Monthly Disciplinary Actions - January 2006

On appeal, the NYSE Board of Directors affirmed the decision of the hearing panel in all respects.

• An NYSE hearing panel found that during the period 2001 through 2002, G & L Partners, Inc. failed to sufficiently document the supervisory reviews of its Floor brokerage activities, and failed to properly time stamp and preserve Floor order tickets.  In addition, during the period 2002 through 2004, the firm failed to report to the NYSE profitable error transactions, it improperly processed non-bona fide errors through its error accounts, and failed to ensure that its policies and procedures were followed to ensure compliance with NYSE rules governing error transactions.

• Further, during 2002 and 2003, the firm failed to notify the the NYSE’s Security Office within 24 hours of employees’ termination and failed to return badges of terminated employees; and in 2002 permitted persons who were not properly qualified to operate as clerks on the Floor of the NYSE.  

The NYSE imposed a penalty of a censure and a $40,000 fine.  The firm consented to the penalty.

• An NYSE hearing panel found that during the period 2002 and 2003, Robeco USA L.L.C., formerly known as Weiss, Peck & Greer, L.L.C., failed to exercise reasonable supervision and control with respect to certain business activities, including its business on the trading floor, committed books and records violations by failing to possess and maintain original Floor order tickets, failed to maintain the firm’s reserve bank account at the required level, and failed to make withdrawals from the account within the prescribed time period.

• The firm also failed to obtain and maintain the physical possession or control of fully-paid and excess margin securities carried for the accounts of customers, failed to report to the NYSE securities accounts in which its Floor broker had an interest, failed to indicate on trade confirmations whether option transactions were opening or closing transactions, failed to submit accurate account type indictators on system orders, and failed to maintain written procedures for changes of customer address.

The NYSE imposed a penalty of a censure and a $100,000 fine.  The firm consented to the penalty.

• An NYSE hearing panel found that during the period January through October 2003, Hayes failed reasonably to supervise Dresdner’s stock loan activities and the activities of a stock loan trader under his supervision in that Hayes failed to review various trading reports, which demonstrated the complicity of the stock loan trader in directing payments to a purported finder who had performed no business function to warrant such payments.

• In addition, Hayes failed to review the firm’s books and records regarding these transactions to determine whether they were accurate and/or complete.

The NYSE imposed a penalty of a censure, a one-year bar, consecutive six-month supervisory bar, a requirement to retake the General Securities Principal Examination, and an undertaking to cooperate with the NYSE Division of Enforcement.  Hayes consented to the penalty.

The stock loan trader was himself charged and found guilty by an NYSE hearing panel of failure to cooperate in a related investigation in October 2005 and will be subject to a permanent bar unless he cooperates by January 20, 2006 (See Hearing Panel Decision #05-119).

NYSE determined to take no action against Dresdner in connection with its supervision of its stock loan activities based upon a number of factors, including its extraordinary cooperation with Enforcement's investigation (See NYSE Information Memo 05-65 for a discussion of the standards of cooperation).

• An NYSE hearing panel found that at various times during the period January 2001 through July 2003, while employed as a registered representative, Bellew effected equity trades in the accounts of three customers pursuant to orally granted discretionary authority. Bellew did not obtain the requisite written authorizations from the customers as required by NYSE Rule 408(a). In addition, in connection with syndicate offerings he exercised discretion to allocate shares to the accounts of five customers.

The NYSE imposed a penalty of a censure, a one-month suspension and $50,000 fine.  Bellew consented to the penalty.

Violated Exchange Rule 352(c) in that he shared in the losses in a customer account – Consent to censure and a two-month bar.

• An NYSE hearing panel found that during the period 2001 through 2002, without the knowledge of his member firm, Butler made a total of $55,000 in payments to a customer to help cover the trading losses in the customer's account.

• An NYSE hearing panel found that in April 2004, Sloboda falsified information on a customer’s monthly account statements for purposes of influencing the outcome of that customer’s mortgage loan application with an outside lender and creating inaccurate books and records for his member firm organization.  In addition, Sloboda failed to comply with one or more written requests by the NYSE for information and testimony.

The NYSE imposed a penalty of a censure and a permanent bar.

• An NYSE hearing panel found that Longo effected a trade in the account of a customer, which was unsuitable in light of the customer’s age, retired status, prior investment history, and investment objectives, and shared in the losses of another customer account.

The NYSE imposed a penalty of a censure and a four-month suspension. Longo consented to the penalty.

• An NYSE hearing panel found that during the period from approximately February 1998 through May 1999, Muldowney accepted eight orders for the accounts of three customers from a person other than the customer without first obtaining the customers’ written authorization and, on one occasion, without notifying his member firm employer of the death of a customer, effected transactions in the account of the deceased customer without proper authorization.

• An NYSE hearing panel found that in early July 2002, on a single occasion, Juster instructed a newly-hired trader on the Agency Securities Trading Desk to adjust the mark on a security in a portfolio in a fashion which would reflect no loss in the portfolio, although a loss of approximately $1.5 million had resulted from the original marking of the portfolio. In addition, at or around the same time, Juster ascribed overstated values to certain securities in his own portfolio. 

The NYSE imposed a penalty of a censure and a two-year bar.  Juster consented to the penalty.

• An NYSE hearing panel found that from about the end of 2001 until his termination in December 2003, Carroll improperly transferred funds and securities from his relatives’ accounts at his member firm into his account by overriding the firm’s letter of authorization requirements and by forging the signatures of family members. 

• An NYSE hearing panel found that during 2001 through 2004 while Janowiak was employed as a non-registered systems administrator he misappropriated at least 20 pieces of computer equipment belonging to his member firm by removing equipment from the firm's premises and by submitting falsified firm repair forms to obtain replacement equipment that he sold.   

The NYSE imposed a penalty on Janowiak of a censure and a permanent bar.

• An NYSE hearing panel found that from September 1999 to August 2003 Sorrells misappropriated approximately $80,000 from approximately 26 firm customers for whom he serviced accounts. 

The NYSE imposed a penalty on Sorrells of a censure and a permanent bar.  Sorrells consented to the penalty.

• An NYSE hearing panel found that Lozada directly or indirectly caused numerous clients to be enrolled for credit cards, without their authorization. In a separate transaction, Lozada also submitted false account documentation for processing. During the course of the NYSE’s investigation, Lozada refused to appear and testify as scheduled. 

NYSE imposed a penalty of a censure and a permanent bar. Lozada consented to the penalty.

• An NYSE hearing panel found that during November 2003, Kastan failed to disclose on employment application her criminal history consisting of approximately three felony and twelve misdemeanor charges and several misdemeanor convictions mainly involving the use of drugs and driving misdemeanors.  In addition, she failed to comply with one or more written requests by the NYSE for information concerning one or more matters that occurred prior to the termination of her status as a non-registered employee of a member organization. 

The NYSE imposed a penalty on Kastan of a censure and a permanent bar.

• An NYSE hearing panel found that Fernandez failed to comply with a written request by the NYSE for testimony regarding one or more matters that occurred prior to the termination of his employment with a member organization.

The NYSE imposed a penalty on Fernandez of a censure and a bar until he complies with the NYSE's request, the bar to become permanent if he does not comply within three months.