FINRA Enforcement Actions 2012

Jan D. Narrine (CRD #5738183, Associated Person, Winter Garden, Florida)

Published on: July 6, 2012 | By Russell L. Forkey, P.A.

Theft and Forgery FINRA Arbitration and Litigation Attorney, Russell L. Forkey, Esq.

January, 2012:

Jan D. Narrine (CRD #5738183, Associated Person, Winter Garden, Florida) submitted a Letter of Acceptance, Waiver and Consent in which he was barred from association with any FINRA member in any capacity. Without admitting or denying the findings, Narrine consented to the described sanction and to the entry of findings that he misappropriated a total of $57,311.99 by transferring funds from customers’ accounts to his own, and in each instance, forged the customers’ signatures on LOAs, which falsely purported to authorize and instruct the transfers. The findings stated that the transfers were made without the customers’ knowledge or authorization. (FINRA Case #2010024395501).

Susan Lynn Morris (CRD #1072185, Registered Principal, Wylie, Texas)

Published on: July 6, 2012 | By Russell L. Forkey, P.A.

Stock Broker Misrepresentation and Fraud FINRA Arbitration and Litigation Attorney, Russell L. Forkey, Esq.

January, 2012:

Susan Lynn Morris (CRD #1072185, Registered Principal, Wylie, Texas) submitted a Letter of Acceptance, Waiver and Consent in which she was barred from association with any FINRA member in any capacity. Without admitting or denying the findings, Morris consented to the described sanction and to the entry of findings that she converted a total of approximately $30,000 of her member firm’s funds for her personal use by altering information to generate interest payment streams not legitimately owed; specifically, Morris artificially inflated the asset account balances of the brokerage account she owned jointly with a relative, as well as the relative’s brokerage account at the firm, in order to receive additional interest on the accounts from the firm not legitimately owed. The findings stated that Morris also generated bogus payments to a firm interest expense account which she journaled to a firm cashiering account she controlled. Morris transferred the funds, disguised as legitimate automated clearing house deposits, into her relative’s brokerage account as a deposit. The findings also stated that in some instances, Morris forged colleagues’ initials on certain bogus account entries in the firm’s systems without their knowledge in an effort to conceal her activity; Morris’ firm did not authorize the transfer of firm funds for her personal use. (FINRA Case #2011029021901).

Theora McMillan (CRD #5779512, Associated Person, Apex, North Carolina)

Published on: July 6, 2012 | By Russell L. Forkey, P.A.

Stock Broker Fraud, Misrepresentation and Mismanagement FINRA Arbitration and Litigation Attorney, Russell L. Forkey, Esq.

January, 2012:

Theora McMillan (CRD #5779512, Associated Person, Apex, North Carolina) submitted a Letter of Acceptance, Waiver and Consent in which she was barred from association with any FINRA member in any capacity. Without admitting or denying the findings, McMillan consented to the described sanction and to the entry of findings that she submitted false insurance applications electronically to her member firm, generating commissions to which she was not entitled. The findings stated that as part of the process, McMillan was required to provide telephone numbers, social security numbers and bank account information for the customer. In many instances, the information McMillan provided was false, either nonexistent, did not belong to the named insurance applicants, or in some cases the signatures on some of the written applications she submitted did not match the signatures of the persons identified as customers. The findings also stated that McMillan was credited with commissions earned on the policies upon completion and submission of the applications. (FINRA Case #2011027687601).

Michael Adam Lichtenstein (CRD #2439244, Registered Representative, Boca Raton, Florida)

Published on: July 6, 2012 | By Russell L. Forkey, P.A.

Private Placement Fraud and Misrepresentation FINRA Arbitration and Litigation Attorney, Russell L. Forkey, Esq.

January, 2012:

Michael Adam Lichtenstein (CRD #2439244, Registered Representative, Boca Raton, Florida) submitted a Letter of Acceptance, Waiver and Consent in which he was fined $50,000 and suspended from association with any FINRA member in any capacity for 24 months. The fine must be paid either immediately upon Lichtenstein’s reassociation with a FINRA member firm following his suspension, or prior to the filing of any application or request for relief from any statutory disqualification, whichever is earlier. Without admitting or denying the findings, Lichtenstein consented to the described sanctions and to the entry of findings that he solicited firm customers to invest in a private placement offering of securities and sent several customers a one-page document entitled “use of proceeds” for an entity that was not the offering’s issuer. The findings stated that the document had been prepared by Lichtenstein’s firm’s outside counsel and the firm provided the document to Lichtenstein for distribution to prospective investors. The findings also stated that while some of the proceeds from the offering were ultimately used to purchase membership interests in the other entity, the offering was not for the other entity. The findings also included that although Lichtenstein never owned any interest in his firm, he represented to a customer that he did have an ownership interest in the firm. FINRA found that Lichtenstein willfully failed to timely disclose material facts on his Form U4.

Bruce Benjamin Katz (CRD #1234370, Registered Representative, Melville, New York)

Published on: July 6, 2012 | By Russell L. Forkey, P.A.

Improper Borrowing of Funds From Client by FINRA Licensed Account Executive, FINRA Arbitration and Litigation Attorney, Russell L. Forkey, Esq.

January 2012:

Bruce Benjamin Katz (CRD #1234370, Registered Representative, Melville, New York) submitted an Offer of Settlement in which he was suspended from association with any FINRA member in any capacity for 18 months. In light of Katz’ financial status, no monetary sanctions were imposed. Without admitting or denying the allegations, Katz consented to the described sanction and to the entry of findings that he borrowed a total of $82,000 from a customer without obtaining his member firm’s prior written approval. The findings stated that Katz assured the customer that he would pay back her money. Katz has not repaid the principal or any interest on the loans. When Katz borrowed the money, the customer was 75 years old and retired. The findings also included that at the time Katz borrowed the money, his firm’s WSPs did not allow the borrowing and lending of money between registered persons and firm customers unless the customer was the registered person’s relative. Katz did not request or obtain the firm’s permission to borrow money from the customer and was not related to the customer. Katz was aware of the firm’s procedures and certified that he had received and read the firm’s written policies and procedures regarding financial arrangements with clients. Katz did not disclose to his firm that he had obtained loans from the customer. FINRA found that since the firm’s procedures did not permit borrowing, Katz could not borrow money from the customer in compliance with NASD Rule 2370, and the loans were not in conformance with conditions set forth in NASD Rule 2370(a)(2)(A)-(E) for permissible loans.

Andrew Vincent Kardish II (CRD #2893973, Registered Supervisor, San Juan Capistrano, California)

Published on: July 6, 2012 | By Russell L. Forkey, P.A.

Stock Broker Fraud, Theft and Misrepresentation FINRA Arbitration and Litigation Attorney, Russell L. Forkey, Esq.

January, 2012:

Andrew Vincent Kardish II (CRD #2893973, Registered Supervisor, San Juan Capistrano, California) submitted a Letter of Acceptance, Waiver and Consent in which he was barred from association with any FINRA member in any capacity. Without admitting or denying the findings, Kardish consented to the described sanction and to the entry of findings that he failed to appear and testify at a FINRA on-the-record interview regarding allegations of misappropriation of funds. (FINRA Case #2009018982901).

Dennis Stanley Kaminski (CRD #1013459, Registered Principal, Wellington, Florida)

Published on: July 6, 2012 | By Russell L. Forkey, P.A.

Variable Annuity Unsuitably FINRA Arbitration and Litigation Attorney, Russell L. Forkey, Esq.

January, 2012:

Dennis Stanley Kaminski (CRD #1013459, Registered Principal, Wellington, Florida) was fined $50,000, suspended from association with any FINRA member in any capacity for 18 months and required to requalify before acting in any capacity requiring qualification. The Securities and Exchange Commission (SEC) sustained the sanctions following appeal of the NAC decision. The sanctions were based on findings that Kaminski failed to supervise the timely review of his member firm’s variable annuity trades. The findings stated that Kaminski not only failed to follow up to ensure the variable annuity supervisor and head of the firm’s compliance department properly exercised his delegated authority, he also failed to heed numerous warnings of staff deficiencies in the compliance department. Kaminski also ignored many red flags that should have caused him to question the abilities of the supervisor and head of the firm’s compliance department, and whether the compliance department had adequate resources to oversee the firm’s expanding business. The supervisor and head of the firm’s compliance department warned Kaminski that the compliance department was severely understaffed, and he and another individual expressed their concern to Kaminski that important surveillance work was falling behind, and sent alarming emails and memoranda regarding the inability of the compliance department’s Trade Review Team (TRT) to timely complete its work. The findings also stated that Kaminski attempted to conceal the firm’s supervisory problems from FINRA’s investigators. Kaminski did not disclose that the firm had halted its daily review of the Red Flag Blotter during a meeting with FINRA staff. Kaminski also misrepresented to FINRA staff that the firm had already developed and implemented a monthly trend report to track client accounts that had been subject to two or more 1035 exchanges during the prior 12 months.

Stephen Johnathan Hoshimi (CRD #1977772, Registered Principal, Pacific Palisades, Californai)

Published on: July 6, 2012 | By Russell L. Forkey, P.A.

Unapproved Outside Business and Selling Away FINRA Arbitration and Litigation Attorney, Russell L. Forkey, Esq.

January, 2012:

Stephen Johnathan Hoshimi (CRD #1977772, Registered Principal, Pacific Palisades, California) submitted a Letter of Acceptance, Waiver and Consent in which he was suspended from association with any FINRA member in any capacity for six months. In light of Hoshimi’s financial status, no monetary sanctions have been imposed. Without admitting or denying the findings, Hoshimi consented to the described sanction and to the entry of findings that he entered into an arrangement with a registered investment advisor that was not a FINRA member, whereby he would receive orders from the registered investment advisor’s customers who wished to purchase promissory notes and would effect the purchases through his member firm. The findings stated that Hoshimi purchased promissory notes for the investment advisor’s customers for a total of approximately $1,000,000. Hoshimi paid the investment advisor approximately $23,825 in transaction based compensation, thereby sharing his commissions with the investment advisor. The findings also stated that Hoshimi engaged in private securities transactions without prior written notice to and approval from his firm; he participated in life settlement transactions in which his customers sold fixed life insurance policies to settlement brokers for a total of approximately $390,855. The findings also included that Hoshimi engaged in outside business activities without providing prompt written notice to his member firm; he participated in life settlement transactions in which his customers sold variable life insurance policies to settlement brokers for a total of approximately $1,152,033 for which he received approximately $325,422 in commissions. FINRA found that Hoshimi engaged in private securities transactions without prior written notice to and approval from his firm; he effected purchases of stocks as his own personal investments for a total of approximately $139,500.

Stephen Elliot Hill (CRD #2202940, Registered Representative, Upper Saddle River, New Jersey)

Published on: July 6, 2012 | By Russell L. Forkey, P.A.

Stock Broker Fraud and Misrepresentation FINRA Arbitration and Litigation Attorney, Russell L. Forkey, Esq.

January, 2012:

Stephen Elliot Hill (CRD #2202940, Registered Representative, Upper Saddle River, New Jersey) submitted a Letter of Acceptance, Waiver and Consent in which he was barred from association with any FINRA member in any capacity. Without admitting or denying the findings, Hill consented to the described sanction and to the entry of findings that he improperly used $1,800,000 in funds that belonged to a customer. The findings stated that Hill and his relative formed a company to serve as an investment vehicle for investments in a manufacturer and distributor of a dental prosthesis that snaps over a patient’s natural teeth. Hill solicited a customer to invest in his company; the customer agreed to the investment and Hill caused the transfer of $103,000 from the customer’s account at his member firm to an affiliate of the manufacturer. Within hours of this transfer, Hill caused the transfer of an additional $220,000 from the customer’s firm account to the affiliate, and later that day, he caused the transfer of an additional $1,477,000 from the customer’s account to the affiliate. The findings also stated that following these transactions, and unbeknownst to the customer, Hill’s company and the affiliate executed a secured promissory note. Hill’s company financed the note using $1,800,000 of the customer’s funds plus $200,000 Hill and a third party contributed, for a total of $2 million. Pursuant to the note, the affiliate agreed to pay Hill’s company, not the customer, interest at a rate per annum equal to 20 percent on the aggregate unpaid principal balance. FINRA found that Hill did not inform his firm in writing of these transactions and investments. (FINRA Case #2010022653601).

Roger William Hayes (CRD #240582, Registered Representative, Vergennes, Vermont)

Published on: July 6, 2012 | By Russell L. Forkey, P.A.

Outside Business and Selling Away FINRA Arbitration and Litigation Attorney, Russell L. Forkey, Esq.

January, 2012:

Roger William Hayes (CRD #240582, Rep. Representative, Vergennes, Vermont) submitted a Letter of Acceptance, Waiver and Consent in which he was barred from association with any FINRA member in any capacity. Without admitting or denying the findings, Hayes consented to the described sanction and to the entry of findings that he engaged in outside business activities without giving prompt written notice of those activities to his member firm. The findings stated that Hayes provided consulting services to a trust and estate for compensation. Hayes first sought permission from his firm to perform such outside consulting services, but the firm specifically prohibited him from engaging in those activities. Nevertheless, Hayes continued to perform consulting services for the trust and estate. The findings also stated that in connection with those services, Hayes double-billed the trust for advice on investments that he had already sold to the trust and earned a commission on as a registered representative of the firm. The findings also included that Hayes gave false responses on a firm compliance questionnaire regarding his involvement in those consulting activities. When the firm questioned him on various occasions, Hayes falsely claimed that he was not charging the estate for his services. (FINRA Case #2010021731601).