Clifford Lee Weaver: Barred

Jeffrey Steven Adler
AWC/2007009020301/July 2008 

Adler settled a customer complaint without notifying his current or previous member firm. 

Jeffrey Steven Adler: Fined $5,000; Suspended 10 business days in all capacities

Paul Douglas Paratore
2005002570601/June 2008  NAC IMPOSED SANCTION FOLLOWING APPEAL OF OFFICE OF HEARING OFFICERS PANEL DECISION

Paratore converted $3,772.71 of a public customerís insurance premiums and settled four customerís complaints without the member firmís knowledge or authorization.

Paul Douglas Paratore:Barred 

Frederic Ray Chavez
AWC/2006007383801/June 2008 

Chavez failed to inform his member firm about a public customerís complaintóas his firmís procedures requiredóand entered into a settlement agreement with the customer in which he agreed to pay her $60,000 to settle her complaint without his firmís knowledge or approval. 

Frederic Ray Chavez: Fined $5,000; Suspended 90 days

Juan Carlos Hernandez
AWC/2007009435601/May 2008 

Hernandez engaged in a pattern of charging commissions on equity trades substantially in excess of his member firmís standard commission rate that began at the start of, and continued throughout, his employment with the firm. He manipulated the firmís order entry system so as to enable him to charge the commissions in question. Hernandez had an express agreement with a public customer to charge a lower commission rate, but he fraudulently violated the agreement. Hernandez failed to report complaint letters from the customer as reportable complaints to his member firm, causing his firm to violate NASD Rule 3070(c). 

Juan Carlos Hernandez: Barred

Timothy Patrick Barry
AWC/20060063677-01/March 2008 

Barry attempted to compensate public customers for losses incurred related to a delay in processing a stock sale. Barry wrote personal checks totaling $7,000 to the customers without informing his member firm that he had attempted to compensate the customers, and without obtaining authority from his firm to settle the loss in this manner. 

Timothy Patrick Barry: Fined $5,000; Suspended 10 business days

NAME DELETED AT SOLE DISCRETION OF RRBDLAW (Principal) 
AWC/2007008938701/February 2008

XXX engaged in private securities transactions without prior written notice to, or prior  written approval from, his member firm. XXX settled a customer complaint without his member firm 's knowledge or approval. Also, he failed to reasonably supervise a registered representative engaged in private securities transactions to prevent his violations and achieve compliance with applicable securities rules, regulations and NASD rules. 

NAME DELETED AT SOLE DISCRETION OF RRBDLAW: Barred

Jeremy Tice Cundiff 
AWC/#20060054450-02/February 2008

Cundiff entered into a real estate business arrangement with a public customer and entered into a settlement agreement with the customer without being the customer's representative of record. Cundiff did not provide his member firm with a copy of the agreement before he signed it or before it became effective. 

Jeremy Tice Cundiff: Fined $5,000; Suspended 10 business days

Bill Singer's Comment: If FINRA is going to qualify something by pointedly noting that Cundiff was not "the customer's representative of record," it would be a tad helpful to explain why that was noteworthy.  What's the deal with that?  Was he pretending to be the RR of record, but wasn't?  Was he paying out of his own pocket for some problem caused by another RR?  Is there some more serious issue about an RR at a given member firm entering into a business deal with a client of the branch (but serviced by another RR)?

FINRA -- just too many damn questions that you should have answered!  Get your act together.

Walter Yun (Principal) 
AWC/#2006006195001/January 2008

Yun engaged in outside business activities, for compensation, without prior written notice, or any notice at all, to his member firm. When Yun was questioned by his firm about his business activities, he made misrepresentations regarding any involvement, receiving compensation, distributing sales or marketing material, discussing the business activity with any individuals and knowing any firm customers that had invested in the company. 

Yun settled customer complaints about their losses by giving the customers promissory notes without telling his firm about the customer complaints or purported settlements. Yun guaranteed customers against loss. Yun executed discretion in customer accounts without the customers' prior written authorization and his firm 's prior written acceptance of the accounts as discretionary, and exercised discretionary authority without disclosing it to his firm. 

Walter Yun (Principal): Barred

Bill Singer's Comment: This case is fairly typical of how regulators' often view certain violations as the likely tip of an iceberg, and, as such, use such opportunities as launching pads to uncover further misconduct.  As is often the case, an outside business activity (OBA) violation generally involves some deceit or effort to cover-up by the offending RR. [For more examples of this violation, visit the OBA page of this site]  It was bad enough that Yun failed to follow the OBA Rule and give prior written notice to his firm, but he then compounded his misconduct by misrepresenting the nature and extent of his involvement.  Moreover, as is often the natural result of such deceitful conduct, Yun had a number of customer complaints and similarly tried to handle those sub rosa by entering into undisclosed settlemetn. [For more about these cases, visit the Undisclosed Settlements page of this site].  

Many would think that juggling two such violations would be enough, but, frankly, veteran defense lawyers and enforcement attorneys know that there is even more below the surface.  Generally, if someone has covered up an OBA activity and entered into undisclosed settlements, there's a good chance that there's yet another improper side deal.  The way it often goes is that the RR says to the customer: "Look, give me a chance here to make it up to you.  Let me trade your account and I'll get your losses back."  And if the once-burned client says 'no,' then the RR often retorts with "Okay, how about I guarantee you against any loss?  Will that persuade you to keep this all quiet and give me a chance?"  I have no idea what happened with Yun, but I am not surprised to see how the dominos fell here.

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