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REGULATORY CASES OF NOTE
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NASD REGULATION, INC. |
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OFFICE OF HEARING OFFICERS |
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| DEPARTMENT OF ENFORCEMENT v. | |
| FORREST
G. HARRIS Disciplinary Proceeding No. C07010084 May 31, 2002 Hearing Officer – Jerome Nelson
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NASD Conduct Rule 2110 U-4: 23A(1)(b) U-4: 23B(1)(b)
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| RR accused of a NASD Conduct Rule 2110
violation in that hewillfully submitted a materially inaccurate
Uniform Application for Securities Industry Registration or Transfer ("Form
U-4").Question 23A(1)(b) asked "[h]ave you ever...been charged
with any felony?" Question
23B(1)(b) asked "[h]ave you ever...been charged
with a misdemeanor…involving...wrongful taking of
property...?" Harris
answered those questions "No".
While in college at a homecoming party, Respondent allegedly was involved in stealing a parking meter, throwing beer at a police officer, possessing someone else's driver's license [first charged as felonies, then reduced to misdemeanors, and ultimately not prosecuted] , and stealing some cough medicine [charged as a petit larceny misdemeanor and ultimately dropped]. If Harris' non-disclosure of his history of criminal charges was found to be willful, under Section 15(b)(4)(A) of the Securities Exchange Act of 1934he would be deemed disqualified from functioning as an associated person in the securities industry. It should be noted that willful is not an element of the offense under NASD Rule 2110, but see Article III, Section 4(f) of the NASD By-Laws, which tracks the federal statutory language. The Panel was not persuaded by a preponderance of the evidence that Harris' omissions were willful. Essentially, Harris did not answer the U-4's questions carefully and accurately, but that did not, in and of itself, rise to a willful disregard.. Statutory disqualification would otherwise flow automatically from any material error. Such a result would penalize every applicant who made a mistake and would render the "willfulness" requirement meaningless. Given the circumstances of the matter at hand, the Panel deemed the events and charges had little significance for purposes of assessing Harris' fitness for employment in the securities industry. Nor did the omissions result in employment of a statutorily disqualified person. Section 15(b) of the Securities Exchange Act of 1934 turns on convictions, not charges. Further, there was no showing of "harm" on this record. Harris' firm itself discovered the falsity, questioned Respondent, and directed that he file an amended U-4. Consequently, Harris was fined $7,500, suspended in all capacities for a period of two months, and directed to pay $1,190.22 in costs. RETURN TO REGULATORY CASES OF NOTE INDEX
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RRBDLAW.COM AND SECURITIES INDUSTRY COMMENTATOR™ © 2004 BILL SINGER THE ARTICLES PUBLISHED HERE REPRESENT THE PERSONAL VIEWS OF THE AUTHOR, AND NOT NECESSARILY THE VIEWS OF ANY LAW FIRM OR ORGANIZATION WITH WHICH HE MAY BE AFFILIATED. ALL STATEMENTS MADE IN THESE ARTICLES ARE FOR GENERAL INFORMATION ONLY AND ARE NOT INTENDED TO PROVIDE, NOR SHOULD THEY BE RELIED ON AS, LEGAL ADVICE. READERS MUST CONSULT WITH QUALIFIED LEGAL COUNSEL BEFORE RELYING UPON ANY CONTENT CONTAINED HEREIN. STATEMENTS MADE IN THESE ARTICLES MAY BE INCORRECT FOR YOUR JURISDICTION OR AT THE TIME WHEN YOU READ SUCH STATEMENTS THE UNDERLYING RULES, REGULATIONS AND/OR DECISIONS MAY NO LONGER BE CONTROLLING OR PERSUASIVE AS A MATTER OF LAW OR INTERPRETATION. Telephone: 917-520-2836 Fax at 720-559-2800 E-mail to bsinger@rrbdlaw.com FOR DETAILS ABOUT MR. SINGER, PLEASE READ HIS ONLINE BIOGRAPHY 
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