FINRA

FINRA BY-LAWS ARTICLE V, SECTION 2; FINRA RULES 1122, 2010, 2150, AND 8210; NASD RULES 2110 AND 2330(A); INTERPRETATIVE MATERIAL 1000-1: HARARI PROVIDED FALSE INFORMATION AND DOCUMENTS TO FINRA STAFF AND HIS MEMBER FIRM IN CONNECTION WITH AN INVESTIGATION INTO HIS BUSINESS DEALINGS WITH A CUSTOMER WHO WAS ALSO A CLOSE FRIEND OF HIMSELF AND HIS WIFE. IN RESPONSE TO A FINRA LETTER REQUIRING HIM TO PROVIDE CERTAIN INFORMATION AND DOCUMENTS, HE FALSELY TOLD FINRA STAFF THAT HE HAD REPAID A $20,000 LOAN FROM THE CUSTOMER, AND SUPPORTED THAT LIE BY INDUCING THE CUSTOMER TO PREPARE AND SIGN A LETTER CONTAINING FALSE REPRESENTATIONS WHICH HE THEN SENT TO FINRA AND TO HIS FIRM, KNOWING IT TO BE UNTRUE. HE ALSO TESTIFIED FALSELY UNDER OATH THAT HE DID NOT DRAFT THE LETTER. HARARI ALSO CAUSED THE CUSTOMER TO GIVE HIM A TOTAL OF $15,000 UNDER FALSE PRETENSES, PURPORTEDLY AS FINANCIAL PLANNING FEES, ALTHOUGH THE CUSTOMER WAS ALSO PAYING THE FEES TO HARARI'S FIRM. HARARI MISAPPROPRIATED AND CONVERTED THE $15,000 THAT HAD BEEN ENTRUSTED TO HIM BY THE CUSTOMER FOR THE PURPOSE OF PAYING HER FINANCIAL PLANNING FEES, APPROPRIATING THEM FOR HIS OWN USE INSTEAD OF REMITTING THEM TO HIS FIRM. HARARI AGAIN PROVIDED FALSE INFORMATION AND DOCUMENTATION IN RESPONSE TO A FINRA REQUEST FOR INFORMATION ABOUT THOSE PAYMENTS. IN ADDITION, HARARI FAILED TO DISCLOSE THE EXISTENCE OF TAX LIENS ON HIS FORM U4.

Decision

Bar (Permanent)

All Capacities

3/9/2015

Disgorgement

$15,000.00

Monetary Penalty other than Fines

$5,817.40

$1,277.80

PLUS PREJUDGMENT INTEREST ON THE DISGORGEMENT-

HEARING PANEL DECISION RENDERED MARCH 28, 2014 WHEREIN HARARI IS BARRED FROM ASSOCIATION WITH ANY FINRA MEMBER IN ANY CAPACITY AND ORDERED TO PAY, JOINTLY AND SEVERALLY, COSTS IN THE AMOUNT OF $5,817.40. THE SANCTIONS WERE BASED ON FINDINGS THAT HARARI PROVIDED FALSE INFORMATION AND DOCUMENTATION TO FINRA AND HIS MEMBER FIRM. THE FINDINGS STATED THAT HARARI AND HIS WIFE RECEIVED $20,000 FROM A CUSTOMER. WHEN SENT A FINRA REQUEST FOR INFORMATION, HARARI PARTICIPATED IN CREATING A FALSE CUSTOMER LETTER WHICH STATED THAT THE $20,000 WAS A LOAN THAT HAD BEEN FULLY REPAID. HARARI PROVIDED HIS RESPONSE TO FINRA AND HIS FIRM, AND KNOWINGLY MISREPRESENTED THE STATUS OF HIS $20,000 INDEBTEDNESS TO THE CUSTOMER AND THE NATURE OF THE FINANCIAL PLANNING FEE PAYMENTS. HARARI OBTAINED THE FINANCIAL PLANNING FEE PAYMENTS BY FALSE PRETENSE. TWICE HARARI INDUCED THE CUSTOMER TO PAY HIM $7,500 AS FINANCIAL PLANNING FEES, ALTHOUGH HE NEVER INTENDED TO USE THE FUNDS FOR THAT PURPOSE, AND AS A RESULT, CONVERTED THE FUNDS. THE FINDINGS ALSO STATED THAT HARARI FAILED TO DISCLOSE TAX LIENS ON HIS FORM U4. ON APRIL 24, 2014, HARARI FILED WITH THE OFFICE OF HEARING OFFICERS A NOTICE OF APPEAL OF THE PANEL DECISION ISSUED MARCH 28, 2014. THE SANCTIONS ARE NOT IN EFFECT PENDING REVIEW. NAC DECISION RENDERED MARCH 9, 2015 WHEREIN THE FINDINGS MADE ARE AFFIRMED AND THE SANCTIONS IMPOSED BY THE HEARING PANEL ARE MODIFIED. THE SANCTIONS WERE IMPOSED BY THE NATIONAL ADJUDICATORY COUNCIL FOLLOWING APPEAL FOR REVIEW OF AN OFFICE OF HEARING OFFICERS DECISION. THE SANCTIONS WERE BASED ON FINDINGS THAT HARARI PROVIDED FALSE INFORMATION AND DOCUMENTATION TO FINRA AND HIS MEMBER FIRM. HARARI AND HIS WIFE RECEIVED $20,000 FROM A CUSTOMER AS A LOAN. THE HARARIS ALTERNATELY HAVE CHARACTERIZED THE $20,000 PAYMENT AS A GIFT AND AS A LOAN THAT HAD BEEN FORGIVEN OR "CONSIDERED REPAID." AFTER THE CUSTOMER ONCE AGAIN ASKED THE HARARIS FOR REPAYMENT OF THE $20,000, THE HARARIS GAVE HER A CHECK FOR $1,000. THE FINDINGS STATED THAT TWICE DAVID HARARI INDUCED THE CUSTOMER TO PAY HIM $7,500 AS FINANCIAL PLANNING FEES, ALTHOUGH HE NEVER INTENDED TO USE THE FUNDS FOR THAT PURPOSE, AND NEVER FORWARDED THE PAYMENTS TO HIS FIRM. DAVID HARARI OBTAINED THE FINANCIAL PLANNING FEE PAYMENTS BY FALSE PRETENSE AND CONVERTED THE FUNDS. THE FIRM REIMBURSED THE CUSTOMER $7,500 FOR THE FEE PAID DIRECTLY TO DAVID HARARI AND PAID HER $30,000 TO REIMBURSE HER FOR ALL THE FEES PAID. THE FINDINGS ALSO STATED THAT HARARI FAILED TO DISCLOSE TAX LIENS ON FORM U4 AMENDMENTS. THE FINDINGS ALSO INCLUDED THAT THE FIRM AMENDED HARARI'S FORM U5 TO DISCLOSE THAT HE WAS THE SUBJECT OF AN INTERNAL REVIEW FOR "VIOLATING COMPANY POLICY RELATED TO COMMINGLING OF FUNDS AND ACCEPTING CASH PAYMENTS FROM A CUSTOMER." PROMPTED BY THIS FILING, FINRA BEGAN INVESTIGATION AND REQUESTED INFORMATION CONCERNING THE $20,000 PAYMENT THE CUSTOMER MADE TO THE HARARIS, THE $7,500 IN PAYMENTS SHE MADE TO HARARI, AND THE TAX LIENS. THE CUSTOMER SUED THE HARARIS FOR REPAYMENT OF THE $19,000 DUE AND THE CASE WAS SETTLED WHEN HARARI'S WIFE SIGNED A NOTE FOR $19,000, WHICH WAS GUARANTEED BY HARARI. THE HARARIS HAD MADE ONLY TWO $250 PAYMENTS PURSUANT TO THIS NOTE. THE BAR IMPOSED IN THIS DECISION IS EFFECTIVE IMMEDIATELY UPON ISSUANCE OF THIS DECISION. THE DECISION BECAME FINAL APRIL 13, 2015.