MATTHEW D.
MITCHELL
Exchange Hearing Panel Decision
02-131
June 19, 2002,
Hearing Officer ---
Edward W. Morris, Jr.
SOURCE CITE
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NYSE
Rule 476(a)
NYSE Rule 408(a)
NYSE Rule 342.16
After
the death of a customer, RR continued to exercise trading discretion in
the account pursuant to an expired Power of Attorney. RR also
exercised "oral" discretion in other accounts. RR sent
unapproved e-mails to customer. Censure and 16 month bar.
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RR
Mitchell submitted a Stipulation of Facts and Consent to Penalty to the
NYSE, which was accepted by the Hearing Panel as set forth below.
While
Mitchell was an RR at Wheat First Securities, Inc, his father executed a
Power of Attorney giving his son full authority to manage his securities
account at that member. The father died a few weeks
thereafter. The POA did not survive the father's death, but Mitchell
continued trading in the account for another eight months, at which time
his employer learned of his conduct and he was permitted to resign. During
the post-death trading period, Mitchell's trading was deemed improper
"discretionary" activity, which earned him $125,000 in
commissions.
Separately,
Mitchell was determined to have effected 50 discretionary trades in
several customer accounts at Wheat First and at his subsequent employer,
Gruantal & Co., LLC. Those questioned trades were not pursuant
to the written authorization required under NYSE Rule 408(a), but were
purportedly permitted by the customers through oral grants of
discretion. One of the customer's is reported to have complained
against Gruntal and Mitchell, and recieved a $50,000 settlement (Mitchell
did not contribute).
Finally,
while at Gruntal, Mitchell sent e-mails (without first obtaining his
firm's approval and without providing copies) to one of the customers in
whose accounts oral discretion was exercised. These unapproved
communications were deemed in violation of NYSE Rule 342.16, which
requires members to reasonably supervise RR's communications concerning
customer accounts. Mitchell was censured and barred for 16 months is
all capacities.
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