The Wall Street Legal & Regulatory Feed
Securities Industry Commentator by Bill Singer Esq
December 28, 2020
The Doctor Will See You Once You Sign This Binding Arbitration Agreement . As it buys up medical practices, private equity is popularizing a favored Wall Street cost-cutting tactic -- and stripping patients of rights(Bloomberg by Heather Perlberg)SEC Division of Trading and Markets' No-Action Letter: SIFMA, Regulation Best Interest
http://www.brokeandbroker.com/5605/zipper-dakota-finra-sec/
Today's blog is less a legal analysis of a case than it is a somewhat pathetic rendering of all that is wrong with Wall Street regulation. Unfolded before us is a tortured tale of miscues and missteps by regulators involving what truly appears to be a record of misconduct by the respondents. So, no . . . it's not as if FINRA's Complaints lacked justification. Frankly, it seems that there was misconduct, some of which was, indeed, serious. On the other hand, the more you read about this mess, you wonder how much of what drove the prosecutions and appeals was fueled by institutional bias against small firms and their management: Would FINRA and the SEC have gone after a large member firm or one of its C-suiters with the same hammer-and-tong approach? I'd like to think that the answer is "yes." On the other hand, history tends to offer us too many examples where the regulation of Wall Street is one of disparate treatment that comes down in a heavy-handed fashion against the industry's small fry. Looking down on the proceedings, and looking back over time, FINRA seems to be pulling wings off of flies, and doing so with disproportionate zeal and joy.
https://www.bloomberg.com/news/features/2020-12-28/the-doctor-will-see-you-once-you-sign-this-binding-arbitration-agreement?srnd=premium
A stunning, superb bit of journalism from Bloomberg's Perlberg. The title says it all -- so, I'm not going to embellish. A very, very MUST read!!!
https://www.sec.gov/divisions/marketreg/mr-noaction/2020/sifma-122320-regbi.pdf
As stated in part in the SEC's No-Action Letter;
FINRA Bars Rep for 155 Personal Car RidesBased on the facts and representations set forth in your Request, and without necessarily concurring in your conclusions and analysis, the Staff will not recommend enforcement action to the Commission against broker-dealers that do not treat family offices that qualify as Institutional Family Offices as "retail customers" for purposes of Reg BI or as "retail investors" for purposes of Form CRS requirements.
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, Yousef Abbasi submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA accepted. The AWC asserts that Abbasi was first registered in 2007, and from March 2011 to July 2018, he was registered with JonesTrading, Ltd. The AWC asserts that Abbasi "does not have any relevant disciplinary history." In accordance with the terms of the AWC, FINRA deemed that Yousef Abbasi had violated FINRA Rule 2010; and the self-regulator imposed upon him a Bar from associating with any FINRA member in any capacity. As alleged in part in the AWC:
As a Global Market Strategist, Abbasi provided market information to the Firm's traders and their clients. Although Abbasi had permission to use the Firm's corporate account for business-related travel, he did not receive authorization to use the corporate account for personal travel. However, from January 2016 through June 2018, Abbasi charged 155 personal car rides totaling $27,177.26 to the Firm's corporate account, including travel to and from the airport for personal vacations, to casinos, and to and from a friend's wedding. On each occasion, Abbasi charged the car service expense to the Firm's corporate account as if it was business-related, with the knowledge that the Firm would pay the expense, which it did.
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, Jaime I. Sanchez submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA accepted. The AWC asserts that Jaime I. Sanchez Rivera entered the industry in 2012, and by April 2017, he was registered with First Southern Securities, LLC. The AWC asserts that Jaime I. Sanchez Rivera "does not have any relevant disciplinary history." In accordance with the terms of the AWC, FINRA deemed that Jaime I. Sanchez Rivera had violated FINRA Rule 2010; and the self-regulator imposed upon him a deferred $10,000 fine and a five-month suspension from association with any FINRA member in any capacity. As alleged in part in the AWC:
In 2019, one of Sanchez's customers was required by court order in a divorce proceeding to document his assets. These assets included a $206,500 debt that Sanchez owed the customer for consultancy services rendered by the customer for Sanchez in 2012. Sanchez was embarrassed that he still had not paid his customer for these services and did not want to document his outstanding debt. Accordingly, rather than provide the customer with evidence of this debt, Sanchez decided to falsify a document to show that his customer possessed an asset valued at $206,500. On June 19, 2019, Sanchez modified a term sheet describing a real estate transaction involving the purchase of senior living housing units by a limited liability company to falsely show that the customer owned an interest in the units valued at $206,500. Sanchez forged the signature of the LLC's managing partner on the document.In May 2020, the customer provided the falsified term sheet to First Southern Securities, LLC in connection with questions the customer had about the status of his account. The firm questioned Sanchez, who admitted that he had falsified the document and forged the signature of the LLC's manager. Sanchez, however, did not want the firm to know that he owed a debt to his customer. So, rather than admit to the debt, Sanchez misinformed the firm that the purpose of the falsification and forgery was to show the customer that Sanchez would make the customer whole for trading losses incurred at a prior firm where Sanchez was the broker of record.Additionally, in connection with his customer's divorce proceedings, the customer was ordered to obtain life insurance naming his children as beneficiaries. Before the life insurance company would issue a policy, it required that the customer provide a list of his assets. Accordingly, to assist his customer in obtaining life insurance, on May 6, 2020, Sanchez provided the customer with a promissory note falsely representing that Sanchez owed the customer $250,000.
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, Paul Lawrence Fowler submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA accepted. The AWC asserts that Paul Lawrence Fowler has been registered since 1983 and by August 2016, he was registered with Wells Fargo Clearing Services, LLC. The AWC asserts that Paul Lawrence Fowler "does not have any relevant disciplinary history." In accordance with the terms of the AWC, FINRA deemed that Paul Lawrence Fowler had violated FINRA Rule 2010; and the self-regulator imposed upon him a $5,000 fine, a $1,9555.85 disgorgement plus interest, and a 30-calendar-day suspension from association with any FINRA member in any capacity. As alleged in part in the AWC:
During the relevant period, Fowler was the GSR of record for the account of Company A at Wells Fargo. Although Fowler was aware of the firm's WSPs, from October 2016 through September 2018, he executed 14 transactions with a total principal value of approximately $60,050 in his firm customer's account based on instructions he received from the husband of the principal and sole owner of Company A. The husband was not a signatory to or authorized individual on Company A's account at Wells Fargo, and Company A's owner and principal never completed a third-party authorization and indemnification form granting him trading authority. Fowler earned $1,955.85 in commissions from the 14 unauthorized transactions.