Securities Industry Commentator by Bill Singer Esq

In the Matter of Steven Albert Gotter, Respondent (AWC 2016051302401, November 28, 2018). 

http://www.finra.org/sites/default/files/fda_documents/2016051302401%20Steven
%20Albert%20Gotter%20CRD%201201173%20AWC%20jm.pdf ,the Respondent consented to a $10,000 fine; a four-months suspension in Principal-only capacity,  and a two-month suspension in all capacities; and as set forth in this AWC's "Overview":

From July 2006 through August 2016 (the "Relevant Period"), Gotter and his two registered sales assistants used the same password to access the Finn's systems. The two sales assistants then regularly used the common password to log into Gotter's system "Worklist" to evidence Goner's approval of new accounts by affixing his electronic signature when, in fact, Gotter never reviewed the account documents for the accounts that he purportedly approved. 

Similarly, during a six and one-half year portion of the Relevant Period, while Gotter was tasked with performing supervisory functions at the Lake Oswego branch office of the Firm, Gotter also authorized one of his two sales assistants to sign his name on documents to evidence his supervisory review and approval of branch correspondence and branch check logs that he had not, in fact; reviewed. 

By the foregoing, Goiter caused the falsification of Firm documents in violation of NASD Rule 2110 (from July 2006 through December 14. 2008) and FINRA. Rule 2010 (from December 15, 2008 through August 2016), and violated NASD Rules 3110 (from July 2006 through December 4. 2011) and 2110 (from July 2006 through December 14, 2008) and FINRA Rules 4511 (from December 5, 2011 through August 2016) and 2010 (from December 15. 2008 through August 2016) by causing the Firm to create and maintain inaccurate books and records in violation of Section 17(a) of the Exchange Act and Rules 17a-3 and 17a-4 promulgated thereunder. Gotter also failed in his capacity as a supervisor to enforce the Firm's written policies and procedures regarding the confidentiality of passwords. delegation of supervisory authority and falsification of documents in violation of NASD Rules 3010(b) (from July 2006 through November 30, 2014) 2110 (from July 2006 through December 14, 2008) and FINRA Rules 3110(b) (from December 1. 2014 through August 2016) and 2010 (from December 15. 2008 through August 2016).  

In the Matter of Holly Louise Walcher, Respondent (AWC 2016051302301, November 28, 2018). 

http://www.finra.org/sites/default/files/fda_documents/2016051302301%20Holly
%20Louise%20Walcher%20CRD%201512169%20AWC%20va.pdf ,the Respondent consented to a $5,000 fine and a two-month suspension in all capacities; and as set forth in this AWC's "Overview":

From July 2006 through August 2016 (the "Relevant Period"), Walcher shared a common password with the registered financial advisor ("FA") for whom she worked. Walcher, with the FA's authorization, then routinely used the common password to log into the FA's system "Worklist" to evidence the FA's approval of new accounts by affixing his electronic signature when, in fact, the FA had neither seen nor reviewed the account documents for those accounts. 

Similarly, during a six and one-half year portion of the Relevant Period, while the FA was tasked with performing supervisory functions at the Lake Oswego branch office of the Firm, Walther, with the FA's authorization, signed his name on documents to evidence the FA's supervisory review and approval of branch correspondence and branch check logs that the FA had neither seen nor reviewed. 

By the foregoing, Walcher falsified Firm documents in violation of NASD Rule 2110 (from July 2006 through December 14, 2008) and FINRA Rule 2010 (from December 15, 2008 through August 2016), and violated NASD Rules 3110 (from July 2006 through December 4, 2011) and 2110 (from July 2006 through December 14, 2008) and FINRA Rules 4511 (from December 5, 2011 through August 2016) and 2010 (from December 15, 2008 through August 2016) by causing the Firm to create and maintain inaccurate books and records in violation of Section 17(a) of the Exchange Act and Rules 17a-3 and 17a-4 promulgated thereunder.  

Another Wall Street Fall Girl Takes A FINRA Flop (BrokeAndBroker.com Blog, September 25, 2015)

http://www.brokeandbroker.com/2908/sexism-finra/

FINRA Bars Female Sales Asst Instructed To Impersonate Customers (BrokeAndBroker.com Blog, October 10, 2014)

http://www.brokeandbroker.com/2566/finra-commonwealth-impersonation/

Getting The Wall Street Girl To Do It (BrokeAndBroker.com Blog, April 21, 2014)

http://www.brokeandbroker.com/2566/finra-commonwealth-impersonation/

Sexist Double Standard? Female Sales Assistant Sanctioned By FINRA (BrokeAndBroker.com Blog, October 26, 2012)
http://www.brokeandbroker.com/1716/finra-sexist-female-sales-assistant-awc/

Wall Street's Women Set Up For Regulatory Failure (BrokeAndBroker.com Blog, July 25, 2012)

http://www.brokeandbroker.com/1579/finra-women-regulatory-failure-sexism/

After the New Jersey Attorney General discovered Osiris Fund Limited Partnership (Osiris), a hedge fund founded by Peter Zuck, perpetrating a Ponzi scheme which defrauded its investors of more than $6.5 million, the Attorney General instituted suit against Zuck and Osiris. Osiris operated through the securities trading platform of plaintiff Interactive Brokers, LLC (Interactive ), and plaintiff Kevin Michael Fisher, as an Interactive employee, assisted Osiris in using Interactive's platform. 

Under a consent order, Zuck was determined to have violated securities laws and defrauded investors, and he was ordered to pay restitution of $7,564,273. Defendant Richard Barry (the Receiver) was appointed as receiver for Osiris. 

1) a declaration that the Receiver "brought claims against [p]laintiffs in an arbitration commenced before [FINRA] that are beyond" his powers in the appointment order; and 2) "injunctive relief to prevent the Receiver from continuing . . . the FINRA arbitration." Plaintiffs alleged the claims were "beyond the scope of the Receiver's authority" because the Receiver grounded his claims on the damages incurred by Osiris's investors, rather than Osiris itself.

1) "the claims set forth in the Receiver's Statement of Claim [were] brought on behalf of Osiris Fund itself, not Osiris Fund's investors"; 2) the Receiver's ability to file the Statement of Claim with FINRA was authorized under the trial court's appointment order, N.J.S.A. 49:3-69(c), and N.J.S.A. 14A:14-1 to -27; 3) the Receiver's claims arose from a dispute between Interactive and Osiris, mandating a resolution in arbitration under the Agreement; and 4) the in pari delicto defense plaintiff asserted was grounded in the merits of Receiver's arbitration claims, and therefore required an arbitrator's determination. 

It is clear a receiver's action is not invalidated, even if the return of assets to the receivership may ultimately benefits its investors. Here, the Statement lists Osiris as its sole claimant. The Statement charges plaintiffs with aiding and abetting Zuck in his fraudulent conduct and details their substantial participation in the wrongdoing. These are claims that belong to Osiris, which was harmed when its funds were removed for unauthorized purposes. It is entitled to the return of the unlawfully transferred monies. The Receiver cannot be deprived of standing to pursue Osiris's legal remedies, even if the defrauded investors become the recipients of the recovered assets. As a result, we are satisfied the Chancery judge did not abuse his discretion in denying plaintiffs' preliminary injunction as they failed to demonstrate a "reasonable probability of ultimate success on the merits." Crowe v. De Gioia, 90 N.J. 126, 133 (1982). 

We are also unpersuaded by plaintiffs' argument that the Receiver's claims are not subject to arbitration. In our de novo review of the arbitrability of a claim, we consider whether: 1) the parties entered into a valid and enforceable agreement to arbitrate disputes; and 2) the dispute falls within the scope of the agreement. Hirsch v. Amper Fin. Servs., LLC, 215 N.J. 174, 187- 88 (2013). "In reviewing such orders, we are mindful of the strong preference to enforce arbitration agreements, both at the state and federal level." Id. at 186.

Plaintiffs contend this dispute does not fall within the scope of the Agreement because Osiris is the customer under the Agreement, not Osiris's investors. In light of our resolution of this issue, the Receiver has brought claims on behalf of Osiris and not the investors, and, therefore, the Receiver is plaintiffs' customer. Since the Agreement requires "any" dispute or claim arising between Osiris and plaintiffs to be arbitrated by FINRA, this dispute falls within the Agreement's scope and is subject to FINRA arbitration. 

11th Circuit Rejects Mandatory FINRA Arbitration By Customers (BrokeAndBroker.com Blog, 

September 25, 2018)
http://www.brokeandbroker.com/4200/finra-11cir-arbitration/

FINRA Arbitrators See No UBS, Citigroup, or Merrill Customers And Dismiss Case  (BrokeAndBroker.com Blog, January 23, 2018)
http://www.brokeandbroker.com/3786/finra-arbitration-jurisdiction/

Widow Lacks Standing In FINRA Arbitration Involving Husband's IRA  (BrokeAndBroker.com Blog, December 8, 2017)

http://www.brokeandbroker.com/3711/widow-ira-finra/

GUEST BLOG: Who Is A Customer For Purposes of FINRA Arbitration Rule 12200 by Martin P. Unger Esq  (BrokeAndBroker.com Blog, September 16, 2016)
http://www.brokeandbroker.com/3247/martin-unger-arbitration-customer/

The customer, in the underlying dispute, alleged that the purchase of Body Drama common stock (BRDM) in his accounts was not authorized. The evidence indicates that this allegation was false. 

The credible testimony of the Claimant, as well as the facts outlined in his Statement of Claim and in his IAPD report, indicate that the customer's accounts were nondiscretionary. Claimant testified credibly that, after a telephonic conversation with the customer, the purchase was fully authorized, and this testimony was supported by the following Broker Statement in his IAPD Report made at or around the time that the customer's claims were settled: "TO PRESERVE CLIENT RELATIONS, PAINEWEBBER SETTLED FOR $18,000. TRADE WAS FULLY AUTHORIZED. THE CLIENT DID NOT MAKE ANY CLAIM ABOUT THE TRADE BEING UNAUTHORIZED UNTIL ALMOST 2 MONTHS AFTER TRADE DATE WHEN STOCK PRICE HAD DECLINED SHARPLY. ALTHOUGH REGISTRANT WAS FORCED TO PAY HALF THE SETTLEMENT AMOUNT, REGISTRANT VEHEMENTLY DENIES ANY WRONGDOING ASSOCIATED WITH THIS INVESTMENT." 

Respondent, as well as the Firm Statement in Claimant's IAPD Report, also stated that the "trade was fully authorized", and in its settlement agreements with the account holders, Respondent disputed the customer's claims and denied liability. 

• Securities Industry Commentator
• Bill Singer