Enforcement Actions
Financial Industry Regulatory Authority (FINRA)
CASES OF NOTE
2011
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.
December 2011 - View all for this month
Raymond Thomas Blunk
OS/2007008935009
OS/2007008935009
Blunk recommended that customers participate in a
Stock-to-Cash program
under which customers would pledge stock to obtain loans to
purchase other products.
Customers obtained non-recourse loans, totaling approximately $1.8
million, from a
non-broker-dealer company and pledged stock to that entity as
collateral for the loans;
the pledged stock would be transferred to the loaning entity’s
securities account, which
was maintained at a clearing firm.
The loans were in amounts
up to 90 percent of the value of the pledged stock and were
typically for a short period of
time, usually three years, with no payments required during the
term of the loan; instead,
customers were required to pay the full principal and interest due
at the end of the loan
term. Customers used some of the loan proceeds to purchase
insurance products through
Blunk.
Documentation used by the
loaning entity made it
appear that the entity was retaining the securities customers
pledged and might use
those securities to enter into hedging transactions, but the
customers actually conveyed
full ownership of their stock to the entity conducting the
program, which routinely sold
the securities upon receipt and often moved the money into its own
bank account.
When the entity became unable to make
complete payments to
customers with profitable portfolios, it used the proceeds from
the sale of securities new
customers pledged to pay off its obligations to existing customers
and diverted money to
pay for expenses not related to its operation. Blunk did not undertake adequate efforts to find
out what happened to
the stock that was conveyed to the lender; he relied on
information the persons marketing
the program provided and assumed that the lender was a
broker-dealer holding the stock
for his customers in custodial accounts. Blunk did not undertake
any steps to verify this
mistaken assumption.
The intermediaries with
whom Blunk dealt
refused to provide more information when he tried to obtain information
about the lender
and nevertheless, continued to entrust his clients’ securities to
the lender.
Raymond Thomas Blunk: Fined $15,000; Suspended 25 days
Tags: Stock To Cash
Enforcement Actions
Search in Cases of Note : FINRA
Months
Cases of Note : FINRA Archive
Tags
- Accredited Investor
- Affirmative Determination
- AML
- Annual Compliance Certification
- Annual Compliance Meeting
- Annuities
- Annuity
- Appeal
- ATM
- Away Accounts
- Bank
- Bankruptcy
- Banks
- Best Efforts Offering
- Blank Forms
- Borrowed
- Borrowing
- Broadcast
- Campaign Contributions
- CCO
- CDs
- Check
- Check Kiting
- Checks
- Churning
- CIP
- Clearing Agreement
- CMO
- Commissions
- Communications
- Computers
- Concentration
- Confidential Customer Information
- Contingency Offering
- Continuing Education
- Conversion
- Corporate Credit Card
- Correspondence
- Credit Cards
- Customer Protection Rule
- Debit Card
- Deceased
- Discretion
- Do Not Call
- Due Diligence
- EIA
- Elderly
- Electronic Communications
- Electronic Storage
- Embezzled
- Escrow
- Estate
- ETF
- Expenses
- Expulsion
- False Statements
- Felony
- Finder Fees
- FINOP
- FOCUS
- Foreign Language
- FOREX
- Forgery
- Form ADV
- Freely-Tradable
- Futures
- Gifts
- Guaranteeing Against Losses
- Hedge Fund
- Heightened Supervision
- Impersonation
- Insider Trading
- Inspections
- Installment Plan Contracts
- Instant Messaging
- Insurance
- Internet
- Investment Advisor
- IRA
- Joint Account
- Life Insurance
- LOA
- Loan
- Loaning
- Margin
- Mark-Up Mark-Down
- Material Change Of Business
- Membership Agreement
- Minimum Contingency
- Money Laundering
- Mortgage
- Mutual Funds
- NAC
- Net Capital
- NSF
- Options
- OSJ
- Outside Accounts
- Outside Business Activities
- Parking
- PIPE
- Ponzi
- Power Of Attorney
- Private Placement
- Private Securities Transaction
- Producing Manager
- Production Quota
- Promissory Notes
- Proprietary Traders
- Public Appearances
- Referral Fees
- Reg D
- Reg U
- Regulation 60
- Regulation S-P
- REIT
- Research
- Reverse Mortgage
- RIA
- Rule 8210
- SAR
- SBA
- Scripts
- Shadowing
- Sharing Profits
- Signature
- Solicited
- Statutory Disqualification
- Stock To Cash
- Suitability
- Supervision
- Supervisory System
- Suspense Account
- Testing
- Third Party Vendor
- Time And Price Discretion
- Trading
- Trading Limits
- Trading Volume
- Trust Account
- Trustee
- U.S. Treasuries
- UIT
- Unauthorized Transaction
- Universal Lease Programs
- Unregistered Person
- Unregistered Principal
- Unregistered RRs
- Unregistered Securities
- Unregistered Supervisor
- Variable Annuity
- Variable Insurance
- Viaticals
- Website
- Willfully
- WSP
- WSPs