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.

Richard Francis Kresge (Principal)
CMS20030182

On remand from Securities Exchange Commission to the National Adjudicatory Council (NAC)

NAC Decision

SEC Remand Decision

This matter was remanded from the SEC to redetermine the sanctions that should be imposed on Richard F. Kresge ("Kresge"), formerly the president of Yankee Financial Group, Inc. ("Yankee Financial" or "the Firm"), for supervision, reporting, and registration violations. Kresge's violations occurred during a period when new representatives of the Firm engaged in fraudulent sales practices and unsuitable recommendations that caused substantial harm to customers. 

NASD barred Kresge in all capacities, ordered restitution to the customers at issue in the amount of $3,866,426, plus interest, and assessed costs of $9,519.61. NASD stated, “[W]e aggregate respondents’ misconduct for purposes of imposing sanctions because such misconduct emanated from a single, underlying problem: respondents’ addition of, and failure to monitor, the Brooklyn office.” 

The SEC sustained NASD’s findings that Kresge violated Conduct Rules 2110, 3010, and 3070(c) and Membership and Registration Rules 1021(a), 1031(a), IM-1000-1, and IM-1000-3. However, the SEC set aside NASD’s findings that Kresge was liable for violations by certain registered representatives of Yankee Financial of Exchange Act Section 10(b), Exchange Act Rule 10b-5, and Conduct Rules 2120, 2310, and IM-2310-2. The SEC set aside FINRA's earlier findings that Kresge had secondary liability for such fraudulent and unsuitable recommendations. Accordingly, the SEC remanded this proceeding to NASD for a redetermination of the sanctions to be imposed upon Kresge. 

Kresge failed to 

• establish or maintain a system of supervision reasonably designed to achieve compliance with applicable securities laws;
• register an individual, either as a principal or a representative, who was actively engaged in the management of the firm’s securities business as either a principal or representative of his member firm; and
• report customer complaints to FINRA.

The NAC considered Kresge’s violations as a whole and imposed the sanction of a bar in response to the totality of the misconduct. The NAC weighed each violation, in addition to Kresge’s “highly troubling” disciplinary history, and found a bar necessary “to protect investors.” 

Richard Francis Kresge (Principal): Barred