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 Albert Bush (Principal)
AWC/2007007151702

In his capacity as Director of Compliance in his member firm’s trading department (DCTD), Bush failed to adequately supervise registered representatives who sold unregistered securities on certain clients’ behalf in violation of Section 5 of the Securities Act of 1933. He also failed to take adequate steps to ensure that the registered representatives ascertained whether the securities being sold were registered, how and from whom the customers obtained their shares, whether and when the shares were paid for, and whether the transactions were subject to any exemption from registration.

As his firm’s Designated Securities Compliance Officer (DSCO), Bush was responsible for evaluating and supervising designated securities (penny stock) transactions to evaluate whether they were part of a “pump-and-dump” or other fraudulent scheme; evaluating and investigating suspicious transactions when numerous shares were deposited and immediately sold; conducting background checks on customers who were expected to engage in a significant amount of designated securities transactions to determine whether the customer had a criminal or securities disciplinary background, or had an affiliation with the issuer; meeting with customers to ensure his firm had the requisite knowledge about customers’ background and trading intentions; and reporting to the firm’s CCO and AMLCO any findings regarding issuers or customers and to certify monthly that he had reviewed, approved and monitored all accounts that conducted a significant amount of transactions in designated securities.

Bush failed to take identifiable steps to ascertain relevant information regarding customers’ disciplinary history and how they obtained the shares being deposited, and did not believe that customers’ background or numerous transactions constituted red flags.

Richard Albert Bush (Principal): Fined $10,000; Suspended 6 months in Principal capacity only

Tags: Unregistered Securities