Enforcement Actions
Financial Industry Regulatory Authority (FINRA)
CASES OF NOTE
2009
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.
Harvest Capital Investments, LLC and Dennis Cotto
2005001305701
National Adjudicatory Council (NAC) imposed sanctions on appeal from Office of Hearing Officers (OHO) Decision

NAC Decision

OHO Decision

Acting through Associated Person Cotto, the Firm 

  • permitted Cotto to manage and control its securities business and otherwise engage in activities and functions that required registration with FINRA as a general securities principal, even though he was not registered with FINRA, and while he was suspended by FINRA for six months in any capacity;
  • failed to respond fully and completely to additional FINRA requests for information; and
  • willfully filed false or inaccurate amendments to its Uniform Application for Broker-Dealer Registration (Form BD)

Cotto failed to produce certain documents at a FINRA on-the-record interview, and willfully failed to amend his Uniform Application for Securities Industry Registration or Transfer (Form U4) to disclose material information.

Harvest Capital Investments, LLC: Expelled

Dennis Cotto: Barred

Bill Singer's Comment
At first blush you think -- Associated Person??--hmmm, must be some green kid. However, when you read the case, you find that in 1998 when Cotto purchased Harvest Capital he was a licensed attorney and real estate broker "and knew nothing about the securities industry." Even more intriguing, in connection with a separate 2004 FINRA investigation about Cotto's functioning as an unregistered Principal, he settled the case for a six-month suspension and $5,000 fine.  Amazingly, much of the cited misconduct occurred during Cotto's six-month suspension.  It's a very interesting tale and I urge you all to read FINRA's decisions noted above.
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