The Wall Street Legal & Regulatory Feed
Securities Industry Commentator by Bill Singer Esq
April 12, 2019
Wikileaks Founder Charged in Computer Hacking Conspiracy (DOJ Release)
https://www.justice.gov/opa/pr/wikileaks-founder-charged-computer-hacking-conspiracy
In an Indictment filed in the United States District Court for the Eastern District of Virginia, https://www.justice.gov/opa/press-release/file/1153486/download, Julian P. Assange, the founder of WikiLeaks, is charged with conspiracy to commit computer intrusion, The DOJ Release alleges in part that:
Assange engaged in a conspiracy with Chelsea Manning, a former intelligence analyst in the U.S. Army, to assist Manning in cracking a password stored on U.S. Department of Defense computers connected to the Secret Internet Protocol Network (SIPRNet), a U.S. government network used for classified documents and communications. Manning, who had access to the computers in connection with her duties as an intelligence analyst, was using the computers to download classified records to transmit to WikiLeaks. Cracking the password would have allowed Manning to log on to the computers under a username that did not belong to her. Such a deceptive measure would have made it more difficult for investigators to determine the source of the illegal disclosures.
During the conspiracy, Manning and Assange engaged in real-time discussions regarding Manning's transmission of classified records to Assange. The discussions also reflect Assange actively encouraging Manning to provide more information. During an exchange, Manning told Assange that "after this upload, that's all I really have got left." To which Assange replied, "curious eyes never run dry in my experience."
Banker's Affair With Customer's Husband Lands Safra in FINRA Arbitration
(BrokeAndBroker.com Blog)
(BrokeAndBroker.com Blog)
http://www.brokeandbroker.com/4531/finra-safra-arb/
Today's blog features music videos by Carrie Underwood, Destiny's Child, and the Hollies. What kind of lawsuit, you may wonder, would prompt such an oddball array of tunes? Well, howsabaout I tease you with the fact that we got a wife suing Safra Securities LLC because she claims the firm's bank officer had an affair with her husband! Oh . . . so now you're intrigued? Oh . . . so now, maybe, just maybe, you're gonna make some time to read today's article? Oh . . . yeah, sure, it's only because there's an important legal-regulatory-compliance-jurisdictional issue involved and you're such a serious person. And why are you smiling and laughing when you say "jursidictional" -- as if you'd find "respondeat superior" anywhere near as funny?
Get Your Motor Runnin'. Head Out on the West Side Highway (or FDR Drive). In the Matter of Edward M. Daspin, a/k/a "Edward (Ed) Michael", Luigi Agostini, and Lawrence R. Lux (Final Prehearing Order, Admin. Proc. Rul. Rel. No. 6538, Admin. Proc. File No. 3-16509 / April 10, 2019) https://www.sec.gov/alj/aljorders/2019/ap-6538.pdf
The saga continues, and, "no," I am not going to relate each and every step along the SEC-way from the 2015 Order Instituting Proceedings to the public hearing that has finally been scheduled for April 15, 2019, at 9:00 a.m. EDT in Courtroom 238, Jacob K. Javits Federal Building, 26 Federal Plaza, NY, NY 10278. For those of you interested, read: "Daspin Death Star Battles SEC And Lone ALJ Jedi Knight Grimes" (BrokeAndBroker.com Blog) http://www.brokeandbroker.com/3836/daspin-grimes-/ In any event, Respondent Daspin submitted yet another in a long, long, long line of submissions -- and in the "Final Prehearing Order," his latest effort is referenced in part as:
a twelve-page filing on April 8, 2019, titled "Final contempt response" that mainly asserts facts but, in addition, asks for directions to the courthouse, requests that the hearing begin at 10:30 a.m. because of traffic, and states that Daspin will rely on the Division for witnesses and copies of exhibits.
SEC Chief ALJ Brenda P. Murray apparently drew the short straw. Barely containing her likely exasperation with this case (and the collective exasperation of all those who preceded her), she ruled, in part, that:
With respect to Daspin's first request, there are many online sites that will provide door-to-door directions for getting to the Javits Federal Building using a range of transportation options, including cars and public transportation.
Get your motor runnin' . . . head out on the West Side Highway (or the FDR Drive) . . . turn right at City Hall . . . try to find parking in Lower Manhattan . . .
https://www.ssb.texas.gov/news-publications/lpl-pays-450000-texas-selling-unregistered-securities
Pursuant to a Consent Order entered into with the Texas State Securities Board, https://www.ssb.texas.gov/sites/default/files/LPL_Order%20No_IC19-CAF-01.pdf,
LPL Financial LLC agreed to pay a $450,000 fine to the State of Texas and repurchase certain securities it sold to investors.. The Consent Order is purportedly part of national settlement between state securities regulators and LPL over the firm's regulatory failures that allowed the sale of unregistered and non-exempt equities and fixed-income securities to its clients. The multi-state investigation focused on LPL's retention, use, and subsequent cancellation of third-party services integral to LPL's compliance with state securities registration requirements. In addition to the fine paid to State of Texas, LPL will contribute $49,000 to the Investor Protection Trust, a nonprofit organization that supports investor education efforts in Texas and other states.
FINRA AWC Addresses 74 Forgeries by Sales Assistant. In the Matter of Denise Marie Bucci Respondent (FINRA AWC 201705531330, April 10 2019)
http://www.finra.org/sites/default/files/fda_documents/2017055313301
%20Denise%20Marie%20Bucci%20CRD%201195774%20AWC%20jm.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, Denise Marie Bucci submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA accepted. The AWC asserts that Bucci first became registered in 1996 and by September 12, 2013, she was registered with FINRA member firm Raymond James Financial Services, Inc. The AWC asserts in part that on "August 17, 2017, RJFS filed a Form U5 disclosing Bucci's termination as of July 20, 2017 after RJFS "...identified issues relating to the authenticity of certain client signatures." In accordance with the terms of the AWC, FINRA found that Bucci violated FINRA Rule 2010 and caused RJFS to violate FINRA Rules 4511 and 2010; and, accordingly, FINRA imposed on Bucci a $7,500 fine and a one-year suspension from association with any FINRA member in all capacities. As set forth in part in the AWC:
[B]ucci worked as a sales assistant for KM, a registered representative and branch manager. In or around April 2017, RJFS's Asset Management Services Department rejected a customer form because the signature was outdated. In response, Bucci submitted a new form that contained an identical signature with an updated date. When KM confronted her about the signatures, Bucci admitted that she affixed the customer's signature by cutting and pasting it from a prior form. At the time, Bucci claimed that her falsification of the customer's signature was an isolated incident. However, during an onsite branch examination in July 2017, RJFS discovered numerous additional documents that contained forged or falsified signatures.
Specifically, during the Relevant Period, Bucci forged KM's signature in his capacity as branch manager or registered representative at least 74 times. In certain instances, Bucci forged KM's signature to conceal from him the fact that she had falsified customer signatures. Bucci also falsified customers' signatures on account-related documents such as client agreements; transfer requests; limited trading authorizations; IRA distribution requests; and ACH profile setup requests at least 25 times during the Relevant Period. When RJFS discovered the additional instances of Bucci's forgery and falsification, she admitted to her misconduct. Bucci's forgeries and falsifications were accommodations to customers regarding transactions they had previously authorized or on forms that they ultimately signed and did not result in customer harm. Moreover, Bucci did not benefit financially from her misconduct. . .
Willful Failure to Disclose Felony Charge and Plea Prompt FINRA Fine And Suspension.
In the Matter of Justin R. Cornelison Respondent (FINRA AWC 2018057932901, April 10 2019)http://www.finra.org/sites/default/files/fda_documents/2018057932901
%20Justin%20R.%20Cornelison%20CRD%204788827%20AWC%20jm.pdfFor 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, Justin R. Cornelison submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA accepted. The AWC asserts that in June 2004, Cornelison first became registered with FINRA through Foresters Financial Services, Inc., where he remained until March 27, 2018, when the firm filed a Uniform Termination Notice for Securities Industry Registration ("Form U5"), stating "[w]hile associated with our firm, Mr. Cornelison was convicted of a felony offense (Driving While Intoxicated) and therefore is subject to a statutory disqualification as defined in Section 3(a)(39) of the Securities Exchange Act of 1934..." In accordance with the terms of the AWC, FINRA found that Cornelison willfully failed to amend his Form U4 to disclose that he had been charged with, and subsequently pled guilty to, a felony, in violation of Article V, Section 2(c) of FINRA's By-Laws, and FINRA Rules 1122 and 2010; and, accordingly, FINRA imposed on Cornelison a $5,000 fine and a six-month suspension from association with any FINRA member in any and all capacities.
http://www.brokeandbroker.com/index.php?a=topic&topic=willfulhttp://brokeandbroker.com/PDF/WillfulSD.pdfhttp://www.brokeandbroker.com/index.php?a=topic&topic=felony
Cornelison acknowledged upon signing the AWC that:
I understand that this settlement includes a finding that I willfully omitted to state a material fact on a Form U4, and that under Section 3(a)(39)(F) of the Securities Exchange Act of 1934 and Article III, Section 4 of FINRA's By-Laws, this omission makes me subject to a statutory disqualification with respect to association with a member.
As set forth in part in the AWC [Ed: footnote omitted]:
In December 2011, while registered with the Firm, Cornelison was arrested and charged with the felony of Operating a Motor Vehicle While Under The Influence Of Alcohol Or Drugs ("DWI"). The complaint charging Cornelison with the DWI specifically apprised him that the crime he had been charged with was a felony. Nonetheless, Cornelison did not amend his Form U4 to disclose that he had been charged with a felony within 30 days of learning that he had been so charged, as he was required to do.In September 2012, also while registered with Foresters Financial, Cornelison entered a guilty plea to the felony DWI charge.' Cornelison did not timely amend his Form U4 to disclose that he had been convicted of a felony. Indeed, he remained registered through Foresters Financial for another five years without amending his Form U4 to disclose his felony charge and conviction.In addition, while registered with Foresters Financial, Cornelison provided false responses on annual attestations submitted to the Firm. Specifically, Cornelison falsely certified that his Form U4 was "correct and current" on five separate occasions from 2012 through 2017. Further, Cornelison falsely certified on four separate occasions from 2014 through 2017 that he had not "been named or involved in any ... criminal matters ... that ha[d] not been reported to the firm?"
Rep Fails to Fully Disclose Nature of Outside Business Activities And Is Fined Suspended by FINRA.
In the Matter of Jason Lane Respondent (FINRA AWC 2017056005701, April 10 2019)http://www.finra.org/sites/default/files/fda_documents/2017056005701
%20Jason%20Lane%20CRD%204967267%20AWC%20va.pdfFor 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, Jason Lane submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA accepted. The AWC asserts that Lane entered the industry in 2005 and from November 2011 to October 2017, Lane was associated with Wells Fargo Clearing Services, LLC. In accordance with the terms of the AWC, FINRA found that over more than four years, Lane had failed to notify WFCS about his role in three outside business activities including his alleged efforts to solicit investments for same. In the case of two notices of outside business activities, the AWC alleges that they were untimely. In accordance with the terms of the AWC, FINRA alleged that Lane violated FINRA Rule 3270 and Rule 2010; and, accordingly, FINRA imposed on Lane a $5,000 fine and a three-month suspension from association in any capacity with any FINRA member.
In part the AWC alleges:http://www.brokeandbroker.com/index.php?a=topic&topic=obahttp://brokeandbroker.com/PDF/Rule3270OBAAnalysis.pdf
In November 2012, Lane began engaging in an outside business activity, a company that he helped to found, Agriplas LLC. Lane notified WFCS about that outside business activity but described his role for Agriplas as merely "[a]dvis[ing] business management on how to best design and sell crop yield enhancement devices utilizing plasma." WFCS allowed Lane to participate in Agriplas, provided that he did not solicit investments in the company. However, on at least five occasions from June to December 2013, Lane arranged and participated in meetings with potential investors in Agriplas without notifying WFCS.In December 2013, Lane began engaging in a second outside business activity, a company called Atlas Agriculture Systems, Inc. that he founded and led as its chief executive officer. In January 2014, Lane told WFCS that Atlas was a "reformed" incarnation of Agriplas, but he did not notify WFCS about the full nature of his role for Atlas. In February 2014, Lane attempted to raise capital for Atlas without notifying WFCS. Four months later, Lane notified WFCS about his outside business activity for Atlas, identifying himself as the company's chief executive officer. WFCS allowed Lane to participate in Atlas, provided that he did not solicit investments in the company. However, Lane subsequently tried to raise $4 million for Atlas, again without notifying WFCS.In July 2016, Lane began engaging in a third outside business activity, a company called HydroNOx, Inc. that he founded and led as its chief executive officer. Six months after starting HydroNOx, Lane notified WFCS about that outside business activity, identifying himself as the company's chief executive officer. In March 2017, WFCS refused to allow Lane to participate in that outside business activity. However, Lane continued to work for HydroNOx for at least five more months, helping to prepare presentations for potential investors and crafting a proposal for raising capital for the company, all without notifying WFCS.In mid-2017, WFCS discovered Lane's undisclosed participation in his outside business activity, and the firm terminated its association with him. FINRA investigated the circumstances of Lane's termination from WFCS, and that investigation led to this disciplinary proceeding. While Lane notified WFCS that he was engaging in outside business activity for Agriplas, Atlas, and HydroNOx, he did not disclose the full nature of his activity -- significantly, that he was attempting to solicit investments, contrary to WFCS's restrictions, although none of Lane's attempts to raise capital for his outside business activities resulted in any securities transactions. As Lane's notices about his outside business activities were or became inaccurate, they were not valid. And, Lane did not timely notify WFCS about his outside business activity for Atlas and HydroNOx. As a result, Lane violated FINRA Rule 3270 and consequently FINRA Rule 2010.