Statutory Disqualification Index
NOTE: Stipulations of Fact 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 & to the entry of findings. Additionally, for AWCs, if FINRA has reason to believe a violation has occurred and the member or associated person does not dispute the violation, FINRA may prepare and request that the member or associated person execute a letter accepting a finding of violation, consenting to the imposition of sanctions, and agreeing to waive such member's or associated person's right to a hearing before a hearing panel, and any right of appeal to the National Adjudicatory Council, the SEC, and the courts, or to otherwise challenge the validity of the letter, if the letter is accepted. The letter shall describe the act or practice engaged in or omitted, the rule, regulation, or statutory provision violated, and the sanction or sanctions to be imposed.

In In the Matter of the Continued Association of X as a General Securities Representative with The Sponsoring Firm

MC-400:  June 2001

Redacted Decision
SD Decision No. 01001

DENIED by Hearing Panel of the NASDR Statutory Disqualification Committee/ NAC

Filed Under: Insider Trading, Permanent Injunction, Recency, Age of Applicant, Sponsor's Regulatory History, Denial
SD Event

In 1997 the SEC alleged that X had engaged in insider trading that allegedly resulted in profits of $7,900 in his own account, and  $29,512.50 in that of his clients.  In 2000 a final judgment by consent was entered against X that permanently enjoined X from future violations of Section 10(b) Rule 10b-5 of the '34 Act.  X was also ordered to pay $53,226.49 plus interest in disgorgement, but based on X's sworn representations in a Statement of Financial Condition, payment of all but $5,000 of the disgorgement was waived. X paid the $5,000 in June 2000. 

Sentence Expiration

Permanent Injunction

Prior Industry Activity

X  has been an RR with three firms (including current sponsor) since 1963, and with sponsor since 1996.  No regulatory history


X is 76 years old and in failing health.  At the hearing he denied involvement in insider trading and claimed that his pro bono attorney told him to sign the consent judgment.

Sponsoring Firm

Firm an NASD member since 1958 (subject to name change in 1996). A general securities business clearing on a fully-disclosed basis. 16 branches. 10 registered principals and 90 RRs. 

1999 State1 administrative complaint pending that alleges sales practice violations, supervisory lapses, and books/records violations.  1998 State2 issued ex parte cease and desist order for unregistered securities sales, supervisory lapses, and failing to respond to customer complaint.1998 firm consented to a cease and desist order issued by State3 arising from registration issues, agreeing to pay an administrative assessment of $7,500 and investigative costs of $3,000

In 1997 the firm entered into a consent degree in furtherance of a prior 1996  cease and desist order issued on consent by State4that alleged supervisory violations. 

1993 AWC for books and records violations:  $2,500 Fine/Censure.1998 AWC for MSRB violations: $4,000 fine/Censure. 

Proposed Activity

X to continue as a general securities representative in home office in State 5. X's activities would be limited to taking and effecting orders for his own retail clients.  

Proposed Supervisor

Home Office Manager.  RR since 1975 and a GSP since 1984. Subject of 1996 arbitration claim by two customers alleging failure to follow instructions to sell stock.  Proposed Supervisor denied allegations but was ordered to pay $4,000 of the $24,396 in compensatory damages sought.  

Member Regulation Recommendation


Recency and seriousness of the insider trading injunction.  Sponsoring Firm's disciplinary historyraises concerns as to ability to properly supervise X.
Enforcement Actions