FINRA Bars Registered Representatives Accused of Securities Misconduct and Negligence
Registered representative Erick Enrique Isaac has turned in a Letter of Acceptance, Waiver and Consent that affirms his agreement to be barred from associating with any Financial Industry Regulatory Authority member. Although he isn’t denying or admitting to the findings, Isaac has consented to the described sanction and the entry of findings that claims he became affiliated with a member firm at the behest of a relative, a former registered representative who needed access to a broker-dealer to make trades for his clients.
While registered with the financial firm, Enrique allegedly gave trading directions from this relative to another firm representative, who then made the trades. He also allegedly started sending over hundreds of thousands of dollars in commissions on those securities transactions to the relative.
FINRA’s findings contend that Isaac knew that his relative was controlling the trading in at least some of the client accounts that resulted in commission fees. He also kept sending the commission funds to the relative even after finding out that the latter was barred by the SRO from associating with a member firm.
Also submitting a Letter of Acceptance, Waiver and Consent in another FINRA case is First Merger Capital, Inc. registered principal Mark SImonetti who is not allowed to associate with any FINRA member for three months.
FINRA accused Simonetti of knowing that registered representatives at First Merger Capital were paying the operators and co-owners of a branch of the financial firm (a foreign-based publicly traded company) $350,000 for unspecified services. Even though this should have indicated to Simonetti that the financial firm’s COO was not appropriately discharging his compliance and supervisory duties, he still allegedly failed to properly supervise the brokers to make sure that everyone disclosed all material information about this consulting agreement when soliciting clients to buy stock in the company.
Also, per FINRA, when the counsel for another foreign-owned publicly traded company referred clients, who were current and former company employees, to First Merger Capital, no one at the financial firm spoke to these new clients to make sure that the information they provided when opening the accounts was accurate.
The customers deposited more than 3.8 million shares of company stock. The company’s CEO, who was given control of the sales of the stock, then gave the order for company shares to be sold. More than $23 million of company stocks were sold. These were the only transactions in the clients’ accounts. Also, a number of branch owners and operators who took part in securities transactions netted commission as a result. FINRA says that SImonetti should have monitored, analyzed, and investigated these transactions to figure out whether they warranted a Suspicious Activity Report. As part of the settlement, Simonetti has agreed to participate in the FINRA Department of Enforcement’s investigation into this matter and to testifying truthfully.
FINRA Fines AXA Advisors $100,000 For Allegedly Not Firing Broker who Ran Ponzi Scam Sooner, Stockbroker Fraud Blog, March 16, 2012
FINRA May Surrender Proprietary BrokerCheck Lock, Stockbroker Fraud Blog, March 8, 2012
Citigroup Ordered by FINRA to Pay $1.2M Over Bond Markups and Markdowns, Institutional Investor Securities Blog, March 27, 2012