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.

NAME DELETED PER BROKEANDBROKER.COM
AWC/2009020780101

RESPONDENT'S NAME DELETED PER SOLE DISCRETION OF BROKEANDBROKER.COM processed options trades in his member firm’s average price account that its clearing firm then executed, but credited customers with inferior prices to the actual street execution price. Respondent created fictitious transactions to journal a portion of the difference between the street price and the inferior price booked to client accounts from the average price account to personal accounts he held at the firm, thereby depriving customers of best execution for their securities transactions. By using fictitious transactions, Respondent misappropriated from the firm’s average price account to his personal accounts $1,305 of the total $2,280 that represented the difference between the prices booked to the customer accounts and the street price to which the customers were entitled, thereby converting the $1,305.

Respondent used his firm’s inventory accounts to place trades that were ultimately allocated to his personal accounts and accounts his relatives held by creating fictitious trades as a means to move the gains he obtained by trading in the inventory accounts to his personal accounts his relatives held. Respondent used the firm’s inventory accounts rather than his personal accounts because he lacked the buying power in his personal accounts to place the trades.

The Firm verbally warned Respondent that he was not permitted to use inventory accounts for personal trading and distributed a written memorandum to all employees telling them that this practice was prohibited, but Respondent ignored the warning and, to avoid detection, stopped using his own accounts and began allocating trades to accounts his relatives held. Respondent ’s firm warned him in writing to stop using firm inventory accounts for personal trading or he would be terminated.

In addition, Respondent effected transactions in his relatives’ accounts to move profits generated by day trading in the firm’s accounts to his family members’ accounts without his family members’ prior written authorization to exercise discretion. Moreover, after effecting trades in the firm account and moving the proceeds to family members’ accounts, Respondent forged relatives’ signatures on wire transfer forms to move the funds he obtained to bank accounts in which he had an interest. Furthermore, Respondent caused his firm to maintain inaccurate books and records by creating fictitious trades in the firm’s inventory accounts to journal proceeds from day-trading activities and from the customer trades books at prices inferior to the prices executed with the street and by forging signatures on wire transfer forms.

NAME DELETED PER BROKEANDBROKER.COM: Barred