FINRA

WILLFULLY VIOLATED SECTION 10(B) OF THE SECURITIES EXCHANGE ACT OF 1934, RULE 10B-5 THEREUNDER, FINRA RULES 2010, 2120, NASD RULES 2110, 2120, 2210, VIOLATED FINRA RULE 2010, NASD RULES 2110, 3010: DUBRULE KNOWINGLY OR RECKLESSLY CAUSED THE DISTRIBUTION OF SUMMARY QUARTERLY STATEMENTS THAT CONTAINED FALSE INFORMATION ABOUT THE VALUATION OF A FUND. THE SUMMARY QUARTERLY STATEMENTS CONTAINED ONLY GENERALIZED DESCRIPTIONS OF THE INVESTOR'S ACCOUNT BALANCE AND ACTIVITY, AND DID NOT INCLUDE A DESCRIPTION OF THE ASSETS OWNED BY THE FUND, OR THE REALIZED AND UNREALIZED GAINS OR LOSSES ATTRIBUTABLE TO THE INDIVIDUAL ASSETS OWNED BY THE FUND. DUBRULE KNOWINGLY INFLATED THE VALUE OF THE FUND'S ASSETS ON ITS QUARTERLY STATEMENTS BY, AMONG OTHER THINGS, INCLUDING THE FACE VALUE AND PROMISED INTEREST OF DEFAULTED PROMISSORY NOTES AS ASSETS OF THE FUND. THE QUARTERLY STATEMENTS ALSO FALSELY INFLATED THE VALUE OF INVESTORS' INTERESTS IN THE FUND. DUBRULE MADE MATERIALLY FALSE AND MISLEADING STATEMENTS AND OMISSIONS TO CUSTOMERS TO ENTICE THEM TO DEPOSIT ADDITIONAL FUNDS AND BY SENDING THE SUMMARY QUARTERLY STATEMENTS TO THE CUSTOMERS, FALSELY REPRESENTING THAT THEIR INVESTMENTS IN THE FUND HAD INCREASED IN VALUE. DUBRULE ALSO FAILED TO DISCLOSE THAT THE VALUATION OF THE FUND WAS BASED ON DEFAULTED PROMISSORY NOTES AND PROMISSORY NOTES THAT HAD BEEN CANCELLED. DUBRULE AND HIS WIFE INVESTED A TOTAL OF $88,554 IN THE FUND AND WITHDREW A TOTAL OF $92,405 RELYING ON THE INFLATED VALUE OF HIS AND HIS WIFE'S INVESTMENTS IN THE FUND. DUBRULE MISAPPROPRIATED INVESTOR FUNDS BY WITHDRAWING THE FUNDS DESPITE KNOWING THAT THE PROMISSORY NOTES HAD BEEN CANCELLED AND THE VALUE OF THE FUND'S ASSETS HAD DECREASED SUBSTANTIALLY. IN ADDITION, THE SUMMARY QUARTERLY STATEMENTS CONTAINED FALSE AND MISLEADING STATEMENTS THAT CLAIMED THE FUND UTILIZED THE SERVICES OF AN INDEPENDENT FIRM TO PREPARE STATEMENTS AND TAX REPORTS, AND THAT THEY WERE PREPARED IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP). DUBRULE'S MEMBER FIRM GRANTED HIM PERMISSION TO ENGAGE IN THIS OUTSIDE BUSINESS ACTIVITY. DUBRULE WITHDREW A QUARTERLY MANAGEMENT FEE FROM THE FUND. DUBRULE KNEW OR WAS RECKLESS IN NOT KNOWING THAT HE INFLATED THE VALUE OF THE ASSETS OF THE FUND. BY USING THE UNSUPPORTED AND INFLATED VALUE OF THE FUND TO CALCULATE THE MANAGEMENT FEES, DUBRULE KNEW OR WAS RECKLESS IN NOT KNOWING THAT HE WAS WITHDRAWING SIGNIFICANTLY MORE THAN THE .5% MAXIMUM QUARTERLY FEE, BASED UPON THE TRUE AND ACCURATE VALUE OF ASSETS IN THE FUND. AS A RESULT, DUBRULE WITHDREW $141,632 OF EXCESS FEES FROM THE FUND, WHICH CAME DIRECTLY FROM WHAT REMAINED OF THE CAPITAL ACCOUNTS OF THE FUND'S INVESTORS. DUBRULE CAUSED HIS FIRM TO SELL UNREGISTERED SECURITIES IN CONTRAVENTION OF SECTION 5 OF THE SECURITIES ACT OF 1933. DESPITE KNOWING THAT A MEMBER OF THE FIRM'S STAFF HAD FORGED A SIGNIFICANT BUT UNKNOWN NUMBER OF DEPOSIT SECURITIES REQUEST FORMS AND THUS CAUSED NUMEROUS UNREGISTERED PENNY STOCKS TO BE DEPOSITED INTO FIRM CUSTOMER ACCOUNTS ABSENT SUPERVISORY REVIEW, DUBRULE FAILED TO CONDUCT ANY INVESTIGATION TO DETERMINE THE SCOPE OF THE FORGERIES AND UNSUPERVISED PENNY STOCK TRADING.

Decision & Order of Offer of Settlement

Bar (Permanent)

All Capacities

5/9/2014

DUBRULE CAUSED WILLFUL VIOLATION OF SECTION 10(B) OF THE SECURITIES EXCHANGE ACT OF 1934, RULE 10B-5 THEREUNDER; FINRA RULES 2020 AND 2010; AND NASD RULES 2210, 2110, 2120 AND 2210.

WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, DUBRULE CONSENTED TO THE SANCTION AND TO THE ENTRY OF FINDINGS THAT HE KNOWINGLY OR RECKLESSLY CAUSED THE DISTRIBUTION OF SUMMARY QUARTERLY STATEMENTS THAT CONTAINED FALSE INFORMATION ABOUT THE VALUATION OF A HEDGE FUND IN WILLFUL VIOLATION OF SECTION 10(B) OF THE SECURITIES EXCHANGE ACT OF 1934, RULE 10B-5 THEREUNDER; FINRA RULES 2020 AND 2010; AND NASD RULES 2210, 2110, 2120 AND 2210. THE FINDINGS STATED THAT DUBRULE KNOWINGLY INFLATED THE VALUE OF THE FUND'S ASSETS ON ITS QUARTERLY STATEMENTS BY, AMONG OTHER THINGS, INCLUDING THE FACE VALUE AND PROMISED INTEREST OF DEFAULTED PROMISSORY NOTES AS ASSETS OF THE FUND. THE QUARTERLY STATEMENTS ALSO FALSELY INFLATED THE VALUE OF INVESTORS' INTERESTS IN THE FUND. DUBRULE MADE MATERIALLY FALSE AND MISLEADING STATEMENTS AND OMISSIONS TO INVESTORS TO ENTICE THEM TO DEPOSIT ADDITIONAL FUNDS AND BY SENDING THE SUMMARY QUARTERLY STATEMENTS TO THE INVESTORS, FALSELY REPRESENTED THAT THEIR INVESTMENTS IN THE FUND HAD INCREASED IN VALUE. THE FINDINGS ALSO STATED THAT DUBRULE FAILED TO DISCLOSE THAT THE VALUATION OF THE FUND WAS BASED ON DEFAULTED PROMISSORY NOTES AND PROMISSORY NOTES THAT HAD BEEN CANCELLED. DUBRULE AND HIS WIFE INVESTED A TOTAL OF $88,554 IN THE FUND AND WITHDREW A TOTAL OF $92,405, RELYING ON THE INFLATED VALUE OF THEIR INVESTMENTS IN THE FUND. DUBRULE MISAPPROPRIATED INVESTOR FUNDS BY WITHDRAWING THE FUNDS DESPITE KNOWING THAT THE PROMISSORY NOTES HAD BEEN CANCELLED AND THE VALUE OF THE FUND'S ASSETS HAD DECREASED SUBSTANTIALLY. THE SUMMARY QUARTERLY STATEMENTS CONTAINED FALSE AND MISLEADING STATEMENTS THAT CLAIMED THE FUND UTILIZED THE SERVICES OF AN INDEPENDENT FIRM TO PREPARE STATEMENTS AND TAX REPORTS, AND THAT THEY WERE PREPARED IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP). INVESTORS DEPOSITED $3.8 MILLION INTO THE FUND, BASED IN PART ON THE FRAUDULENT MISREPRESENTATIONS AND OMISSIONS IN THE SUMMARY QUARTERLY STATEMENTS. DUBRULE'S MEMBER FIRM GRANTED THEM PERMISSION TO ENGAGE IN THIS OUTSIDE BUSINESS ACTIVITY. THE FINDINGS ALSO INCLUDED THAT DUBRULE WITHDREW A QUARTERLY MANAGEMENT FEE FROM THE FUND. DUBRULE KNEW OR WERE RECKLESS IN NOT KNOWING THAT THEY INFLATED THE VALUE OF THE ASSETS OF THE FUND. BY USING THE UNSUPPORTED AND INFLATED VALUE OF THE FUND TO CALCULATE THE MANAGEMENT FEES, DUBRULE KNEW OR WERE RECKLESS IN NOT KNOWING THAT THEY WERE WITHDRAWING SIGNIFICANTLY MORE THAN THE .5 PERCENT MAXIMUM QUARTERLY FEE, BASED UPON THE TRUE AND ACCURATE VALUE OF ASSETS IN THE FUND. AS A RESULT, DUBRULE AND A COLLEAGUE WITHDREW $141,632 OF EXCESS FEES FROM THE FUND, WHICH CAME DIRECTLY FROM WHAT REMAINED OF THE CAPITAL ACCOUNTS OF THE FUND'S INVESTORS. FINRA FOUND THAT DESPITE KNOWING THAT A MEMBER OF THE FIRM'S STAFF HAD FORGED A SIGNIFICANT BUT UNKNOWN NUMBER OF DEPOSIT SECURITIES REQUEST FORMS AND THUS CAUSED NUMEROUS UNREGISTERED PENNY STOCKS TO BE DEPOSITED INTO FIRM CUSTOMER ACCOUNTS ABSENT SUPERVISORY REVIEW, DUBRULE FAILED TO CONDUCT ANY INVESTIGATION TO DETERMINE THE SCOPE OF THE FORGERIES AND UNSUPERVISED PENNY STOCK TRADING.