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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 Read NASD Conduct Rule 2370 and NYSE Rule 352
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Juan Carlos Hernandez AWC/2007009435601/May 2008 Hernandez engaged in a pattern of charging commissions on equity trades substantially in excess of his member firm’s standard commission rate that began at the start of, and continued throughout, his employment with the firm. He manipulated the firm’s 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 |
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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 |
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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 |
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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 |
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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. |
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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 |
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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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