- Risk to public from felony at issue; and
- The Firm and Proposed Supervision
Whether the particular felony at issue, examined in light of the circumstances related to the felony and other relevant facts and circumstances, creates an unreasonable risk of harm to the market or investors. X’s participation in the securities industry, subject to the supervisory terms and conditions set forth below, will not present an unreasonable risk of harm to the market or investors. The felony conviction is serious;however, this felony conviction occurred in 2001, more than six years ago, and the NAC is not aware of any other misconduct by X. X has been punished for his felony offense by a State 1 state court, which ordered him to do 25 hours of community service and placed him on probation for two years. X satisfied his community service requirement, and he received a discharge from probation in June 2003.
Further, although the NAC was initially concerned with the fact that X’s felony involved a plan to defraud a car insurance company through theft by deception, but X engaged in this activity when he was only 18 years old and still in high school. Moreover, X’s actions since that time have demonstrated his efforts to rehabilitate himself. He has not been the subject of any further criminal or disciplinary actions. He performed his required community service and served his probation without incident. He has completed a substantial number of credits to obtain an Associate’s degree from a community college, and he hopes to complete a bachelor’s degree in finance and economics. He has also successfully been employed by an affiliate of the Sponsoring Firm, for more than five years.
The Sponsoring Firm has been a member of FINRA since 2002, with no formal disciplinary history.
PLAN OF HEIGHTENED SUPERVISION
The Sponsoring Firm has agreed to the following comprehensive supervisory plan to ensure that it will be able to maintain heightened supervision for X. The items that are denoted with an asterisk (*) are conditions of heightened supervision for X. Other registered representatives of the Sponsoring Firm are not subject to these heightened supervisory conditions.
1. * The Sponsoring Firm will amend its written supervisory procedures to state that the Proposed Supervisor is the primary supervisor responsible for X;
2. * X will not maintain discretionary accounts;
3. * X will not act in a supervisory capacity;
4. * The Proposed Supervisor will supervise X on-site at the Sponsoring Firm’s main office in City 1, State 2. X will not be permitted to establish or work from a primary residence office;
5. * X will not be permitted to hold seminars;
6. * X will not be permitted to meet with customers outside of the Sponsoring Firm’s main office in City 1, State 2;
7. * X will not be permitted to engage in any outside business activity unrelated to the Sponsoring Firm or its affiliates. He will be required to confirm in writing, on an annual basis, that he is not and has not engaged in any outside business activities;
8. * X will not be permitted to engage in any private placements. He will be required to confirm in writing, on an annual basis, that he has not engaged in any private placement activities;
9. * X will not be permitted to maintain any personal securities accounts other than through the Sponsoring Firm. He will be required to confirm in writing, on an annual basis, that he does not maintain any personal securities accounts other than through the Sponsoring Firm;
10. X will not be permitted to arrange financing for any customer. He will, however, be permitted to establish margin accounts for customers through Firm 1, the Sponsoring Firm’s clearing firm;
11. * The Proposed Supervisor will review and pre-approve each securities account, prior to the opening of the account by X. The Proposed Supervisor will document his approval by dating and signing the paperwork and maintaining it at the Sponsoring Firm’s main office;
12. * The Proposed Supervisor will review and approve X’s orders after execution, or as soon as practicable. The Proposed Supervisor will then review the trade reports, evidence his review by initialing the trade reports, and keep copies of the trade reports segregated for ease of review;
13. * X will not be permitted to solicit the sale of or effect transactions in options;
14. X will not be permitted to act in the capacity of a trustee, executor, administrator, conservator, or guardian of any customer accounts;
15. The Proposed Supervisor will review X’s incoming written correspondence (including email communications) upon its arrival and will review outgoing correspondence before it is sent;
16. * For the purposes of client communication, X will only be allowed to use an email account that is held at the Sponsoring Firm, with all emails being filtered through the Sponsoring Firm’s email system. If X receives a business related email message in another email account outside the Sponsoring Firm, he will immediately deliver that message to the Sponsoring Firm’s email account. X will also inform the Sponsoring Firm of all outside email accounts that he maintains. The Proposed Supervisor will preserve and segregate X’s email messages for ease of review during statutory disqualification audits;
17. All complaints pertaining to X, whether written or oral, will immediately be referred to the Proposed Supervisor for review and then to the Sponsoring Firm’s compliance department. The Proposed Supervisor will prepare a memorandum to the file as to what measures he took to investigate the merits of the complaint (e.g., contact with the customer) and the resolution of the matter. The Proposed Supervisor will segregate documents pertaining to these complaints for ease of review;
18. If the Proposed Supervisor is out of the office, Employee 1 will act as X’s interim supervisor;
19. * For the duration of X’s statutory disqualification, the Sponsoring Firm must obtain prior approval from Member Regulation if it wishes to change X’s primary supervisor from the Proposed Supervisor to another person; and
20. * The Proposed Supervisor must certify quarterly (March 31, June 30, September 30, and December 31) to the compliance department of the Sponsoring Firm that he and X are in compliance with all of the above conditions of heightened supervision.