Monthly Disciplinary Actions - September 2007

• An NYSE hearing officer found that on or about March 10, 2006, the Firm ceased brokerage operations. On the same date, the NYSE’s Division of Member Firm Regulation (“MFR”) requested access to the Firm’s offices for purposes of conducting a special examination of the Firm’s books and records and financial condition, after becoming aware that the Firm’s bank account had been frozen by the Internal Revenue Service on or about the same date. For several weeks, the Firm and Yuet Kwan Wong (see HBD 07-110) denied or provided incomplete access to MFR examiners to the Firm’s premises. The Firm and Wong ultimately provided the requested documents and information to the extent they had it, but admitted to failing to make and maintain certain required books and records. The Firm and Wong violated NYSE Rules 476(a)(11) and 477 by failing to timely comply with requests for documents and information and to timely provide access to Firm premises.
• In addition to violating books and records requirements in connection with the special examination in March 2006, the Firm also violated net capital, audit trail, anti-money laundering, and FOCUS Report submission requirements. During 2006, the Firm failed to properly calculate its net capital requirements and, as a result, was in net capital deficiency and failed to make a required notification to the NYSE of change in its net capital. The Firm also failed to include all required trade information on certain order tickets in February 2006, and failed to conduct an independent review of its anti-money laundering compliance program in 2005.  Wong was responsible for the Firm’s compliance with the books and records and anti-money laundering compliance requirements. Wong violated NYSE Rule 342 in that she failed to reasonably supervise and control the Firm’s business activities in connection with such requirements.
• In addition, during 2005, the Firm submitted untimely and inaccurate FOCUS Reports to the NYSE.

The NYSE imposed a penalty of a censure and $150,000 fine.   First Hudson Financial Group, Inc. consented to the penalty.

• An NYSE hearing officer found that Wong was responsible for the First Hudson Financial Group, Inc. (the “Firm’s”) compliance with the books and records and anti-money laundering compliance requirements. (See HBD 07-109.) Wong violated NYSE Rule 342 in that she failed to reasonably supervise and control the Firm’s business activities in connection with such requirements. 
  
• Wong also denied or provided incomplete access to NYSE examiners to the Firm’s premises. The Firm and Wong ultimately provided the requested documents and information to the extent they had it, but admitted to failing to make and maintain certain required books and records. The Firm and Wong violated NYSE Rules 476(a)(11) and 477 by failing to timely comply with requests for documents and information and to timely provide access to Firm premises.

The NYSE imposed a penalty of censure, six-month bar, and requirement to retake and pass applicable supervisory examination before re-assuming any supervisory position with any NYSE member organization. Wong consented to the penalty.

• An NYSE hearing officer found that during the period March 2005 through December 2005, Puyear made unauthorized trades in at least seven customer accounts, and failed to report customer complaints to his member organization employer on at least three occasions.

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

• An NYSE hearing officer found that Harris exercised discretionary trading authority in the accounts of nine Firm customers with verbal but not prior written authorization from the customers. Harris also caused the Firm’s books and records to inaccurately reflect that certain customer orders were inputted upon their receipt, when in fact he had received the orders from the customers the prior week.

The NYSE imposed a penalty of a censure and a three-month bar. Harris consented to the penalty.

• An NYSE hearing officer found that Parker and Michael W. Brinton, See Michael W. Brinton, Decision 07-60 (NYSE Hearing Board Apr. 26, 2007) engaged in unapproved outside business activities when they facilitated the purchase of investments away from the Firm by soliciting UBS customers to invest in certain hedge funds managed by ABC, that were not approved by UBS. Parker and Brinton each received approximately $66,485 in compensation from ABC after certain UBS customers invested in the ABC hedge funds. Parker and Brinton also made misstatements on their respective Annual Employee Certifications of Compliance relating to their outside business activities and the compensation they received from ABC. Parker and Brinton also made misstatements to their branch office manager regarding their outside business activities with ABC.

The NYSE imposed a penalty of a censure, a three-month suspension, and $10,000 fine. Parker consented to the penalty.

• An NYSE hearing officer granted a motion of default and found that Bell violated NYSE Rule 476(a)(6) by misappropriating funds belonging to a member firm employee and violated NYSE Rules 476(a)(11) and 477 by failing to comply with written requests for information concerning matters that occurred prior to termination of his status as employee of member organization.  

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

• An NYSE hearing officer found that on or about October 18, 2005, Lanci failed to disclose on an employment application submitted to a member organization a prior disciplinary action taken against him while he was employed in the commodities industry that subjected Lanci to statutory disqualification.

The NYSE imposed a penalty of a censure and a 15-month bar. Lanci consented to the penalty.

• An NYSE hearing officer granted a default motion and found that Blankenship violated NYSE Rule 476(a)(6) by failing to disclose his prior criminal history on an employment application submitted to his member firm; violated NYSE Rules 476(a)(11) and 477 by failing to comply with written requests by NYSE for information concerning a matter that occurred prior to termination of his employment with his member firm employer.

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

• An NYSE hearing officer granted a default motion and found that Pope violated NYSE Rule 476(a)(6) by failing to disclose his prior criminal history on an employment application submitted to his member firm; violated NYSE Rules 476(a)(11) and 477 by failing to comply with written requests by NYSE for information concerning a matter that occurred prior to termination of his employment with his member firm employer.

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

• An NYSE hearing officer granted a default motion and found that Reynolds violated NYSE Rule 476(a)(6) by misappropriating property belonging to his member firm employer; violated NYSE Rules 476(a)(11) and 477 by failing to comply with written requests for information. 

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

• An NYSE hearing officer granted a motion of default and found that Swanson violated NYSE Rule 476(a)(6) by misappropriating funds from a customer and  violated NYSE Rules 476(a)(11) and 477 by failing to comply with written requests for information.  

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

• Following a contested hearing, an NYSE hearing panel found that Wong violated NYSE Rule 476(a)(6) by misappropriating customer funds, receiving customer funds under false pretenses, depositing those funds into her personal bank account, and commingling customer funds; caused a violation of NYSE Rule 351(d) by failing to notify her member firm employer of a customer complaint; caused a violation of NYSE Rule 409(b)(2) by causing customer’s account statement to be sent to her home address; caused a violation of NYSE Rule 440 and Section 17(a) of Securities Exchange Act of 1934 and Rules 17a-3 and 17a-4 thereunder by causing books and records of her member firm employer to be inaccurate.

NYSE imposed a penalty of a censure and a permanent bar. On appeal, the NYSE Regulation Board of Directors affirmed the decision of the hearing panel in all respects.