Oklahoma department of securities

ACAP (7731), Kirk Lynn Ferguson ( 1307741), and Gary Hume (1216949) were expelled and/or barred from membership in FINRA.

Order

Bar (Permanent)

All capacities

permanent

11/9/2017

FINRA

Respondent Hume failed to pay fines and/or costs of $9,691.91 in FINRA Case #2007008239001.

Letter

Revocation

Pursuant to FINRA Rule 8320, Respondent Hume's FINRA registration is revoked as of the close of business on July 31, 2017 for failure to pay fines and/or costs.

FINRA

Hume was named a respondent in a FINRA complaint alleging that his member firm, acting through his capacity as the firm's Anti-Money Laundering Compliance Officer (AMLCO), facilitated the liquidation of over 3.3 billion shares of four unregistered microcap stocks that two customers deposited into their accounts at the firm. The complaint alleges that Hume, as the firm's AMLCO, failed to establish and implement policies and procedures related to the firm's Anti-Money Laundering (AML) program that could reasonably detect and cause the reporting of suspicious activity, particularly with respect to penny stock transactions. Guidance provided by FINRA for AML compliance programs advised that if firms detect red flags, they should perform additional due diligence before proceeding with a transaction. Hume failed to conduct due diligence on the firm's customers in the presence of red flags. Had Hume conducted any due diligence, he would have discovered that a customer's husband who exercised control over two penny stock accounts was barred by NASD in all capacities and was barred by the SEC from engaging in penny stock activities. The complaint also alleges that Hume failed to adequately investigate suspicious penny stock activity, even in instances where he identified red flags, and failed to consider whether to report potentially suspicious activity by filing a Suspicious Activity Report (SAR) where appropriate.

Decision & Order of Offer of Settlement

Bar (Permanent)

All Capacities

Indefinite

12/27/2016

Without admitting or denying the allegations, Hume consented to the sanctions and to the entry of findings that he, as his member firm's Anti-Money Laundering Compliance Officer ("AMLCO"), the firm, and its President and CCO, facilitated the liquidation of over 3.3 billion shares of four unregistered microcap stocks that two customers deposited into their accounts at the firm. The findings stated that the accounts at issue were opened for two corporations by an individual. While the individual was the only authorized contact on both accounts, the firm permitted her husband, to exercise control over both accounts and to direct the firm to liquidate unregistered penny stocks in the accounts. The penny stock liquidation activity in the two accounts followed the same pattern: (1) the accounts acquired penny stocks or debt instruments that were later converted into purported free-selling shares of penny stocks; (2) the individual and/or her husband liquidated the shares shortly after deposit; and (3) the individual and/or her husband wired the proceeds out of their accounts shortly after the sales. Sales of certain of the penny stocks often represented a significant percentage of the stock's outstanding shares and its daily trading volume. Further, the shares were not registered with the SEC, nor were the sales exempt from registration. Thus, the firm, its President and CCO, and Hume caused the sale of unregistered securities. From these illicit sales, the individual and her husband generated over $5 million in proceeds, and the firm collected approximately $ 144,010 in commissions. The findings also stated that numerous other firm customers liquidated billions of shares of penny stocks in transactions that presented numerous red flags, yet the firm, its President and CCO, and Hume often failed to detect the red flags, and, even when red flags were detected, they took no action to investigate them or determine whether to file a Suspicious Activity Report ("SAR"). Collectively, these failures show that the firm and Hume, as the firm's AMLCO, failed to establish and implement policies and procedures that could reasonably detect and cause the reporting of suspicious activity.

There is no truth whatsoever in FINRA's allegations. Every position liquidated had an attorney's opinion that the sale fell within the rules and was also sent to outside counsel to be reviewed before any sale occurred. FINRA an organization the could care less about its members initiated a witch hunt solely for the purpose of putting us out of business because they do not like penny stocks. There is no reasonable basis for their conclusions only to kill us and then the members of their tribunal will get raises. No person of any competency will ever see these charges and there is no appeal because FINRA is the judge, jury and executioner. This is wrong but there is no relief from FINRA's findings regardless of how incorrect they are. FINRA is a corrupt organization dispensing justice where there is no crime to justify their existence.

FINRA

FINRA RULES 2010, 3310 (A) AND (B), NASD RULE 3011(A) AND (B): HUME WAS HIS MEMBER FIRM'S DESIGNATED ANTI-MONEY LAUNDERING (AML) COMPLIANCE OFFICER (AMLCO). HUME WAS ALSO THE DESIGNATED SUPERVISOR FOR THE CREATION AND MAINTENANCE OF HIS FIRM'S POLICIES AND PROCEDURES. THE MAJORITY OF THE FIRM'S BUSINESS WAS THE DEPOSIT OF LARGE BLOCKS OF SHARES, PRIMARILY THINLY TRADED PENNY STOCKS, AND SUBSEQUENT SALE OF THOSE SHARES (LIQUIDATIONS). CUSTOMERS OFTEN OPENED A NEW ACCOUNT WITH A DEPOSIT OF PHYSICAL CERTIFICATES AND SOLD THE SHARES SOON THEREAFTER. SOME CUSTOMERS HAD MULTIPLE ACCOUNTS THROUGH WHICH THEY DEPOSITED AND LIQUIDATED THEIR SHARES. IN MID-2009, FINRA HAD CONVERSATIONS WITH HUME REGARDING THE NECESSITY OF MONITORING FOR, DETECTING, AND INVESTIGATING SUSPICIOUS ACTIVITY TO DETERMINE WHETHER TO FILE A SUSPICIOUS ACTIVITY REPORT (SAR). PRIOR TO THIS TIME, HUME DID NOT ESTABLISH ADEQUATE SYSTEMS OR PROCEDURES TO MONITOR ACCOUNTS FOR SUSPICIOUS ACTIVITY. HUME HIMSELF DID NOT SUFFICIENTLY MONITOR ACCOUNTS FOR WHICH HE WAS THE REGISTERED REPRESENTATIVE OR ANY OF THE OTHER ACCOUNTS OF THE FIRM FOR SUSPICIOUS ACTIVITY. NOR DID HUME DELEGATE THIS RESPONSIBILITY TO ANY OTHER EMPLOYEE OF THE FIRM. THE FIRM FAILED TO ESTABLISH AND MAINTAIN AN ADEQUATE SYSTEM TO MONITOR FOR, DETECT AND INVESTIGATE SUSPICIOUS ACTIVITY TO DETERMINE WHETHER IT WAS NECESSARY TO FILE A SAR. NOR DID THE FIRM HAVE AN ADEQUATE SYSTEM OR PROCEDURES TO REPORT SUSPICIOUS ACTIVITY. AS A RESULT, DESPITE THE PRESENCE OF THOSE AND OTHER INDICATORS OF SUSPICIOUS ACTIVITY, THE FIRM AND HUME HAD NEVER FILED A SAR PRIOR TO SEPTEMBER 2009. AFTER REVIEWING FINRA REGULATORY NOTICE 09-05 AND HAVING THE CONVERSATIONS WITH FINRA, HUME MISTAKENLY CONCLUDED THAT FINRA DEEMED ALL SECURITIES LIQUIDATIONS TO BE SUSPICIOUS ACTIVITY. BASED ON HIS MISTAKEN BELIEF HUME DECIDED TO TAKE AN EXTREME APPROACH AND TREATED, EVERY, LIQUIDATION AS SUSPICIOUS ACTIVITY WORTHY OF FILING A SAR. WHEN HE FIRST BEGAN FILING SARS HUME UTILIZED THE INCORRECT FORM FOR THE FIRST 25 FILINGS, USING THE FORM SAR-DI (USED ONLY BY DEPOSITORY INSTITUTIONS) INSTEAD OF THE SAR-SF FORM WHICH APPLIES TO THE SECURITIES INDUSTRY. IN ADDITION, THE DESCRIPTIONS OF THE SUSPICIOUS ACTIVITY PROVIDED ON THE SAR FORMS THAT HUME FILED ON BEHALF OF HIS FIRM DID NOT INCLUDE SUBSTANTIVE INFORMATION REGARDING THE ACTIVITY AND WERE SO BROAD AS TO BE VIRTUALLY USELESS. IN CONTRAST, WHEN ONE OF THE FIRM'S REGISTERED REPRESENTATIVES BROUGHT SPECIFIC SUSPICIOUS ACTIVITY TO HUME'S ATTENTION AND PROVIDED HIM WITH A COMPLETED SAR FORM, HUME DID NOT INVESTIGATE THE SUSPICIOUS ACTIVITY IN ORDER TO DETERMINE WHETHER A SAR FILING WAS WARRANTED.

Acceptance, Waiver & Consent(AWC)

Suspension

ALL PRINCIPAL CAPACITIES

45 DAYS

4/16/2012

5/30/2012

SHALL COMPLETE 40 HOURS OF AML TRAINING

WITHOUT ADMITTING OR DENYING THE FINDINGS, HUME CONSENTED TO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS, THEREFORE HE IS SUSPENDED FROM ASSOCIATION WITH ANY FINRA MEMBER IN ALL PRINCIPAL CAPACITIES FOR 45 DAYS AND SHALL COMPLETE 40 HOURS OF AML TRAINING. HUME WILL REGISTER FOR, WITHIN 120 DAYS OF THE DATE OF ISSUANCE OF THIS AWC, AML TRAINING IN A PROGRAM OR PROGRAMS THAT ARE NOT UNACCEPTABLE TO FINRA. HUME SHALL PROVIDE FINRA WITH EVIDENCE OF THE REGISTRATION FOR EACH SUCH PROGRAM WITHIN 10 DAYS OF REGISTRATION. HUME SHALL ATTEND SUCH TRAINING WITHIN 180 DAYS OF THE ISSUANCE OF THIS AWC, AND HUME SHALL PROVIDE FINRA WITH EVIDENCE THAT HE HAS COMPLETED SUCH TRAINING WITHIN 10 DAYS OF COMPLETION OF EACH SUCH TRAINING PROGRAM. HUME HAS ASSERTED AN INABILITY TO PAY AND HAS SUBMITTED SUPPORTING DOCUMENTATION. IN LIGHT OF HIS FINANCIAL STATUS, THE SANCTIONS DO NOT INCLUDE A MONETARY FINE. THE SUSPENSION IS IN EFFECT FROM APRIL 16, 2012, THROUGH MAY 30, 2012.

I FILED SARS REPORTS BASED UPON A CRITERIA I DETEREMINED WAS APPROPRIATE USING INFORMATION GIVEN TO US BY OUR FINRA AUDIT SUPERVISOR AND SEC EXAMINER. THEN FINRA TOLD ME I WAS WRONG TO USE THAT CRITERIA AND I WAS SUSPENDED AS A GENERAL PRINCIPAL FOR 45 DAYS. ALSO FINRA CONTENDS I SHOULD HAVE FILED A SARS ON A CEO WHO WAS USING FRAUDULENT ATTORNEY'S OPINIONS TO FREE UP RESTRICTED STOCK. OUR FIRM REPORTED THE CEO TO THE SEC THE STOCK WAS SUSPENDED. THE CEO WAS NOT A CUSTOMER OF ACAP I DID NOT HAVE THE INFORMATION TO FILE A SARS

FINRA

NASD RULES 2110, 3010: HUME, AS COMPLIANCE OFFICER OF HIS MEMBER FIRM AND THE SUPERVISOR FOR A REGISTERED REPRESENTATIVE, FAILED TO TAKE ADEQUATE MEASURES TO ENSURE THAT THE REGISTERED REPRESENTATIVE DID NOT ENGAGE IN THE SALE OF UNREGISTERED SECURITIES, AND FAILED TO TAKE STEPS TO ENSURE THAT THE REGISTERED REPRESENTATIVE ASCERTAINED WHETHER THE TRANSACTIONS WERE SUBJECT TO ANY EXEMPTION FROM REGISTRATION. HUME WAS RESPONSIBLE FOR CREATING AND UPDATING THE FIRM'S PROCEDURES MANUAL AND THE FIRM DID NOT HAVE ANY WRITTEN OR FORMAL PROCEDURES REGARDING RESTRICTED STOCK TRANSACTIONS OR THE RECEIPT OF CERTIFICATES; THUS HUME AND THE FIRM FAILED TO ESTABLISH, MAINTAIN AND ENFORCE WRITTEN PROCEDURES REASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITH APPLICABLE SECURITIES LAWS AND REGULATIONS. HUME FAILED TO TAKE ANY ACTION TO CAUSE THE FIRM TO ADOPT AND IMPLEMENT APPROPRIATE PROCEDURES FOR HANDLING THE SALE OF STOCK DEPOSITED IN UNLEGENDED CERTIFICATE FORM. AS A RESULT, HUME FAILED TO TAKE THE STEPS NECESSARY TO ENSURE THAT THE FIRM HAD PROCEDURES THAT WERE REASONABLY DESIGNED TO DETECT AND PREVENT ILLEGAL SALES OF SECURITIES.

Decision

Civil and Administrative Penalty(ies)/Fine(s)

$25,000.00

Requalification

Suspension

ANY CAPACITY

SIX MONTHS

8/3/2015

2/2/2016

HEARING PANEL DECISION RENDERED MAY 3, 2011 WHEREIN FOR VIOLATING NASD RULES 2110 AND 3010 BY FAILING TO REASONABLY SUPERVISE A REGISTERED REPRESENTATIVE IN CONNECTION WITH THE SALE OF UNREGISTERED SECURITIES AND BY FAILING TO ESTABLISH, MAINTAIN, AND ENFORCE WRITTEN SUPERVISORY PROCEDURES REASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITH THE APPLICABLE SECURITIES LAWS AND REGULATIONS, HUME IS FINED $10,000, SUSPENDED FROM ASSOCIATION WITH ANY FINRA MEMBER IN ALL PRINCIPAL CAPACITIES FOR ONE YEAR, AND REQUIRED TO RE-QUALIFY BY EXAMINATION AS A PRINCIPAL BEFORE REENTERING THE SECURITIES INDUSTRY IN ANY PRINCIPAL CAPACITY. HUME'S FINE SHALL BE DUE AND PAYABLE ON A DATE SET BY FINRA, BUT NOT SOONER THAN 30 DAYS AFTER THIS DECISION BECOMES FINRA'S FINAL DISCIPLINARY ACTION IN THIS PROCEEDING. ON JUNE 14, 2011, HUME APPEALED THIS DECISION TO THE NATIONAL ADJUDICATORY COUNCIL (NAC). NAC DECISION RENDERED SEPTEMBER 26, 2012, WHEREIN THE FINDINGS MADE ARE AFFIRMED AND THE SANCTIONS IMPOSED BY THE HEARING PANEL ARE MODIFIED THEREFORE, HUME IS FINED $25,000, SUSPENDED IN ALL CAPACITIES FOR SIX MONTHS, AND REQUIRED TO RE-QUALIFY BEFORE ACTING IN ANY CAPACITY REQUIRING QUALIFICATION. ON OCTOBER 31, 2012, HUME FILED AN APPLICATION FOR REVIEW WITH THE SEC REGARDING THE NAC DECISION. ON JULY 26, 2013, THE SEC ORDERED THAT THE DISCIPLINARY ACTION, AND THE SANCTIONS IMPOSED, BY FINRA ON HUME BE, AND HEREBY ARE, SUSTAINED. ON SEPTEMBER 23, 2013, HUME PETITIONED THE U.S. COURT OF APPEALS FOR THE TENTH CIRCUIT FOR REVIEW OF THE SEC'S FINAL ORDER. SEC NO. 3-15080: THE UNITED STATES COURT OF APPEALS FOR THE TENTH CIRCUIT RENDERED ITS DECISION APRIL 3, 2015. THE COURT DENIED THE PETITION FOR REVIEW OF THE SEC DECISION WHEREIN THE SEC AFFIRMED THE SANCTIONS IMPOSED BY THE NATIONAL ADJUDICATORY COUNCIL (NAC) FOLLOWING THE RESPONDENT'S PETITION FOR REVIEW OF THE SANCTIONS IMPOSED. THE SANCTIONS WERE BASED ON FINDINGS THAT HUME'S FIRM, THROUGH A REGISTERED REPRESENTATIVE, SOLD 27 MILLION UNREGISTERED SHARES OF AN ENTITY TO THE PUBLIC, RESULTING IN PROCEEDS OF APPROXIMATELY $46,000. THE FINDINGS STATED THAT THE FIRM AND HUME, AS ITS COMPLIANCE OFFICER, FAILED TO TAKE ADEQUATE MEASURES TO PREVENT THE REGISTERED REPRESENTATIVE FROM SELLING THE UNREGISTERED SHARES TO THE PUBLIC. THE FIRM AND HUMEL RELIED ON THE LACK OF A RESTRICTIVE LEGEND ON THE STOCK CERTIFICATES AND THE CLEARANCE OF THE STOCK THROUGH THE TRANSFER AGENT IN MAKING THE DETERMINATION THAT SHARES WERE FREELY TRADABLE. THE FINDINGS ALSO STATED THAT DESPITE "RED FLAGS" THAT THE STOCK SALES MAY HAVE BEEN PART OF AN ILLEGAL DISTRIBUTION, THE FIRM AND HUME FAILED TO TAKE STEPS TO ENSURE THAT THE REGISTERED REPRESENTATIVE ASCERTAINED THE INFORMATION NECESSARY TO DETERMINE WHETHER THE UNREGISTERED SHARES COULD BE SOLD IN COMPLIANCE WITH SECURITIES ACT SECTION 5. HUME FAILED TO UNDERTAKE ANY OTHER DUE DILIGENCE TO OBTAIN INFORMATION ABOUT THE ISSUER OF THE SECURITIES. THE FINDINGS ALSO INCLUDED THAT ALTHOUGH HUME WAS RESPONSIBLE FOR CREATING AND MAINTAINING THE FIRM'S WRITTEN SUPERVISORY PROCEDURES (WSPS), THE FIRM DID NOT HAVE WRITTEN OR FORMAL PROCEDURES REGARDING RESTRICTED STOCK TRANSACTIONS OR THE RECEIPT OF STOCK CERTIFICATES, GIVEN ITS BUSINESS MODEL. THE FIRM'S PROCEDURES DID NOT PROVIDE ANY GUIDANCE ON DETERMINING WHETHER THE STOCK WAS FREELY TRADABLE. THE DECISION BECAME FINAL JULY 2, 2015.

HOW IS IT THAT IN AMERICA AN SRO CAN FINE YOU JUDGE YOU AND BASICALLY GIVE A DEATH PENALTY OVER ASKING FOR AN APPEAL. REMINISCENT TO HITLERS GESTAPO THEY HAVE CHANGED MY FINE FROM $2500 TO $25000 AND FROM A 30 DAY SUSPENSION AS A GENERAL PRINCIPAL TO A BAR OF 6 MONTHS ALL BECAUSE WE APPEALED THEIR DECISION ALL I WANTED WAS FOR SOMEONE TO REVIEW THIS AND SEE WHAT WAS HAPPENING HERE I WOULD NEVER HAVE BELIEVED IT EXCEPT IT HAPPENED TO ME

NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.

Decision

Monetary/Fine

$2,000.00

Censure

EVENTS WHICH OCCURRED WHILE I WAS EMPLOYED AT EQUITY-ONE CORPORATION I WAS NOT AN OWNER OF EQUITY-ONE AND WAS NOT THE FINANCIAL PRINCIPAL OF RECORD ALL EVENTS WERE NOT UNDER MY CONTROL I COULD NO PREVENT THEIR OCCURRENCE AND WAS MADE THE FALL GUY BY MY EMPLOYERS.