NOTE:  Stipulation of Facts and Consent to Penalty (SFC), Offers of Settlement (OS) and Letters of Acceptance, Waiver, and Consent (AWC) are entered into by Respondents without admitting or denying the allegations, but consent is given to the described sanctions and to the entry of findings.

2005
OUTSIDE BUSINESS ACTIVITIES 

Tsang engaged in business activities outside the scope of his member firm, without providing prompt written notice of these activities to his firm. 

Fined $5,000; Suspended 6 months in all capacities

O'Brien engaged in outside business activities without giving his firm prompt written notice. 

Fined $25,000; Suspended 10 business days in all capacities

Henley participated in an outside business activity for compensation without giving his member firm prompt written notice. 

Suspended 3 months in all capacities

Fiebich engaged in outside business activities without giving his member firm prompt written notice. 

Barred

Chambers 

• induced public customers to submit $180,600 for investing purposes to his company or its agent and, without their knowledge, authorization or consent, he misused and/or converted the customers’ funds for his own use and benefit;
• recommended securities transactions to public customers without reasonable grounds to believe the investments were suitable for them in light of their financial situations, investment objectives, needs and the risks associated with the investments;
• engaged in private securities transactions and outside business activities without providing his member firm with prior written notice; and
• willfully failed to amend and to timely submit an amendment to his Form U4 to disclose material information. 

Barred; Ordered to pay $73,750 in restitution

Hermanson engaged in business activity outside the scope of his member firm and failed to provide his member firm with prompt written notice. 

Fined $6,582.54; Suspended 3 months in all capacities

Grant Jack Vermillion
AWC/2005000590201/October 2005

Vermillion participated in business activities outside the scope of his member firm without providing prompt written notice to his firm.

Fined $10,000 (includes $2,330.94 disgorgement of commissions); Suspended 30 days in all capacities

Falk engaged in a business activity for compensation outside the scope of his relationship with his member firm without providing his firm prompt written notice of the activity. 

Fined $2,500; Suspended 30 days in all capacities.

Wilkinson engaged in outside business activities for compensation without giving prior written notice to his member firm. 

Fined $5,000; Suspended 30 days in all capacities

Utter engaged in outside business activities without providing prompt written notice to his member firm; and continued to engage in outside business activity knowing that his member firm disapproved of this activity. 

Fined $15,000 (includes $8,800 disgorgement); Suspended 5 months in all capacities

Trigillo affixed a customer’s signature to securities related documents without the customer’s knowledge or consent; and transferred a customer’s funds from a fixed annuity to a variable annuity without the customer’s knowledge or consent. Trigillo affixed another registered representative’s signature on customer forms without the registered representative’s knowledge or consent. In addition, Trigillo engaged in outside business activity without providing prompt written notice to his member firm. (NASD Case #C)

Barred

Polus engaged in outside business activities for compensation without giving prior written notice to his member firm. 

Fined $10,000; Suspended 6 months in all capacities

Myers engaged in outside business activities for compensation without giving prompt written notice to his member firm. 

Fined $10,000; Suspended 6 months in all capacities

Moon engaged in business activities outside the scope of her business relationship with her member firm without providing her firm with prompt written notice of these activities. 

Fined $5,000; Suspended 3 months in all capacities

Meter engaged in outside business activities for compensation without giving prompt written notice to his member firm. 

Fined $10,000; Suspended 3 months in all capacities

Gatto engaged in outside business activities and failed to provide prompt written notice to his member firm. Gatto appeared for an on-the-record interview and failed to cooperate by refusing to answer NASD’s questions. 

Barred

Bayley engaged in business activities outside the scope of his association with his member firm and failed to give prompt written notice of his outside business activities to his member firm. 

Fined $29/966; Suspended 1 month all capacities

In September 1999, Marcus D. Braden began working as an investment specialist at Charles Schwab & Co., Inc. (the “Firm”). As an investment specialist, his duties included opening new accounts, encouraging customers to bring new or additional assets, recommending money management firms, following up with customers on a quarterly basis, and advising customers on overall portfolio strategy. His job duties did not include and did not permit disseminating specific stock recommendations and advice for short term trading. 

In or about December 2000 or January 2001, Braden met with his personal friend T, who informed Braden that he wanted to trade some portion of his assets and he wanted Braden to act as his broker. Because as an "investment specialist" he could not serve as T’s broker, Braden and T discussed the idea of opening an investment account outside of the Firm at an online brokerage.  Following his meeting with T, Braden met with two of his Schwab customers, Y and K, and spoke to them about participating in the investment club account, and both agreed to do so. Both Y and K understood that this account, and Braden’s participation in it, was not permitted by the Firm.

All the parties signed an investment club agreement for the "M.B. Partners Fund," the terms of which were that 

• each participant, including Braden, was to invest $100,000 to open the account;
• all investment decisions were to be left to Braden’s discretion;
• Braden would distribute profits to the XYZ Investors and update them on the account’s performance on a quarterly basis; and 
• Braden would keep all profits earned in the account above 10 percent. 

On or about January 31, 2001, Braden completed and signed an application to open an Investment Club Account at XYZ (not a NYSE member firm). Braden understood at the time he opened the XYZ Account that 

• it was against the Firm’s policies and procedures to open the XYZ Account without advance written approval from the Firm and that had approval been granted, duplicate copies of all confirmations and account statements were required to be sent to the Firm’s compliance department;
• he had not sought the Firm’s approval prior to opening the XYZ Account, nor did he arrange for duplicate copies of the account statements or the trade confirmations to be sent to the Firm; and
• he had an obligation to report his participation in any outside investments to the Firm’s compliance department and that he did not do so when the account was opened or at any point thereafter. 

Page one of the application asked, “Are you or a relation (or partner, if partnership) associated with securities firm, exchange, insurance company or investment advisor?” Braden answered “no”, which was untrue. 

Around the first week of February 2001, each of the investors gave Braden a check for $100,000 made out to “M.B. Partners Fund,” and signed the new account documentation. Despite his agreement to do so and without the knowledge of the XYZ Investors, Braden did not deposit his $100,000 share into the XYZ Account. 

About February 14, 2001, $300,000 was deposited into the XYZ account and Braden began trading.  By March 30, 2001, the value of the XYZ Account had dropped to approximately $87,700. Braden continued to trade the XYZ Account, and the account continued to suffer losses. Braden informed the XYZ Investors that the XYZ Account “was down,” however he never revealed to them the extent of the losses. On or about May 30, 2001, Braden transferred $1,000 from the XYZ Account to a bank account at Fifth Third Bank in the name of MB Partners Fund, and then withdrew the $1,000 for his personal use (without authorization). Between June 12, 2001 and August 29, 2001, Braden made five additional transfers totaling $22,000 from the XYZ Account to the Fifth Third Bank, all without authorization and for his personal use.

On September 30, 2001, following Braden’s withdrawals trading losses, the market value of the XYZ Account was $5,477. In or around November 2001, T informed Braden that he wanted to discontinue his participation in the XYZ Account. Braden informed T of the losses in the account and told him that he could provide T with a check for the remainder of the account. On or about November 20, 2001, Braden sold the remaining securities in the XYZ Account, and on or about November 27, 2001, a check for $6,938 was issued from the XYZ Account and given to T. Braden never told T that he had misappropriated approximately $23,000 from the account.  On April 30, 2002, without the knowledge of the XYZ Investors, the XYZ Account was closed for inactivity. 

At some point in approximately late 2002 to early 2003, Y informed Braden that he needed to withdraw some money from the XYZ Account. Braden informed Y of the losses in the account and gave Y online access to the account activity. Y calculated that approximately $30,000 had been withdrawn and distributed from the account. Braden agreed to pay Y $10,000, his share of the $30,000, by the end of 2003, and Y was satisfied with this agreement.  However, it seems that Braden left the Firm in September 2003 to work for his next employer in Sarasota, Florida, and did not inform Y --- which I guess also means that he never paid Y the promised $10,000 as of that date. 

In or around July or August 2003, after Braden informed Y of the losses in the XYZ Account, Braden met with K and informed him of the losses in the XYZ Account. K never saw the account activity and was not told about Braden’s withdrawals or the monies that were given to T. K did not receive any money from the XYZ Account and he has not made any complaints against Braden. 

About October 16, 2003, upon learning that Braden was no longer employed by the Firm, Y made an oral complaint to the Firm revealing Braden’s involvement in the XYZ Account. The Firm settled with Y for $10,000. 

The Firm terminated Braden on September 12, 2003 and amended his Form U5 to disclose the above circumstance on December 5, 2003. Upon learning of the allegations in the amended Form U5, Braden's new employer terminated him on December 18, 2003. 

The NYSE found that 

I. Engaged in conduct inconsistent with just and equitable principles of trade in that he misappropriated funds from customers of his member firm employer;

II. Violated NYSE Rule 346(b) by engaging in outside business activities without prior written consent of his member firm employer; and

III. Violated NYSE Rule 407(b) in that he maintained a securities account at a domestic non-member broker-dealer for himself and three customers of his member firm employer without the prior written consent of another person designated by his member organization to sign such consents; and failed to arrange for duplicate confirmations and monthly statements to be sent to another person designated by his member organization to review such documents. 

In support of the penalty, NYSE relied upon

• In the Matter of Fernando A. Gallardo, HPD 03-201 (November 4, 2003) http://www.nyse.com/pdfs/03-201.pdf;
• In the Matter of Douglas E. Spainer, HPD 02-145 (July 17, 2002) http://www.nyse.com/pdfs/02-145.pdf ; and
• In the Matter of Michael Anthony Fortugno, HPD 02-89 (April 24, 2002) http://www.nyse.com/pdfs/02-089-090.pdf . Each of these cases involved misappropriation of funds or securities coupled with engaging in outside business activity or maintaining a securities account at another firm without his employer’s written consent. Each of these cases resulted in the imposition of a censure and a permanent bar. 

Censure; Permanent bar in all capacities.

Lewis engaged in an outside business activity for compensation without providing written notice to his member firm; and he failed to respond to NASD requests for information. 

Barred

In September 1999, Marcus D. Braden began working as an investment specialist at Charles Schwab & Co., Inc. (the “Firm”). As an investment specialist, his duties included opening new accounts, encouraging customers to bring new or additional assets, recommending money management firms, following up with customers on a quarterly basis, and advising customers on overall portfolio strategy. His job duties did not include and did not permit disseminating specific stock recommendations and advice for short term trading. 

In or about December 2000 or January 2001, Braden met with his personal friend T, who informed Braden that he wanted to trade some portion of his assets and he wanted Braden to act as his broker. Because as an "investment specialist" he could not serve as T’s broker, Braden and T discussed the idea of opening an investment account outside of the Firm at an online brokerage.  Following his meeting with T, Braden met with two of his Schwab customers, Y and K, and spoke to them about participating in the investment club account, and both agreed to do so. Both Y and K understood that this account, and Braden’s participation in it, was not permitted by the Firm.

All the parties signed an investment club agreement for the "M.B. Partners Fund," the terms of which were that 

• each participant, including Braden, was to invest $100,000 to open the account;
• all investment decisions were to be left to Braden’s discretion;
• Braden would distribute profits to the XYZ Investors and update them on the account’s performance on a quarterly basis; and 
• Braden would keep all profits earned in the account above 10 percent. 

On or about January 31, 2001, Braden completed and signed an application to open an Investment Club Account at XYZ (not a NYSE member firm). Braden understood at the time he opened the XYZ Account that 

• it was against the Firm’s policies and procedures to open the XYZ Account without advance written approval from the Firm and that had approval been granted, duplicate copies of all confirmations and account statements were required to be sent to the Firm’s compliance department;
• he had not sought the Firm’s approval prior to opening the XYZ Account, nor did he arrange for duplicate copies of the account statements or the trade confirmations to be sent to the Firm; and
• he had an obligation to report his participation in any outside investments to the Firm’s compliance department and that he did not do so when the account was opened or at any point thereafter. 

Page one of the application asked, “Are you or a relation (or partner, if partnership) associated with securities firm, exchange, insurance company or investment advisor?” Braden answered “no”, which was untrue. 

Around the first week of February 2001, each of the investors gave Braden a check for $100,000 made out to “M.B. Partners Fund,” and signed the new account documentation. Despite his agreement to do so and without the knowledge of the XYZ Investors, Braden did not deposit his $100,000 share into the XYZ Account. 

About February 14, 2001, $300,000 was deposited into the XYZ account and Braden began trading.  By March 30, 2001, the value of the XYZ Account had dropped to approximately $87,700. Braden continued to trade the XYZ Account, and the account continued to suffer losses. Braden informed the XYZ Investors that the XYZ Account “was down,” however he never revealed to them the extent of the losses. On or about May 30, 2001, Braden transferred $1,000 from the XYZ Account to a bank account at Fifth Third Bank in the name of MB Partners Fund, and then withdrew the $1,000 for his personal use (without authorization). Between June 12, 2001 and August 29, 2001, Braden made five additional transfers totaling $22,000 from the XYZ Account to the Fifth Third Bank, all without authorization and for his personal use.

On September 30, 2001, following Braden’s withdrawals trading losses, the market value of the XYZ Account was $5,477. In or around November 2001, T informed Braden that he wanted to discontinue his participation in the XYZ Account. Braden informed T of the losses in the account and told him that he could provide T with a check for the remainder of the account. On or about November 20, 2001, Braden sold the remaining securities in the XYZ Account, and on or about November 27, 2001, a check for $6,938 was issued from the XYZ Account and given to T. Braden never told T that he had misappropriated approximately $23,000 from the account.  On April 30, 2002, without the knowledge of the XYZ Investors, the XYZ Account was closed for inactivity. 

At some point in approximately late 2002 to early 2003, Y informed Braden that he needed to withdraw some money from the XYZ Account. Braden informed Y of the losses in the account and gave Y online access to the account activity. Y calculated that approximately $30,000 had been withdrawn and distributed from the account. Braden agreed to pay Y $10,000, his share of the $30,000, by the end of 2003, and Y was satisfied with this agreement.  However, it seems that Braden left the Firm in September 2003 to work for his next employer in Sarasota, Florida, and did not inform Y --- which I guess also means that he never paid Y the promised $10,000 as of that date. 

In or around July or August 2003, after Braden informed Y of the losses in the XYZ Account, Braden met with K and informed him of the losses in the XYZ Account. K never saw the account activity and was not told about Braden’s withdrawals or the monies that were given to T. K did not receive any money from the XYZ Account and he has not made any complaints against Braden. 

About October 16, 2003, upon learning that Braden was no longer employed by the Firm, Y made an oral complaint to the Firm revealing Braden’s involvement in the XYZ Account. The Firm settled with Y for $10,000. 

The Firm terminated Braden on September 12, 2003 and amended his Form U5 to disclose the above circumstance on December 5, 2003. Upon learning of the allegations in the amended Form U5, Braden's new employer terminated him on December 18, 2003. 

The NYSE found that 

I. Engaged in conduct inconsistent with just and equitable principles of trade in that he misappropriated funds from customers of his member firm employer;

II. Violated NYSE Rule 346(b) by engaging in outside business activities without prior written consent of his member firm employer; and

III. Violated NYSE Rule 407(b) in that he maintained a securities account at a domestic non-member broker-dealer for himself and three customers of his member firm employer without the prior written consent of another person designated by his member organization to sign such consents; and failed to arrange for duplicate confirmations and monthly statements to be sent to another person designated by his member organization to review such documents. 

In support of the penalty, NYSE relied upon

• In the Matter of Fernando A. Gallardo, HPD 03-201 (November 4, 2003) http://www.nyse.com/pdfs/03-201.pdf;
• In the Matter of Douglas E. Spainer, HPD 02-145 (July 17, 2002) http://www.nyse.com/pdfs/02-145.pdf ; and
• In the Matter of Michael Anthony Fortugno, HPD 02-89 (April 24, 2002) http://www.nyse.com/pdfs/02-089-090.pdf . Each of these cases involved misappropriation of funds or securities coupled with engaging in outside business activity or maintaining a securities account at another firm without his employer’s written consent. Each of these cases resulted in the imposition of a censure and a permanent bar. 

Censure; Permanent bar in all capacities.

Bacon engaged in outside business activities without providing written notice to his member firm. He also violated standards of commercial honor and just and equitable principles of trade by billing one client for the same advisory services under both an agreement with his member firm and through his outside business. 

Censured; Fined $5,000; Ordered to pay $11,793.59 restitution to a public customer; Suspended 1 year in all capacities.

Tiwari participated in private securities transactions without providing written notification to or obtaining written approval from his member firm. Tiwari engaged in outside business activities without providing prompt written notice to his member firm. In addition, he failed to respond to NASD requests to appear for an on-the-record interview.

Barred

Ranhofer participated in a private securities transactions without providing prior written notice to or receive approval from his member firm.  Ranhofer engaged in outside business transactions and failed to give prompt notice of these activities to his member firm. Ranhofer failed to disclose material facts on his Form U4. (NASD Case #)

Barred

Newmark engaged in business activities outside the scope of his relationship with his member firm without providing prompt written notice to his member firm. 

Fined $150,000; Suspended 9 months all capacities

Mauss engaged in private securities transactions without providing prior written notice to his member firm. He engaged in outside business activities and received compensation in connection with such activity without providing prompt written notice to his member firm. Mauss failed to disclose material facts on his Form U4. 

Barred.

Rovezzi engaged in outside business activities without providing prompt written notice to his member firm; and he provided a written response to his member firm in which he falsely represented that he had not engaged in the outside business activities.

Barred

Liu engaged in outside business activities for compensation without providing written notice to his member firm. 

Fined $10,000; Suspended 6 months in all capacities

Kemmerling failed and neglected to provide prompt, written notice to his member firm of his outside business activities.

Fined $10,000; Suspended 3 months

Kelley engaged in outside business activities without providing prompt written notice to his member firm. He failed to appear for an NASD on-the-record interview. 

Barred

Harris engaged in outside business activity, for compensation, without prior written notification to, or written approval from his member firm. 

Fined $7,000 (including $2,000 disgorgement); Suspended 15 business days all capacities.

Deves engaged in outside business activities for compensation without prior written notification to his member firm.

Fined $18,541 (including $8,541 commission disgorgement); Suspended 1 year in all capacities

The NAC found that  Abbondante 

1. participated in private securities transactions without providing prior written notice to, and receiving prior written approval from, his member firm; 
2. recklessly made material misrepresentations and omissions to public customers with respect to an investment fund; 
3. engaged in outside business activities without providing prompt written notice to his member firm; and 
4. knowingly facilitated another in providing false account statements to seven customers of his member firm.

Barred; Required to pay public customers $276,265 in restitution.

READ THIS CASE IN CONJUNCTION WITH THE WEINERS AND McDONALD CASES IMMEDIATELY BELOW

NYSE Enforcement commenced its investigation on February 11, 2002 after receiving a Uniform Termination Notice for Securities Industry Representatives (“Form U-5”) from the Firm, that notified the NYSE that a co-worker of Zellers was discharged on April 19, 2001, based upon the Firm’s determination that he engaged in outside employment without prior written employer consent, and as a result of his refusal to cooperate with the Firm’s internal investigation. Enforcement concurrently investigated the conduct of Zellers and others, all of whom worked with the terminated employee, to determine whether they also engaged in an outside business activity without prior written Firm consent. Zellers voluntarily left the Firm prior to the completion of the Firm’s internal investigation. 

The NYSE found that Zellers violated NYSE Rule 346(b) by engaging in an outside business activity without written employer consent. 

Censure; Bar for 6 months in all capacities. 
Zellers agreed to cooperate with the NYSE as follows:

A. Zellers shall fully, fairly and truthfully disclose all information and produce all records in his possession and other evidence relevant to the inquiries by Enforcement concerning any violations of the federal securities laws or NYSE rules by coworkers of Zellers during his tenure at the Firm’s Cupertino branch office of which he has any knowledge or information;  

B. Zellers shall fully, fairly and truthfully testify at any contested hearing brought by the NYSE, concerning any matter falling within paragraph A above; and 

C. Zellers shall actively participate in the NYSE’s investigation and prosecution of any matter within paragraph A above, including meeting with NYSE staff when requested in order to prepare to testify at any contested hearing.

Seth Andrew Wiener
SFC/NYSE Hearing Panel Decision 05-48/May 9, 2005

READ THIS CASE IN CONJUNCTION WITH THE McDONALD CASE (IMMEDIATELY BELOW) AND THE ZELLERS CASE IMMEDIATELY ABOVE

NYSE Enforcement commenced its investigation on February 11, 2002 after receiving a Uniform Termination Notice for Securities Industry Representatives (“Form U-5”) from the Firm, that notified the NYSE that a co-worker of Seth and Eric Weiner was discharged on April 19, 2001, based upon the Firm’s determination that he engaged in outside employment without prior written employer consent, and as a result of his refusal to cooperate with the Firm’s internal investigation. Enforcement concurrently investigated the conduct of Seth and Eric Weiner and others, all of whom worked with the terminated employee, to determine whether they also engaged in an outside business activity without prior written Firm consent. Seth and Eric Weiner voluntarily left the Firm prior to the completion of the Firm’s internal investigation. 

The NYSE found that Seth and Eric Weiner violated NYSE Rule 346(b) by engaging in an outside business activity without written employer consent. 

Censure; Bar for 6 months in all capacities. 
Seth and Eric Weiner agreed to cooperate with the NYSE as follows:

A. Seth and Eric Weiner shall fully, fairly and truthfully disclose all information and produce all records in his possession and other evidence relevant to the inquiries by Enforcement concerning any violations of the federal securities laws or NYSE rules by coworkers of Seth and Eric Weiner during his tenure at the Firm’s Cupertino branch office of which he has any knowledge or information;  

B. Seth and Eric Weiner shall fully, fairly and truthfully testify at any contested hearing brought by the NYSE, concerning any matter falling within paragraph A above; and 

C. Seth and Eric Weiner shall actively participate in the NYSE’s investigation and prosecution of any matter within paragraph A above, including meeting with NYSE staff when requested in order to prepare to testify at any contested hearing.

READ THIS CASE IN CONJUNCTION WITH THE WEINERS AND ZELLERS CASES IMMEDIATELY ABOVE

MH, a customer, filed an arbitration against McDonald and others alleging various sales practice violations. The complaint arose out of a sale by MH of various mutual fund investments including various International Fund B shares, Mid Cap Growth B shares, Tax Managed Growth Fund B shares and Select Growth B shares.  MH contended that McDonald failed to sell her mutual funds after she specifically instructed him to do so during a telephone conversation. McDonald conceded his failure to execute this sale, but explained that there were mitigating circumstances for the delay, specifically, that the delay was the result of McDonald’s attempt to forestall MH’s sale, as it would have resulted in significant penalties resulting from an early sale of the mutual funds.

NYSE Enforcement commenced its investigation on February 11, 2002 after receiving a Uniform Termination Notice for Securities Industry Representatives (“Form U-5”) from the Firm, that notified the NYSE that a co-worker of McDonald was discharged on April 19, 2001, based upon the Firm’s determination that he engaged in outside employment without prior written employer consent, and as a result of his refusal to cooperate with the Firm’s internal investigation. Enforcement concurrently investigated the conduct of McDonald and others, all of whom worked with the terminated employee, to determine whether they also engaged in an outside business activity without prior written Firm consent. McDonald voluntarily left the Firm prior to the completion of the Firm’s internal investigation. In addition, the NYSE also investigated McDonald after being notified by the Firm that a customer arbitration was commenced against McDonald and others, and which included allegations of misrepresentations, unsuitable investments and the failure to execute a sale order when instructed to do so. 

The NYSE found that McDonald violated NYSE Rule 346(b) by engaging in an outside business activity without written employer consent. 

Censure; Bar for 6 months in all capacities. 
McDonald agreed to cooperate with the NYSE as follows:

A. McDonald shall fully, fairly and truthfully disclose all information and produce all records in his possession and other evidence relevant to the inquiries by Enforcement concerning any violations of the federal securities laws or NYSE rules by coworkers of McDonald during his tenure at the Firm’s Cupertino branch office of which he has any knowledge or information;  

B. McDonald shall fully, fairly and truthfully testify at any contested hearing brought by the NYSE, concerning any matter falling within paragraph A above; and 

C. McDonald shall actively participate in the NYSE’s investigation and prosecution of any matter within paragraph A above, including meeting with NYSE staff when requested in order to prepare to testify at any contested hearing.

Having raised points one and two, I must also be fair and offer the following observations.  I think we need to liberalize the outside business activities and private securities transactions violations at both NYSE and NASD because far too many RRs fall afoul of those restrictions.  The sheer numbers of violations in these areas indicate to me that the missteps are frequently out of ignorance and not with an intention to violate.  As such, we need to re-examine the reasons for these prohibitions, better communicate them to the salesforce, and also question why RRs aren't entitled to finder's fees (provided --- and I say this with NO reservation --- that full disclosure is made to the customer and the firm).  Which finally brings me to the requirement that McDonald testify against his colleagues and cooperate with the NYSE in their prosecution.  There is likely no more potent arrow in the regulator's quiver than compelling cooperation from a co-conspirator or an accessory.  Tasteful or otherwise, it is a necessary option.  Moreover, the mere threat that someone engaged with you in misconduct could be induced to turn you in, is often a potent issue that may preclude some schemes.  True, there's something in the American grain that is rankled by such cooperation, but it's often a necessary evil for the system to work.  Notwithstanding, I wish we could dispense with the charade that McDonald somehow simply "agreed to cooperate."  We all know that this was the NYSE's idea and I'm sure there was some prodding on the regulator's part.  Why even play this game?

Padilla engaged in business activities for compensation outside the scope of his member firm without providing his firm with prompt written notice of these activities. 

Fined $5,000; Suspended 6 months in all capacities

LLoyd engaged in outside business activities without first providing written notice to the member firms with which he was associated.

Fined $50,000 (includes $45,000 disgorgement); Suspended 6 months in all capacities.

James engaged in business activities for compensation outside the scope of his member firm without providing his firm prompt written notice of the activities. He failed to respond to NASD requests for information and to appear to testify.

Barred

Graves 

• engaged in a private securities transaction with a public customer without providing written notice to his member firm;
• recommended an unsuitable security to a public customer;
• participated in outside business activities without prior written notice to his member firm; and
• received a loan from a public customer, which violates his member firm’s policy prohibiting the receipt or solicitation of loans from customers. 

Fined $7,500; Suspended 20 business days in all capacities

Dubey engaged in outside business activities and failed to provide prompt written notice to his member firm. 

Fined $5,000; Suspended 30 business days in all capacities

Deves participated in outside business activities without prior written notice to his member firm. 

Fined $18,541 (includes disgorgement of $8,541 commissions); and Suspended 1 year in all capacities.

Dahmer engaged in outside business activities without providing prompt written notice to his member firm.

Fined $5,000; Suspended 60 days in all capacities; Required to requalify as a General Securities Representative

Bello made unsuitable recommendations to public customers; and engaged in outside business activities for compensation without providing prompt written notice to his member firm. 

Fined $26,718.92 (includes disgorgement of $26,718.92 --- apparently NASD limited the fine to the actual disgorgement because of Bello's "financial status"); Suspended 1 year

Dellinger engaged in outside business activities, received $15,287 in compensation, and failed to provide written notice to his member firm of his intent to engage in such activities. 

Fined $5,000; Suspended 15 business days all capacities

Avila received $92,000 from public customers to invest in securities for the customers, but failed to follow the customers’ instructions and converted the funds to his own use and benefit. Further, he owned or maintained control over two brokerage accounts at an NASD member firm, but failed to disclose his association with his member firm to the firm carrying the accounts, and failed to disclose the existence of the accounts to his member firm. Also, Avila failed to provide prompt written notice to his member firm that he was employed by, or received compensation from, an outside business activity. 

Barred

Peterson engaged in outside business activities by receiving compensation for selling viaticals, and failed to give prompt written notice of his activities to his member firm. 

Peterson was Barred

Nuciola failed to provide prompt written notice of his outside business activities to his member firm.

Nuciola was Fined $5,000 and Suspended 20 days in all capacities

Christ engaged in outside business activities without providing the firm prompt written notice.

Christ was Fined $5,000 and Suspended 3 months in all capacities.

Amick engaged in outside business activities by receiving compensation for providing financial planning services to public customers, and failed to give prompt written notice of his outside business activities to his member firm.

Amick Fined $5,000 and Suspended 30 days in all capacities.

Pett engaged in outside business activities for which he received in excess of $75,780 in compensation and failed to provide his member firm with prompt written notice of his outside business activities.

Pett was Fined $10,000 and Suspended 6 months in all capacities.

Nobrega engaged in an outside business activity without providing prompt written notice to his member firm; and failed to appear for an NASD on-the-record interview. 

Nobrega was Barred.

Lanza e conducted outside business activities for which he received $70,000 in compensation while employed with his member firm, and failed to provide his firm with prompt written notice of his activities. 

Lanza was Fined $10,000 and Suspended 3 months in all capacities.

Huebner engaged in outside business activities for compensation and failed to provide his member firm with prompt written notice of these transactions and his role therein. 

Huebner was Barred.

Holstein engaged in business activities outside the scope of his relationship with his member firm for compensation and failed to provide his member firm with prompt written notice. 

Holstein was Fined $5,000 and Suspended 30 days in all capacities.

Walthall engaged in outside business activities and private securities transactions without prompt written notification to his member firm and his firm’s written approval to engage in the private securities transactions. 

Fined $35,000, suspended from 1 year in all capacities; and ordered to requalify by exam as a general securities representative (Series 7) before re-entering the securities industry. 

Pittenger engaged in outside business activities and failed and neglected to provide prompt written notice to his member firm. 

Fined $10,000 and suspended 3 months in all capacities.

Ladah engaged in private securities transactions outside the normal scope of employment with his member firm and failed to give prior written notice to, and receive approval from, his member firm. Also, he engaged in outside business activities without providing prompt written notice to his member firm. 

Fined $5,000; suspended 2 years in all capacities; ordered to disgorge to customers $49,200 commissions plus interest

Tony Ricardo Brown
AWC/C8A040100/January 2005

Brown engaged in outside business activities and failed and neglected to provide prompt written notice to his member firm.

Fined $2,500 and suspended for 10 business days in all capacities. 

From May 1985 to May 2003, Meizner was employed as in a non-registered capacity as an internal auditor at the Firm. Around July 2000, Meizner began taking educational courses with a division of a non-member firm. In late 2001, the non-member firm contacted Meizner and asked him to provide his opinion about its services to potential customers and answer their questions. In exchange for his services, the non-member firm agreed to pay Meizner 5% of the amount paid by each customer who signed up for a seminar or who purchased any of its products as a result of their discussions with Meizner. Thereafter, on or about March 1, 2002, Meizner began receiving compensation from the non-member firm for his services while he was employed by the Firm. During 2002, Meizner received a total of approximately $226 in compensation from the nonmember firm for his services. During 2003, prior to the termination of his employment from the Firm, Meizner received a total of approximately $1,212 from the non-member firm for his services. Meizner neither requested nor received the Firm’s written consent to engage in business activity with the non-member firm while he was employed by the Firm. On January 30, 2002, Meizner signed a Firm document entitled Principles of Employee Conduct, in which he acknowledged that he received a copy of Firm policies prohibiting employees from engaging in outside business activities without the prior written consent of the Firm and agreed to comply with those provisions throughout the year. Nevertheless, Meizner failed to disclose when he began engaging in outside business activities with a non-member firm on or about March 1, 2002. On January 23, 2003 and February 12, 2003, while Meizner was employed by the Firm and receiving compensation from the non-member firm, he signed two additional Principles of Employee Conduct forms issued by the Firm, in which he acknowledged that he would comply with the Firm’s compliance rules regarding employee outside business activities throughout 2003. When he signed these forms, Meizner failed to disclose to the Firm that he was engaged in outside business activities with the non-member firm. 

Around November 2002, while employed by the Firm, Meizner opened a securities account with another securities firm (“the Account”). On the application Meizner completed to open the Account, Meizner stated that he was self-employed with a company called Tech Equities 2003. Meizner described himself as the owner of Tech Equities 2003 and described the nature of his business as Finance-Investing. Meizner listed the address for Tech Equities 2003 as his home address. In response to the following questions on the application to open the Account: “Are you currently affiliated or employed by a member of a stock exchange or the NASD” and “Do you have an affiliation with, or work for a securities firm, bank, trust or insurance company,” Meizner responded “No,” which was not true. Meizner did not request or obtain the Firm’s approval for opening the Account and he did not request duplicate copies of his Account statements to be sent to the Firm, as required by Exchange Rule 407(b). On or about March 11, 2003, while Meizner was employed by the Firm and maintained the Account, Meizner signed a Firm document entitled Brokerage Accounts Outside the Firm, which required each employee to disclose all outside brokerage accounts. Meizner signed the document without disclosing the Account. 

The NYSE found that Meizner

I. Violated Exchange Rule 346(b) in that, without making a written request and receiving the prior written approval of his member organization employer, he engaged in outside business activity. 

II. Violated Exchange Rule 407(b) by maintaining a securities account at another securities firm without the prior written consent of his member firm employer, and without arranging duplicate confirmations and monthly statements of such account to be sent to his member firm employer. 

III. Engaged in conduct inconsistent with just and equitable principles of trade in that he made misstatements to his member firm employer concerning his outside business activities and his securities account maintained outside his member firm employer.

Censure and a 1 year Bar 

Currie failed to give prompt notice of his outside business activities to his member firm. 

Fined $2,500 and suspended 2 months in all capacities