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.

National Investor Services Corp.
AWC/2007011877701

National failed to establish, maintain and enforce an adequate supervisory system and written supervisory procedures to supervise its securities lending business and registered securities lending representatives to prevent and detect fraudulent activity. 

The Firm failed to

• include a description of 
  • what managers were to look for in reviewing Loanet reports, 
  • the steps to be taken if questionable activity was discovered, and 
  • how to document and maintain documentation of supervisors’ oversight activities;
• failed to take steps to detect and prevent a registered representative from participating in fraudulent stock loan transactions for his personal benefit;
• establish and maintain a separate system of follow-up and review to ensure that delegated supervisory authority and responsibility were being properly exercised. 

National permitted a stock loan supervisor to review his own transactions. 

National Investor Services Corp.: Censured; Fined $75,000