FINRA

FINRA RULES 2010, 8210, NASD RULES 2110, 2370, 2510(B), 3110: HEAD ORALLY TOLD CUSTOMERS THAT THE TOTAL ASSET VALUE OF THEIR ACCOUNTS WAS WORTH MORE THAN THEIR TRUE VALUES AND PROVIDED THEM WITH DOCUMENTS WHICH FALSIFIED AND OVERSTATED THE TRUE VALUES OF THEIR ACCOUNTS. HEAD ASKED A CUSTOMER TO LOAN HER $20,000.00, WHICH THE CUSTOMER AGREED TO AND GAVE HER A CASHIER'S CHECK IN THE AMOUNT OF $20,000.00. SEVERAL MONTHS AFTER SHE BORROWED THE $20,000.00, HEAD SENT THE CUSTOMER A CHECK FOR $1,000.00 AND HEAD MADE NO FURTHER PAYMENT. HEAD'S MEMBER FIRM PROHIBITED BORROWING FROM ANY CLIENT (OTHER THAN A FAMILY MEMBER) BUT ALLOWED THAT UNDER EXTREMELY RARE AND EXTENUATING CIRCUMSTANCES AN EXCEPTION MIGHT BE GRANTED; BUT THE FIRM REQUIRED THAT ANY SUCH EXCEPTION BE REVIEWED AND APPROVED BY A BRANCH MANAGER OR OTHER SUPERVISOR AND WRITTEN APPROVAL BE OBTAINED FROM THE COMPLIANCE DEPARTMENT BEFORE ENGAGING IN THE ACTIVITY. NASD CONDUCT RULE 2370 PROHIBITS REPRESENTATIVES FROM BORROWING MONEY FROM THEIR CUSTOMERS UNLESS THE REPRESENTATIVE'S FIRM HAS WRITTEN PROCEDURES ALLOWING SUCH BORROWING AND THE BORROWING MEETS ONE OF THE FIVE SPECIFIC CONDITIONS SET FORTH IN RULE 2370(A)(2)(A) - (E). HEAD NEITHER SOUGHT NOR OBTAINED APPROVAL FOR THE LOAN; MOREOVER, HER ARRANGEMENT WITH THE CUSTOMER DID NOT SATISFY ANY OF THE CONDITIONS SET FORTH IN NASD RULE 2370(A)(2)(A) - (E). HEAD SETTLED AND/OR ATTEMPTED TO SETTLE CUSTOMER'S COMPLAINT WITHOUT THE KNOWLEDGE OR AUTHORIZATION OF HER FIRM. HEAD PREPARED, SIGNED AND MAILED A LETTER TO A FINANCIAL INSTITUTION STATING THAT A CUSTOMER'S ASSETS TOTALED "OVER $4 MILLION" IN ORDER TO ASSIST THE CUSTOMER IN OBTAINING A MORTGAGE LOAN. THE LETTER WAS MATERIALLY FALSE BECAUSE THE CUSTOMER HAD ASSETS WORTH ONLY ABOUT $1.6 MILLION, AND FURTHER, ALTHOUGH THE FIRM'S PROCEDURES REQUIRED THAT OUTGOING CORRESPONDENCE BE REVIEWED AND APPROVED BEFORE MAILING; HEAD NEITHER SOUGHT NOR OBTAINED APPROVAL FOR THE LETTER. HEAD NEITHER SOUGHT NOR OBTAINED AUTHORIZATION FROM EITHER A CUSTOMER OR THE FIRM TO EXERCISE DISCRETION IN THE CUSTOMER'S ACCOUNTS; NONETHELESS, SHE EXECUTED TRADES IN THE CUSTOMER'S INDIVIDUAL ACCOUNT WITHOUT DISCUSSING ANY OF THOSE TRANSACTIONS WITH HIM. SIMILARLY, HEAD NEITHER SOUGHT NOR OBTAINED AUTHORIZATION FROM ANOTHER CUSTOMER OR HER FIRM TO EXERCISE DISCRETION IN THE CUSTOMER'S FAMILY TRUST ACCOUNTS; NONETHELESS, HEAD EXECUTED TRADES IN THE ACCOUNTS WITHOUT DISCUSSING ANY OF THOSE TRANSACTIONS. ON OCCASIONS, HEAD MISCHARACTERIZED SOLICITED TRADES IN CUSTOMERS' ACCOUNTS AS "UNSOLICITED" THEREBY CAUSING THE FIRM'S BOOKS AND RECORDS TO BE INACCURATE. HEAD SUBMITTED FALSE AND EVASIVE INFORMATION TO FINRA IN RESPONSE TO A WRITTEN REQUEST FOR INFORMATION; IN PARTICULAR, HEAD FALSELY DENIED USING HER PERSONAL EMAIL ADDRESS TO COMMUNICATE WITH CLIENTS; TEXT MESSAGING; AND SETTLING AWAY FROM HER FIRM. WHILE HEAD WAS REGISTERED WITH THE FIRM, THE FIRM HAD WRITTEN SUPERVISORY PROCEDURES FORBIDDING THE USE OF PERSONAL EMAIL ACCOUNTS AND MANDATING THAT BUSINESS RELATED ELECTRONIC COMMUNICATIONS WITH CUSTOMERS GO THROUGH THE FIRM'S NETWORK. HEAD BY REPEATEDLY EMAILING CUSTOMERS FROM HER PERSONAL EMAIL ACCOUNT AND BY REPEATEDLY USING HER PERSONAL BLACKBERRY TO SEND TEXT MESSAGES TO A CUSTOMER, HEAD VIOLATED HER FIRM'S POLICIES AND PREVENTED IT FROM REVIEWING HER EMAIL AND TEXT MESSAGES AND DELAYED DISCOVERY OF THE MISCONDUCT IN CUSTOMERS' ACCOUNTS. HEAD FAILED TO APPEAR FOR AND PROVIDE ON-THE-RECORD TESTIMONY AS REQUESTED BY FINRA.

Decision

Bar (Permanent)

All Capacities

8/4/2011

Restitution

$19,000.00

DEFAULT DECISION RENDERED JULY 7, 2011, WHEREIN HEAD IS BARRED FROM ASSOCIATION WITH ANY FINRA MEMBER IN ANY CAPACITY FOR CONVEYING FALSE AND EXAGGERATED ACCOUNT VALUES TO CUSTOMERS; OFFERING TO SETTLE A CUSTOMER COMPLAINT AWAY FROM HER FIRM; PROVIDING FALSE INFORMATION TO FINRA; FAILING TO APPEAR FOR TESTIMONY; AND SENDING AN UNAPPROVED AND MATERIALLY FALSE LETTER TO A BANK. IN LIGHT OF THE BARS, NO ADDITIONAL SANCTIONS ARE IMPOSED FOR EXERCISING DISCRETION WITHOUT WRITTEN AUTHORIZATION IN CUSTOMER ACCOUNTS; MISCHARACTERIZING SOLICITED TRADES AS UNSOLICITED CAUSING HER FIRM TO HAVE INACCURATE BOOKS AND RECORDS; AND USING UNAPPROVED EMAIL AND TEXT MESSAGING ACCOUNTS TO COMMUNICATE WITH CUSTOMERS. IN ADDITION, HEAD IS ORDERED TO PAY RESTITUTION TO A CUSTOMER FROM WHOM SHE BORROWED MONEY; SPECIFICALLY, HEAD IS ORDERED TO PAY RESTITUTION TO THE CUSTOMER IN THE PRINCIPAL AMOUNT OF $19,000, REPRESENTING THE AMOUNT OF THE LOAN THAT HAS NOT BEEN REPAID, PLUS INTEREST THEREON AT THE RATE ESTABLISHED UNDER SECTION 6621(A)(2) OF THE INTERNAL REVENUE CODE FROM DECEMBER 9, 2005, UNTIL PAID. IN LIGHT OF THE BARS IMPOSED FOR THE OTHER VIOLATIONS, NO SUSPENSION OR FINE IS IMPOSED FOR THIS VIOLATION. DECISION BECAME FINAL AUGUST 4, 2011.