AWC/2009019051902/ 2010
AWC/2008015144801/ 2010
Shields assisted a relative, an unregistered person at the time, with the sale of a fixed and variable annuity. Shields signed and submitted the customer’s annuity application to his member firm and the annuity company after discussing the matter with firm principals; Shields also signed the firm’s new account application as the customer’s introducing agent, thereby facilitating his relative’s violation of registration rules.
Shields certified on the annuity application that he had explained the contract to the customer even though he knew he had not done so. Shields’ relative became registered with the same firm and the day after he became registered, the annuity transaction settled. Shields later received a commission payment for the annuity sale from his firm for approximately $50,500, he shared the payment with his relative.Shields did not disclose to the firm that he shared the commission payment, and from the time his relative became registered with the firm until the termination of Shields’ association with the firm, it was his relative, not Shields, who was the registered representative responsible for advising the customer on the annuity and for servicing the customer’s account in which the annuity was held at the firm. In addition, Shields failed to take any steps to correctly disclose on the firm’s books and records that his relative was the responsible representative, rendering the firm’s records inaccurate.
AWC/2009018322101/ 2010
AWC/2008011794901/ 2010
The Firm
- issued research reports that the firm labeled “Asset Analysis Focus” (AAF) on a paid subscription basis;
- did not consider the AAF a research report;
- did not have in place policies and procedures designed to ensure compliance with the various research related rules applicable to firms that issue research reports, such as those relating to research analyst and research principal registration, disclosures, conflicts, annual attestations and written supervisory procedures;
- allowed registered representatives at the firm to collaborate in the preparation of AAFs without having passed a qualifying examination,
- allowed an individual also to collaborate in the preparation of AAFs without being registered as a general securities representative or in any other capacity through the firm, and without having passed a qualifying examination.
A general securities principal supervised the preparation of AAFs without having passed the qualifying examination.
Certain AAFs the firm issued failed to disclose certain NASD Rule 2711 required information, including the financial interest in the issuer of the research analysts who prepared the reports, price charts for issuers where the firm has assigned a price target for at least one year, and the valuation methods used to determine price targets and the risks that may impede achievement of the price targets.
An individual who collaborated in the preparation of AAFs purchased securities of companies during the 30-day period before the publication of the research reports concerning those companies. In addition, The firm did not have the required research report-related written supervisory procedures in place, and the firm did not have a senior officer make the required annual attestation that the firm had adopted and implemented the required written supervisory procedures.
Moreover, the Firm did not make the required annual attestations for several years and filed inaccurate annual attestations for other years.
AWC/2008015144802/ 2010
Petracek recommended the purchase of a fixed and variable annuity to a customer, and since he was not registered with any FINRA member firm, he was unable to sign the annuity application. Petracek’s relative became associated with a member firm, signed the customer’s annuity application and submitted it to his firm, and the annuity company listed the relative as the introducing agent after discussing the matter with principals of the firm. Petracek knew his relative was not present when the customer signed the annuity application or during any of his meetings with the customer at which the annuity was discussed, and he knew that his relative never met or spoke with the customer.
Petracek became registered at the same firm as his relative, and the annuity transaction settled the day after Petracek became registered. Petracek’s relative later received a commission payment of approximately $50,500 for the annuity sale from the firm, which he shared with Petracek, and Petracek did not disclose to the firm that he shared in this commission payment.
During his employment at the firm, Petracek continuously served as the registered representative responsible for advising the customer on the annuity and for servicing the customer’s account in which the annuity was held at the firm, although the relative’s name remained on the account as the responsible agent. In addition, Petracek failed to take any steps to correctly disclose on the firm’s books and records that he—not his relative—was the responsible representative, rendering the firm’s records inaccurate.
OS/2008015310801/ 2010
AWC/2009018521601/ 2010
Rhodes failed to give notice to his member firm as required by the firm and FINRA rules that he was engaged in an outside business activity and was being compensated by an individual for providing financial services. The individual contacted Rhodes for financial advice on several businesses the individual owned and on a number of issues and Rhodes met with his firm’s officers to develop a plan for working with the individual.
Rhodes firm’s officers told him that he had to qualify and become registered as an investment adviser representative (Series 65) before he could provide the services the individual requested and be compensated for those services. Rhodes was paid $25,000 per month from one of the individual’s businesses even though he was not registered as an investment adviser representative. The Firm learned about the compensation through other means.
- 529 College Savings Plan
- Abandoned Accounts
- Algorithmic Trading
- Altered Customer Phone Records
- AML
- Annual Compliance Certification
- Annual Compliance Meeting
- Annuity
- Asset Purchase Agreement
- ATM
- Away Accounts
- Background
- Bank
- Banks
- Beneficiary
- Best Efforts Offering
- Blackjack
- Borrowed
- Borrowing
- Breakpoint
- Casino
- CE
- CFTC
- Changes Of Address
- Check
- Check Kiting
- Checks
- CIP
- CMO
- Commodity Futures
- Commodity Pool
- Communications
- Computers
- Confidential Customer Information
- Contingency Offering
- Continuing Education
- Conversion
- Conviction
- Cooperation Agreement
- Correspondence
- Credit Cards
- Currency
- Day Trading
- Deceased
- Delivery Instructions
- Discretion
- Do Not Call
- EIA
- Elderly
- Electronic Communications
- Electronic Storage
- Embezzled
- Escheat
- Escrow
- Estate
- Expenses
- False Proof Of Insurance
- False Statements
- Fax
- Federal Appeal
- Felony
- Finder Fees
- Finder\\\'s Fees
- Fingerprints
- FINOP
- Firm Committment Offering
- FOCUS
- FOREX
- Forgery
- Freely-Tradable
- Futures
- Gifts
- Guaranteeing Against Losses
- Hedge Fund
- Impersonation
- Inspections
- Instant Messaging
- Insurance
- Internet
- Investment Advisor
- Letter Of Credit
- Life Insurance
- Living Trust
- LOA
- Loan
- Log On IDs
- Margin
- Mark-Up Mark-Down
- Material Change Of Business
- Membership Agreement
- Minimum Contingency
- Modification Of Sanctions
- Money Laundering
- MSRB
- Mutual Fund
- Mutual Funds
- NAC
- Net Capital
- Notary
- Notice Of Levy
- NSF
- Operations Manager
- Options
- Orders
- OSJ
- Outside Accounts
- Passwords
- Payphones
- POA
- Policy Lapse
- Ponzi
- Power Of Attorney
- Pre-arranged Trading.
- Private Placement
- Private Securities Transaction
- Producing Manager
- Production Quota
- Promissory Notes
- Proprietary Traders
- Public Appearances
- Qualified Domestic Relations Order
- Radio
- Regulation S-P
- REIT
- Research
- Restitution
- SAR
- Scripts
- Signature
- Solicited
- Statutory Disqualification
- Suitability
- Supervision
- Supervisory System
- Surrender Charge
- Surrender Charges
- Suspense Account
- Taping Rule
- Telemarketing
- Television
- Term Life
- Testing
- Third Party Vendor
- Time & Price Discretion
- Trading Limits
- Trading Volume
- Trust Account
- Turnover
- Two Party Consent
- U.S. Treasuries
- UIT
- Unclaimed Funds
- Universal Lease Programs
- Unregistered Office
- Unregistered Person
- Unregistered Principal
- Unregistered RRs
- Unregistered Securities
- Unregistered Supervisor
- Variable Annuity
- Variable Insurance
- Website
- Willfully
- WSP
- Zero Coupon