NASD

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

Decision

Bar (Permanent)

Monetary Penalty other than Fines

COSTS

FIRST USE. THE BROCHURE OMITTED MATERIAL INFORMATION NECESSARY TO PROVIDE A SOUND BASIS FOR EVALUATING THE FACTS REGARDING INVESTMENT PROGRAM. WIARD ALSO PRODUCED AND DISTRIBUTED A LETTER THAT WAS DEFICIENT IN THE FOLLOWING RESPECTS: (A) THE MATERIAL DISCLOSURE: "PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS" IS PLACED IN A LEGEND IN SMALLER TYPE IN THE LAST LINE ON THE LAST PAGE OF THE THREE-PAGE LETTER; (B) THE NAME OF THE NASD MEMBER WAS PLACED IN A LEGEND ON THE LAST PAGE OF THE LETTER; (C) THE LETTER, WHICH NAMES A NON-MEMBER ENTITY IN ADDITION TO THE MEMBER, FAILED TO MAKE IT CLEAR THAT SECURITIES ARE OFFERED THROUGH THE MEMBER; AND (D) THE MATERIAL WAS NOT APPROVED PRIOR TO USE BY A REGISTERED PRINCIPAL OF THE BROKER-DEALER. THE COMPLAINT FURTHER ALLEGES THAT WIARD FAILED TO AMEND FORM U4 TO REFLECT CUSTOMER COMPLAINTS.HEARING PANEL DECISION RENDERED MAY 25, 2004, WHEREIN RESPONDENT SCOTT E. WIARD WAS FOUND TO HAVE USED DISCRETIONARY AUTHORITY TO INVEST CLIENT FUNDS IN A MANNER THAT THE CLIENTS HAD NOT AUTHORIZED, AND THAT RESPONDENT WIARD HAD NOT DETERMINED WAS SUITABLE FOR THE CLIENTS IN VIOLATION OF RULE 2110. RESPONDENT WIARD IS BARRED FROM ASSOCIATION WITH ANY NASD MEMBER IN ANY CAPACITY. IN ADDITION, RESPONDENT WIARD IS JOINTLY AND SEVERALLY ORDERED TO PAY COSTS IN THE AMOUNT OF $2,538.50. RESPONDENT WIARD ALSO VIOLATED 2110 BY MAINTAING DISCRETIONARY ACCOUNTS, CONTRARY TO CONDITIONS IMPOSED ON HIM BY NASD WHEN IT APPROVED A MEMBERSHIP CONTINUANCE APPLICATION FILED ON HIS BEHALF, AND BY FAILING TO DISCLOSE CUSTOMER COMPLAINTS ON HIS FORM-U4. IN LIGHT OF THE BAR, NO ADDITIONAL SANCTIONS ARE IMPOSED ON HIM FOR THESE VIOLATIONS. NAC DECISION RENDERED OCTOBER 18, 2005, WHEREIN RESPONDENT SCOTT E. WIARD WAS FOUND TO HAVE USED DISCRETIONARY AUTHORITY TO INVEST CLIENT FUNDS IN A MANNER THAT THE CLIENTS HAD NOT AUTHORIZED, AND THAT RESPONDENT WIARD HAD NOT DETERMINED WAS SUITABLE FOR THE CLIENTS IN VIOLATION OF RULE 2110. THE SANCTIONS IMPOSED BY THE HEARING PANEL ARE AFFIRMED AND IMPOSE APPEAL COSTS OF $1,000 AND TRANSCRIPT COSTS OF $367.04 AGAINST RESPONDENTS, JOINTLY AND SEVERALLY. RESPONDENT WIARD IS BARRED FROM ASSOCIATION WITH ANY NASD MEMBER IN ANY CAPACITY. A SEPARATE BAR IS IMPOSED ON RESPONDENT FOR HIS SUITABILITY VIOLATIONS UNDER CONDUCT RULE 2310 AND FOR HIS UNATHORIZED TRADING VIOLATIONS UNDER CONDUCT RULE 2110. DECISION IS FINAL NOVEMBER 19, 2005. FINES PAID.

REGUALTION FOR REVIEW AND APPROVAL WWITHIN 10 DAYS OF FIRST USE. THE BROCHURE OMITTED MATERIAL INFORMATION NECESSARY TO PROVIDE A SOUND BASIS FOR EVALUATING THE FACTS REGARDING INVESTMENT PROGRAM. WIARD ALSO PRODUCED AND DISTRIBUTED A LETTER THAT WAS DEFICIENT IN THE FOLLOWING RESPECTS:A) THE MATERIAL DISCLOSURE;"PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS" IS PLACED IN A LEGEND INSMALLER TYPE IN THE LASTLINE ON THE LAST PAGE OF THE THREE PAGE LETTER;B) THE NAME OF THE NASD MEMBER WAS PLACED ON THE LAST PAGE OF THE LATTER;C) THE LETTER, WHICH NAMES A NON-MEMBER ENTITY IN ADDITION TO THE MEMBER, FAILED TO MAKE IT CLEAR THAT SECURITIES ARE OFFERED THROUGH THE MEMBER; AND D) THE MATERIAL WAS NOT APPROVED PRIOR TO USE BY A REGISTERED PRINCIPAL OF THE BROKER-DEALER. THE COMPLAINT FURTHER ALLEGES THAT WIARD FAILED TO AMEND FORM U4 TO REFLECT CUSTOMER COMPLAINTS. RESPONDENT IS ALLEGING THAT NASD-DISTRICT 8 IS MALICIOUSLY PROCEEDING IN BAD FAITH, FALSIFYING DOCUMENTS, OMITTING PREVIOUSLY SUBMITTED DOCUMENTATION, PROCEEDING TO MAKE CHARGES ON DOCUMENTS NOT SUBMITTED TO THE PUBLIC PURPOSEFULLY MISCONSTRUING ANTI-DISCRETIONARY RULES.