MICHIGAN

IT IS ORDERED THAT THE FOLLOWING PENALTY AUTHORIZED BY SECTION 412(6) AND SECTION 604 OF THE ACT, MCL 451.2412(6) AND MCL 451.2604, IS IMPOSED: THE SECURITIES ADMINISTRATOR HEREBY SUSPENDS THE SECURITIES AGENT REGISTRATION OF DOUGLAS A. TROSZAK.

Order

Suspension

SECURITIES AGENT REGISTRATION

INDEFINITE

8/25/2015

FINRA

FINRA BY-LAWS ARTICLE V, SECTION 2, FINRA RULES 1122, 2010, 3130, 3310(B), 3310(C), 8210, NASD RULES 2110, 3010, 3011(B), 3012: TROSZAK AND HIS MEMBER FIRM WERE AWARE OF THE FIRM'S SUSPENSION, BUT, DURING THE SUSPENSION PERIOD, THE FIRM, THROUGH TROSZAK, EFFECTED SOME PURCHASES AND SOME SALES OF MUTUAL FUND SHARES FOR ITS CUSTOMERS. TROSZAK BORROWED FUNDS FROM SOME INDIVIDUALS TO REDEEM A CONDOMINIUM THAT HE OWNED FROM FORECLOSURE. TROSZAK SIGNED AND ISSUED PROMISSORY NOTES TO THESE INDIVIDUALS, SOME OF WHOM WERE CUSTOMERS OF THE FIRM. FINRA REQUESTED INFORMATION AND DOCUMENTATION CONCERNING THE REPAYMENT OF THE PROMISSORY NOTES AND LOANS. FINRA WAS CONCERNED THAT TROSZAK WAS NOT TIMELY REPAYING THE PURCHASERS OF THE PROMISSORY NOTES, AND OTHER CUSTOMERS OF THE FIRM WHO LENT HIM MONEY. THERE WERE ALSO CONCERNS THAT TROSZAK DID NOT HAVE THE FINANCIAL WHEREWITHAL TO REPAY THE CUSTOMERS AND INVESTORS. TROSZAK FAILED TO PROVIDE THE DOCUMENTS AND INFORMATION THAT WERE REQUESTED AND THEREBY IMPEDED AND DELAYED FINRA'S EXAMINATION. AS THE SOLE REGISTERED PERSON AT THE FIRM, TROSZAK WAS RESPONSIBLE FOR PREPARING THE 3130 REPORTS AND FOR MAKING THE CEO SUPERVISORY CERTIFICATIONS FOR THE FIRM. THE FIRM, THROUGH TROSZAK, FAILED TO CREATE 3012 AND 3130 REPORTS FOR SOME ANNUAL PERIODS. THE FIRM, THROUGH TROSZAK, ALSO FAILED TO MAKE THE CEO SUPERVISORY CERTIFICATIONS REQUIRED BY FINRA RULE 3130 FOR THOSE YEARS. THE FIRM, THROUGH TROSZAK, FAILED TO ESTABLISH AND MAINTAIN ADEQUATE WRITTEN SUPERVISORY PROCEDURES (WSPS) DESIGNED TO ENSURE THAT THE FIRM AND TROSZAK COMPLIED WITH NASD AND FINRA RULES AND SEC STATUTES AND REGULATIONS, AND OTHER LAWS. THE FIRM'S WSPS WERE OBTAINED FROM A THIRD-PARTY AND WERE NOT TAILORED TO APPLY TO THE FIRM'S SECURITIES BUSINESS. TROSZAK ADMITTED TO FINRA THAT HE PURCHASED A "CANNED" VERSION OF WRITTEN PROCEDURES FOR SECURITIES FIRMS, AND HE HAD NOT TAKEN THE TIME TO REVIEW THE PROCEDURES OR CUSTOMIZE THEM TO MAKE THEM RELEVANT TO THE BUSINESS CONDUCTED BY THE FIRM. TROSZAK WILLFULLY FAILED TO TIMELY AMEND HIS FORM U4 TO DISCLOSE UNSATISFIED JUDGMENT AGAINST HIM. FURTHER, THE FIRM FILED THE AMENDMENT ONLY AFTER FINRA ADVISED TROSZAK OF HIS OBLIGATION TO DISCLOSE THE JUDGMENT. FOR A PERIOD, THE FIRM, THROUGH TROSZAK, FAILED TO ESTABLISH AND IMPLEMENT APPROPRIATE ANTI-MONEY LAUNDERING (AML) COMPLIANCE PROCEDURES. SPECIFICALLY, THE FIRM, THROUGH TROSZAK, ESTABLISHED AND IMPLEMENTED AML PROCEDURES WHICH IMPROPERLY PROVIDED THAT THE INDEPENDENT TEST OF ITS AML PROGRAM WOULD BE PERFORMED BY THE FIRM. TROSZAK FAILED TO ARRANGE FOR A TIMELY INDEPENDENT TEST OF THE FIRM'S AML PROGRAM FOR AN ANNUAL PERIOD. THE FIRM'S INDEPENDENT AML TEST FOR THE PERIOD WAS NOT COMPLETED UNTIL OVER A YEAR AFTER THE PERIOD. FOR CLOSE TO THREE YEARS, THE FIRM, THROUGH TROSZAK, FAILED TO OPEN AND DOWNLOAD ANY OF THE FINANCIAL CRIMES ENFORCEMENT NETWORK (FINCEN) 314(A) REQUESTS THAT WERE SENT TO IT, AND THEREFORE ALSO FAILED TO EVIDENCE ANY SEARCHES OF ITS RECORDS TO DETERMINE IF IT MAINTAINED ACCOUNTS FOR, OR ENGAGED IN TRANSACTIONS WITH, INDIVIDUALS OR ENTITIES IDENTIFIED IN ANY OF THE 314(A) REQUESTS FROM FINCEN. THE FIRM WILLFULLY VIOLATED SEC REGULATION S-P WHEN IT, THROUGH TROSZAK, FAILED TO COMPLY WITH REGULATION S-P IN THAT THE FIRM USED A NOTICE TO CUSTOMERS THAT WAS DEFICIENT BECAUSE IT FAILED TO: STATE THAT THE FIRM DOES NOT DISCLOSE, AND DOES NOT RESERVE THE RIGHT TO DISCLOSE, NONPUBLIC PERSONAL INFORMATION TO AFFILIATES OR NONAFFILIATED THIRD PARTIES; PROVIDE CATEGORIES OF NONPUBLIC PERSONAL INFORMATION THAT THE FIRM COLLECTS; DISCLOSE THE FIRM'S POLICIES AND PROCEDURES FOR PROTECTING THE CONFIDENTIALITY AND SECURITY OF NONPUBLIC INFORMATION; AND CONTAIN A DESCRIPTION OF ANY DISCLOSURES THE REGULATION PERMITS A FIRM TO MAKE TO NONAFFILIATED THIRD PARTIES AS EXCEPTIONS TO THIS REGULATION.

Decision

Bar (Permanent)

All Capacities

Indefinite

8/22/2016

HEARING PANEL DECISION RENDERED MAY 16, 2014 WHEREIN TROSZAK IS BARRED FROM ASSOCIATION WITH ANY FINRA MEMBER IN ANY CAPACITY FOR HIS FAILURES TO COMPLY WITH FINRA'S RULE 8210 REQUESTS AND BARRED FROM ASSOCIATION WITH ANY FINRA MEMBER IN ANY PRINCIPAL OR SUPERVISORY CAPACITY FOR HIS SUPERVISORY VIOLATIONS. TROSZAK MUST ALSO PAY, JOINTLY AND SEVERALLY, COSTS OF $4,719.09. THE SANCTIONS WERE BASED ON FINDINGS THAT TROSZAK FAILED TO RESPOND TO A FINRA REQUEST FOR INFORMATION AND DOCUMENTS RELATED TO LOANS HE OBTAINED IN FEBRUARY 2011 FROM A NUMBER OF INDIVIDUALS, FOUR OF WHOM WERE FIRM CUSTOMERS. THE FINDINGS STATED THAT THE FIRM AND TROSZAK FAILED TO ESTABLISH AND MAINTAIN ADEQUATE WSPS AND FAILED TO PREPARE REQUIRED ANNUAL REPORTS AND CERTIFICATIONS REGARDING THE DOCUMENTING, REVIEW AND TESTING OF THE FIRM'S WSPS. THE WSPS DID NOT TAILOR THE GENERIC, ALL-INCLUSIVE SET OF PROCEDURES THE OWNER PURCHASED FROM A THIRD PARTY TO APPLY TO THE FIRM'S ACTUAL BUSINESS. THE FIRM AND TROSZAK FAILED TO ESTABLISH AND IMPLEMENT ADEQUATE AND APPROPRIATE AML PROCEDURES AND FAILED TO CONDUCT A TIMELY INDEPENDENT AML TESTS. INSTEAD OF DEVELOPING AND IMPLEMENTING AN AML PROGRAM, TROSZAK USED FINRA'S SMALL FIRM TEMPLATE WITHOUT TAILORING IT TO FIT THE FIRM'S BUSINESS. THE FIRM'S CONSULTANT NOTED THIS DEFICIENCY. THE FINDINGS ALSO STATED THAT THE FIRM AND TROSZAK WILLFULLY FAILED TO AMEND HIS FORM U4 TO REPORT A JUDGMENT ENTERED AGAINST HIM. THE FINDINGS ALSO INCLUDED THAT THE FIRM AND TROSZAK WILLFULLY FAILED TO ADOPT AND PROVIDE CUSTOMERS WITH A PRIVACY NOTICE THAT COMPLIES WITH THE REQUIREMENTS OF REGULATION S-P. THE FIRM AND TROSZAK RELIED ON THE NOTICES THE OWNER PROVIDED TO HIS TAX CLIENTS ALTHOUGH THEY WERE CAUTIONED THAT THEY COULD NOT DO SO. THE HEARING PANEL DISMISSED THE ALLEGATIONS THAT CHARGED THE FIRM AND TROSZAK WITH EFFECTING SECURITIES TRANSACTIONS WHILE THE FIRM WAS SUSPENDED AND THAT THE FIRM AND TROSZAK FAILED TO RESPOND TO FINCEN INFORMATION SHARING REQUESTS. ON JUNE 5, 2014, TROSZAK APPEALED THE DECISION TO THE NATIONAL ADJUDICATORY COUNCIL (NAC). THE SANCTIONS ARE NOT IN EFFECT PENDING THE APPEAL. NAC decision rendered July 19, 2016. The sanction is based on findings that Troszak failed to respond to a FINRA request for information and documents related to loans he obtained from a number of individuals, four of whom were customers of his member firm. The findings stated that Troszak also failed to establish and maintain adequate WSPs at the firm, and failed to prepare required annual reports and certifications regarding the documenting, review and testing of the firm's WSPs. The WSPs did not tailor the generic, all-inclusive set of procedures the owner purchased from a third party to apply to the firm's actual business. Troszak failed to establish and implement adequate and appropriate AML procedures, and failed to conduct a timely independent AML tests. Instead of developing and implementing an AML program, Troszak used FINRA's small firm template without tailoring it to fit the firm's business. The findings also stated that Troszak willfully failed to amend his Form U4 to report a judgment entered against him. The findings also included that Troszak willfully failed to adopt and provide customers with a privacy notice that complies with the requirements of Regulation S-P. Troszak relied on the notices he provided to his tax clients even though they were cautioned that they could not do so. The decision became final August 22, 2016.

FINRA

ARTICLE V, SECTION 2 OF FINRA BY-LAWS, FINRA RULES 2010, 8210, NASD RULE 2110 - DOUGLAS A. TROSZAK FAILED TO AMEND HIS FORM U4 TO DISCLOSE MATERIAL INFORMATION. TROSZAK FAILED TO RESPOND COMPLETELY TO FINRA REQUESTS FOR INFORMATION AND DOCUMENTATION.

Decision

Bar (Permanent)

All Capacities

7/21/2014

Monetary Penalty other than Fines

$2,712.00

$1,368.79

HEARING PANEL DECISION RENDERED MARCH 29, 2012 WHEREIN TROSZAK IS BARRED FROM ASSOCIATION WITH ANY FINRA MEMBER IN ANY CAPACITY FOR FAILING TO COMPLY WITH FINRA REQUESTS FOR INFORMATION AND DOCUMENTS, IN VIOLATION OF FINRA RULES 2010 AND 8210; AND ORDERED TO PAY $2,712 IN COSTS, JOINTLY AND SEVERALLY. IT WAS ALSO FOUND THAT TROSZAK AND HIS MEMBER FIRM FAILED TO AMEND HIS FORM U4 TO DISCLOSE THAT HE WAS THE SUBJECT OF A FEDERAL TAX LIEN, IN VIOLATION OF ARTICLE V, SECTION 2 OF THE FINRA BY-LAWS, NASD RULE 2110 AND FINRA RULE 2010. NO SANCTIONS ARE IMPOSED FOR THE FAILURE TO AMEND THE FORM U4 IN LIGHT OF THE BAR. ON APRIL 20, 2012, TROSZAK APPEALED TO THE NATIONAL ADJUDICATORY COUNCIL (NAC). NAC DECISION RENDERED JULY 21, 2014 WHEREIN THE NAC AFFIRMED THE FINDINGS AND MODIFIED THE SANCTIONS. THE NAC ALSO DETERMINED IT WOULD BE APPROPRIATE TO FINE TROSZAK $50,000, JOINTLY AND SEVERALLY, BUT DECLINE TO DO SO IN LIGHT OF THE BAR. FOR THE FORM U4 VIOLATION, THE NAC DETERMINED THAT SUSPENDING TROSZAK FOR 60 DAYS AND IMPOSING A FINE OF $10,000, JOINTLY AND SEVERALLY, WOULD BE APPROPRIATE, BUT ALSO DECLINE TO IMPOSE THESE SANCTIONS IN LIGHT OF THE BAR. THE NAC ALSO AFFIRMS THE HEARING PANEL'S ORDER THAT TROSZAK AND HIS FIRM PAY $2,712 IN HEARING COSTS AND ORDER THEM TO PAY $1,368.79 IN APPEAL COSTS. THE BAR IS EFFECTIVE JULY 21, 2014. THIS MATTER HAS BEEN APPEALED TO THE SEC. IN LIGHT OF THE MOTION TO STAY, FINRA WILL NOT IMPOSE THE BAR UNTIL THE COMMISSION RULES ON THE PENDING MOTION, AND THEN ONLY IF THE COMMISSION DENIES APPLICANT'S MOTION TO STAY. ON AUGUST 12, 2014, THE SEC DENIED TROSZAK'S REQUEST FOR A STAY AND AS A RESULT, THE BAR IS IN EFFECT. SEC DECISION RENDERED MAY 8, 2015. THE SANCTIONS WERE SUSTAINED BY THE SEC FOLLOWING APPEAL OF A NAC DECISION. THE SANCTIONS WERE BASED ON FINDINGS THAT TROSZAK AND HIS MEMBER FIRM FAILED TO RESPOND COMPLETELY TO FINRA REQUESTS FOR INFORMATION AND DOCUMENTS. THE FINDINGS STATED THAT THE FIRM AND TROSZAK FAILED TO TIMELY AMEND TROSZAK'S UNIFORM APPLICATION FOR SECURITIES INDUSTRY REGISTRATION OR TRANSFER (FORM U4) WITH MATERIAL INFORMATION ABOUT A FEDERAL TAX LIEN THAT WAS FILED AGAINST HIM. ON JULY 7, 2015, TROSZAK AND HIS FIRM APPEALED THE DECISION TO THE UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT. THE BAR REMAINS IN EFFECT WHILE ON APPEAL. On June 29, 2016, the U.S. Court of Appeals for the Sixth Circuit denied Troszak's petition for review and sustained the sanctions following appeal of the SEC decision. The bar remains in effect. The decision became final September 27, 2016.

HEARING PANEL DECISION RENDERED MARCH 29, 2012 WHEREIN TROSZAK IS BARRED FROM ASSOCIATION WITH ANY FINRA MEMBER IN ANY CAPACITY AND ORDERED TO PAY $2,712 IN COSTS, JOINTLY AND SEVERALLY. IN LIGHT OF THE BAR, NO OTHER SANCTIONS WERE IMPOSED. APPEALED TO THE NAC ON APRIL 20, 2012.

NASD N/K/A FINRA

SEC RULE 17A-3, NASD RULES 2110, 3110 - A MEMBER FIRM, ACTING THROUGH DOUGLAS A. TROSZAK, FAILED TO PREPARE A GENERAL LEDGER AND TRIAL BALANCE FOR FEBRUARY AND MARCH 2005.

Decision

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

$2,500.00

HEARING PANEL DECISION RENDERED NOVEMBER 30, 2007, WHEREIN, RESPONDENT IS FINED $10,000, JOINTLY AND SEVERALLY, AND REQUIRED TO REQUALIFY BY EXAMINATION AS A FINANCIAL AND OPERATIONAL PRINCIPAL (FINOP) BEFORE AGAIN SERVING AS A FINOP. IN ADDITION, RESPONDENT IS ASSESSED COSTS IN THE AMOUNT OF $1,950, JOINTLY AND SEVERALLY. APPEALED TO THE NAC ON 12/24/07. NAC DECISION RENDERED DECEMBER 10, 2008 WHEREIN THE FINDINGS ARE AFFIRMED AND SANCTIONS MODIFIED; THEREFORE, TROSZAK IS FINED $2,500, JOINTLY AND SEVERALLY, AND ORDERED TO PAY HEARING COSTS OF $1,950.42, JOINTLY AND SEVERALLY. APPEALED TO THE SEC ON JANUARY 5, 2009. SEC DECISION RENDERED AUGUST 14, 2009 WHEREIN THE FINDINGS MADE ARE HELD AND THE SANCTIONS IMPOSED BY THE NAC ARE SUSTAINED, THEREFORE TROSZAK IS FINED $2,500, JOINTLY AND SEVERALLY, AND ORDERED TO PAY HEARING COSTS OF $1,950.42, JOINTLY AND SEVERALLY. THE REQUIREMENT TO REQUALIFY AS A FINOP WAS ELIMINATED. DECISION BECAME FINAL OCTOBER 13, 2009.

HEARING PANEL DECISION RENDERED NOVEMBER 30, 2007, WHEREIN, RESPONDENT IS FINED $10,000, JOINTLY AND SEVERALLY, AND REQUIRED TO REQUALIFY BY EXAMINATION AS A FINANCIAL AND OPERATIONAL PRINCIPAL (FINOP) BEFORE AGAIN SERVING AS A FINOP. IN ADDITION, RESPONDENT IS ASSESSED COSTS IN THE AMOUNT OF $1,950, JOINTLY AND SEVERALLY. APPEALED TO THE NAC ON 12/24/07. NAC DECISION RENDERED DECEMBER 10, 2008 WHEREIN THE FINDINGS ARE AFFIRMED AND SANCTIONS MODIFIED; THEREFORE, TROSZAK IS FINED $2,500, JOINTLY AND SEVERALLY, AND ORDERED TO PAY HEARING COSTS OF $1,950.42, JOINTLY AND SEVERALLY. APPEALED TO THE SEC ON JANUARY 5, 2009. SEC DECISION RENDERED AUGUST 14, 2009 WHEREIN THE FINDINGS MADE ARE HELD AND THE SANCTIONS IMPOSED BY THE NAC ARE SUSTAINED, THEREFORE TROSZAK IS FINED $2,500, JOINTLY AND SEVERALLY, AND ORDERED TO PAY HEARING COSTS OF $1,950.42, JOINTLY AND SEVERALLY. THE REQUIREMENT TO REQUALIFY AS A FINOP WAS ELIMINATED. DECISION BECAME FINAL OCTOBER 13, 2009.

NASD

NASD MEMBERSHIP AND REGISTRATION RULE 1022 AND CONDUCT RULE 2110 - RESPONDENT DOUGLAS A. TROSZAK, ACTING ON BEHALF OF HIS MEMBER FIRM, ENGAGED IN SECURITIES RELATED ACTIVITIES WITHOUT EMPLOYING A PERSON WHO WAS QUALIFIED AND REGISTERED AS A FINANCIAL AND OPERATIONAL PRINCIPAL OR AN INTRODUCING BROKER-DEALER/FINANCIAL AND OPERATIONS PRINCIPAL. IN ADDITION, RESPONDENT TROSZAK MADE THE FINAL PREPARATIONS AND GAVE THE FINAL APPROVAL FOR THE ACCURACY OF FINANCIAL REPORTS THAT WERE SUBMITTED TO NASD ON BEHALF OF HIS MEMBER FIRM, WHILE HE HAD NOT PASSED THE APPROPRIATE QUALIFICATION EXAMINATION.

Decision & Order of Offer of Settlement

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

ORDER OF ACCEPTING OFFER OF SETTLEMENT ISSUED JANUARY 6, 2005, WHEREIN WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, RESPONDENT TROSZAK CONSENTED TO THE DESCRIBED SANCTION AND TO THE ENTRY OF FINDINGS, THEREFORE, HE IS FINED $5,000, JOINTLY AND SEVERALLY. FINES PAID.

THIS ACTION DOES NOT REPRESENT RESPONSIBLE REGULATION. NASD NOW FINRA NEEDS TO UNDERSTAND THE HARM THAT RESULTS FROM ENFORCEMENT THAT HAS GONE BEYOND GOOD INTENTIONS AND NEEDS TO BE MODIFIED SIGNIFICANTLY. SETTLEMENT WAS EXTRACTED DUE TO THE HEAVY ECONOMIC BURDEN IMPOSED TO DEFEND AGAINST UNREASONABLE AND INAPPRORIATE ALLEGATIONS BROUGHT BY NASD.