The Wall Street Legal & Regulatory Feed

Securities Industry Commentator by Bill Singer Esq

April 1, 2020





http://www.brokeandbroker.com/5147/vaccarelli-fraud/
Stockbroker and investment advisor Leon C. Vaccarelli got into the ring with the United States Government and thought he could go the distance against a 21-count Indictment. In the end, Vaccarelli found himself on his back, looking up at the ceiling, and being counted out. Perhaps hearing the bell for the 13th Round of a 12 Round fight, Vaccarelli continued to fight back via a Motion for Acquittal. Sometimes you just gotta know when to stay down.


Can You Arb the StatArbers? (By Gontran de Quillacq)
https://www.navesinkinternational.com/Articles/Can
%20You%20Arb%20the%20StatArbers.pdf
Statistical arbitrage (often referred to in industry lingo as "StatArb") encompasses a number of strategies that typically generalize pair-trades whereby you would go long one company while shorting another in the same industry/sector. In part, you are trying to place bets on the under- and over-valued shares in an effort to exploit your trade. Other descriptions of StatArb rely heavily on an expectation that a given data set will typically revert to its mathematical mean -- which prompts an opening for algo trading to exploit perceived non-correlated outliers. In recent years, StatArb has been something of a Wall Street darling. More importantly, folks have made money by StatArbing. In a provocative but compelling analysis, Gontran de Quillacq examines why StatArbing has suddenly underperformed as a strategy.


JPMorgan starts mandatory diversity training for managers after discrimination allegations (CNBC by Hugh Son)
https://www.cnbc.com/2020/03/31/jpmorgan-starts-diversity-training-after-discrimination-allegations.html
As reported in part by Hugh Son:

JPMorgan Chase said it was instituting mandatory diversity and inclusion training for its managers after a December New York Times article detailed racial discrimination at a branch in Arizona.

The bank, which admitted to failures tied to the report in January, said Tuesday in a staff memo it had targeted several areas where it could improve its culture and processes to prevent more incidents from happening. That includes diversity training for all of the bank's 257,000 employees, with special training for managers, the New York-based lender said.


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, Genesis Zschocher submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA accepted. The AWC alleges that Genesis Zschocher was employed in 2019 by FINRA member firm CUNA Brokerage Services, Inc. as a Coordintor. The AWC alleges that Zschocher "does not have any disciplinary history with the Securities and Exchange Commission, any state securities regulators, FINRA, or any other self-regulatory organization." In accordance with the terms of the AWC, FINRA found that Zschocher had violated FINRA Rule 2010; and the self regulator imposed upon her a $5,000 deferred fine and a two-month suspension from association with any FINRA member firm in any capacity. As set forth in part in the AWC:

Zschocher joined CUNA as a Non-Registered Fingerprinted Person in the position of Coordinator in March 2019. As a condition of her employment, Zschocher was required to successfully complete several licensing and qualifications exams, including the SIB Exam, by July 2019. 

Zschocher first attempted the SIE Exam on May 16, 2019, and a score of 70% or above was required to pass. Zschocher failed the exam and advised the Firm of that failure on May 20, 2019. At that time, Zschocher orally represented to CUNA that she had received a score of 69%, which was not accurate. 

Zschocher attempted the SIE Exam again on June 24, 2019. She failed this exam, receiving a score of 48%. That same day, Zschocher informed her CUNA supervisor that she had again failed the exam, and was instructed to bring her printed score report to the office the next day. Prior to meeting with her supervisor, however, Zschocher created a modified version of her official score report for that exam, reflecting an inaccurate score of 69%. On June 27, Zschocher provided this falsified score report to her CUNA supervisor.  


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,William James Hite submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA accepted. The AWC alleges that William James Hite was first registered in 1998, and since 2015, he was registered with FINRA member firm  NewYork Life Securities LLC. The AWC alleges that Hite  "does not have any disciplinary history with the Securities and Exchange Commission, any state securities regulators, FINRA, or any other self-regulatory organization." In accordance with the terms of the AWC, FINRA found that Hite had violated FINRA Rule 2010; and the self regulator imposed upon him a $7,500 fine and a six-month suspension from association with any FINRA member firm in any capacity. As set forth in part in the AWC:

In January 2018, Firm Customer EW, an elderly investor, met with Hite and initiated an exchange from a variable annuity to a fixed annuity. EW signed all the transaction related documents to effect the exchange. The documents did not conform to firm guidelines and Hite was required to have the customer sign the documents again and resubmit to the firm. 

Subsequently, Hite attempted to contact EW but was not successful in reaching him. Rather than having customer EW sign the documents again, on March 8, 2018, Hite forged EW's handwritten signature on a hold harmless agreement, one of the transaction related documents. On March 28, 2018, Hite also electronically forged EW's signature on three additional transaction-related documents to effect the exchange. These transaction documents included the Fixed Annuity Application, Client Profile and Policy Disclosure form, and the Replacement of Life Insurance or Annuities form. Hite's forgeries are aggravated by the fact that, in order to authenticate the electronic signatures, Hite re-created an e-mail address previously used by EW and used it to verify the forged electronic signatures. Unbeknownst to Hite, EW had passed away on February 22, 2018, prior to the forgeries. Although EW had previously signed these documents, Hite was not authorized to sign for EW. Hite submitted the transaction related documents to the Firm for processing as originals signed by EW.


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, Mark T. Lamkin submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA accepted. The AWC alleges that Mark T. Lamkin was first registered in 1991, and since 2018, he was registered with FINRA member firm LPL Financial LLC. The AWC alleges that Lamkin "does not have any disciplinary history with the Securities and Exchange Commission, any state securities regulators, FINRA, or any other self-regulatory organization." In accordance with the terms of the AWC, FINRA found that Lamkin had violated FINRA Rules 3240 and 2010; and the self regulator imposed upon him a $7,500 fine and a three-month suspension from association with any FINRA member firm in any capacity. As set forth in part in the AWC:

On three occasions between December 2011 and August 2017, while registered through LPL, Lamkin borrowed a total of $1,265,000 from a longtime friend who was also an LPL customer whose account he serviced. The first loan, which was made in December 2011 in the amount of $740,000, was made via a promissory note dated December 30, 2011 signed by Lamkin's wife and secured by a mortgage dated December 30, 2011 identifying Lamkin and his wife as the borrowers and signed by both. That loan has been repaid in full. The second loan, in the amount of $250,000, was negotiated between Lamkin and the customer and memorialized by a note signed by Lamkin's wife on April 1, 2017. The third loan, in the amount of $275,000, was made to a limited liability company ("LLC") of which Lamkin was a member and initially was memorialized by a note signed by Lamkin and his business partner in the LLC on August 31, 2017. While the second and third loans have not been repaid in full, they are currently in repayment. 

Throughout the relevant period, LPL's written supervisory procedures prohibited registered representatives from borrowing money from a customer unless the customer was a family member. The customer was not Lamkin's family member, and Lamkin did not seek or obtain prior approval of any of the loans from LPL. 

Additionally, in annual compliance questionnaires completed in 2012 and 2017, Lamkin falsely affirmed that neither he nor "any related person or entity" had "borrowed or loaned any money or securities from or to another individual or entity.

Permalink

Search RRBDLaw

Related Topics

Previous Entries

No Headlines Found

Tag Cloud

Securities Industry Commentator Bill Singer BrokeAndBroker RRBDLaw Securities Industry Commentator by Bill Singer Esq Bill Singer Esq securities industry commentator Bill Singer RRBDLAW