FINRA

FINRA RULE 2010, NASD RULE 2110: WEST MISUSED APPROXIMATELY $113,513.68 DEPOSITED WITH HIS MEMBER FIRM BY A CORPORATE CLIENT. WEST'S FIRM ENTERED INTO AN AGREEMENT WITH AN ENTITY TO ADVISE THE ENTITY ON VARIOUS POSSIBLE TRANSACTIONS, INCLUDING CAPITAL RAISING AND/OR A MERGER OR ACQUISITION. WEST'S FIRM IDENTIFIED A CAPITAL SOURCE TO POTENTIALLY PROVIDE THE ENTITY WITH AN EQUIPMENT LOAN. THE CAPITAL SOURCE AND THE ENTITY AGREED TO A TERM SHEET CONCERNING THE PROPOSED TRANSACTION. PURSUANT TO THE TERM SHEET, THE ENTITY WAS REQUIRED TO MAKE AN INITIAL DEPOSIT OF $113,513.68 REPRESENTING THE FIRST AND LAST PAYMENT THAT WOULD BE DUE UNDER THE PROPOSED TRANSACTION. UNDER THE TERM SHEET ARRANGED BY WEST'S FIRM, THE CAPITAL SOURCE AND THE ENTITY AGREED THAT THE ENTITY'S DEPOSIT WOULD BE "HELD BY WEST'S FIRM UNTIL CLOSING." THE ENTITY WIRED THE DEPOSIT TO AN ACCOUNT CONTROLLED BY WEST'S FIRM. SHORTLY THEREAFTER, AND UNBEKNOWNST TO THE ENTITY, WEST CAUSED HIS FIRM TO DISBURSE THE ENTITY'S DEPOSIT TO OTHER ACCOUNTS OF HIS FIRM. THEREAFTER, WEST'S FIRM DISBURSED A PORTION OF THE FUNDS TO WEST'S PERSONAL BANK ACCOUNT. WEST USED THE ENTIRETY OF THE DEPOSIT TO PAY BUSINESS EXPENSES OF HIS FIRM AND TO PAY HIS OWN PERSONAL EXPENSES, INCLUDING HIS MORTGAGE LOAN PAYMENTS AND OTHER BILLS. AFTER THE CAPITAL SOURCE AND THE ENTITY TERMINATED THE TERM SHEET, THE ENTITY ASKED WEST'S FIRM TO RELEASE THE DEPOSIT BACK TO THE ENTITY. WEST'S FIRM, HOWEVER, DID NOT HAVE THE FUNDS, AND WEST PUT OFF THE ENTITY WITH A SERIES OF EXCUSES. AFTER THE ENTITY COMPLAINED TO FINRA THAT ITS FUNDS HAD BEEN CONVERTED, WEST REPAID THE ENTITY WITH A WIRE FROM HIS PERSONAL BANK ACCOUNT IN THE AMOUNT OF $113,483.68. IN CONNECTION WITH A SEPARATE TRANSACTION, WEST CAUSED HIS FIRM TO FAIL TO UTILIZE A PROPER ESCROW ACCOUNT IN CONNECTION WITH A CONTINGENCY OFFERING AND BY PREMATURELY RELEASING FUNDS BEFORE THE CONTINGENCY WAS SATISFIED. WEST'S FIRM ACTED AS THE LEAD PLACEMENT AGENT IN A PRIVATE CONTINGENCY OFFERING FOR A COMPANY. THE OFFERING WAS A BEST EFFORTS OFFERING AND HAD A $250,000 MINIMUM AND A $3 MILLION MAXIMUM. IN CONNECTION WITH THE OFFERING, WEST ESTABLISHED A BANK ACCOUNT AT A BANK IN THE NAME OF HIS FIRM'S ESCROW ACCOUNT. WEST CAUSED THE ACCOUNT TO BE USED TO HOLD FUNDS FROM INVESTORS WHO PURCHASED SHARES OF THE COMPANY IN THE OFFERING UNTIL THE MINIMUM CONTINGENCY WAS MET. THE ACCOUNT WAS NOT A BANK ESCROW ACCOUNT AND FAILED TO CONFORM TO THE REQUIREMENTS OF SECURITIES EXCHANGE ACT OF 1934 RULE 15C2-4 FOR ACCOUNTS HOLDING INVESTOR FUNDS PENDING SATISFACTION OF AN OFFERING CONTINGENCY. WEST CAUSED HIS FIRM TO RELEASE A PORTION OF THE FUNDS RAISED TO ITSELF AS PAYMENT OF ITS FEES BEFORE THE MINIMUM CONTINGENCY WAS MET.

Order

Bar (Permanent)

All Capacities

Indefinite

2/20/2014

Monetary Penalty other than Fines

$6,163.04

HEARING PANEL DECISION RENDERED JULY 26, 2012 WHEREIN WEST IS BARRED FROM ASSOCIATION WITH ANY FINRA MEMBER IN ANY CAPACITY FOR MISUSING A COMPANY'S FUNDS. THE SANCTION WAS BASED ON FINDINGS THAT WHEN WEST TOOK THE FUNDS, HE TOLD THE COMPANY AND A CAPITAL SOURCE THAT THE FUNDS WOULD BE HELD IN ESCROW UNTIL CLOSING. THE FINDINGS STATED THAT CONTRARY TO THIS REPRESENTATION, AS SOON AS HE RECEIVED THE FUNDS, WEST USED THEM TO PAY HIS PERSONAL EXPENSES. THE FINDINGS ALSO STATED THAT WEST CAUSED HIS MEMBER FIRM TO ACCEPT CUSTOMER FUNDS BEFORE AN OFFERING MET THE MINIMUM CONTINGENCY AND TO ACCEPT INVESTOR FUNDS THAT WERE NOT SUBJECT TO AN ESCROW AGREEMENT ADMINISTERED BY A BANK. IN LIGHT OF THE BAR, NO FURTHER SANCTIONS ARE IMPOSED FOR CAUSING HIS FIRM TO VIOLATE SECURITIES AND EXCHANGE COMMISSION (SEC) RULE 15C2-4'S ESCROW REQUIREMENTS. WEST IS ORDERED TO PAY COSTS IN THE AMOUNT OF $4,681.25. THE COSTS SHALL BE PAYABLE ON A DATE SET BY FINRA, BUT NOT LESS THAN 30 DAYS AFTER THIS DECISION BECOMES FINRA'S FINAL DISCIPLINARY ACTION IN THIS MATTER. ON AUGUST 20, 2012, WEST APPEALED THE DECISION TO THE NATIONAL ADJUDICATORY COUNCIL (NAC). NAC DECISION RENDERED FEBRUARY 20, 2014 WHEREIN THE FINDINGS MADE AND SANCTIONS IMPOSED BY THE HEARING PANEL ARE AFFIRMED. THE NAC ALSO IMPOSED APPEAL COSTS OF $1,481.79. ON MARCH 24, 2014, WEST APPEALED THE DECISION TO THE SEC. THE BAR IS IN EFFECT WHILE THE DECISION IS ON APPEAL. SEC RELEASE 34-74030, JANUARY 9, 2015: THE SEC SUSTAINED FINRA'S FINDINGS AND THE SANCTIONS IMPOSED. ON MARCH 3, 2015, WEST FILED WITH UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT A PETITION FOR REVIEW OF THE JANUARY 9, 2015 SEC DECISION. THE BAR REMAINS IN EFFECT PENDING REVIEW. On February 2, 2016, the Court issued a Summary Order which denied West's petition for review and affirmed the SEC's Order. The decision became final on May 2, 2016.