FINRA

RESPONDENT PERRY FAILED TO COMPLY WITH AN ARBITRATION AWARD OR SETTLEMENT AGREEMENT OR TO SATISFACTORILY RESPOND TO A FINRA REQUEST TO PROVIDE INFORMATION CONCERNING THE STATUS OF COMPLIANCE.

LETTER

Suspension

ANY CAPACITY

N/A

5/29/2015

PURSUANT TO ARTICLE VI, SECTION 3 OF FINRA BY-LAWS, AND FINRA RULE 9554, RESPONDENT PERRY IS SUSPENDED ON MAY 29, 2015 FOR FAILURE TO COMPLY WITH AN ARBITRATION AWARD OR SETTLEMENT AGREEMENT OR TO SATISFACTORILY RESPOND TO A FINRA REQUEST TO PROVIDE INFORMATION CONCERNING THE STATUS OF COMPLIANCE.

CLAIMANT ASSERTED THE CAUSE OF ACTION OF CONVERSION (NASD RULE 2330 AND FINRA RULES 2150 AND 2010).

$100,000.00

The award against Joan Perry was stayed through U.S. Bankruptcy Court for the Northern District of California, Case No. 14-51538.

STATE OF CALIFORNIA, DEPARTMENT OF CORPORATIONS

DURING THE FIELD EXAMINATION COMMENCING IN MARCH 2012, IT WAS NOTED THAT TAKE CHARGE FINANCIAL, INC. FAILED TO SUBMIT REQUESTED FOCUS REPORTS, FAILED TO MAINTAIN REQUIRED NET CAPITAL, AND FAILED TO MAINTAIN REQUIRED BOOKS AND RECORDS INVOLVING FINANCIAL DOCUMENTS AND CLIENT DOCUMENTS. ADDITIONALLY, WHILE THE EXAMINATION WAS STILL IN PROCESS, JOAN PERRY (PRINCIPAL) COULD NO LONGER BE CONTACTED AFTER REASONABLE SEARCH. THEREFORE, THE ORDERS REVOKING THE BROKER-DEALER AND INVESTMENT ADVISER CERTIFICATES OF TAKE CHARGE FINANCIAL, INC. WERE ISSUED ON JULY 16, 2012 PURSUANT TO CALIFORNIA CORPORATIONS CODE SECTION 25242.

Order

Revocation

FINRA

FINRA BY-LAWS ARTICLE V, SECTION 2, FINRA RULES 1122, 2010, 2150, 3240, 3310, 4530, 8210, NASD RULES 2110, 2330, 3011, 3070, 3110: PERRY AND HER MEMBER FIRM, STOLE MORE THAN $90,000 FROM THEIR CUSTOMERS BY TAKING THE CUSTOMERS' FUNDS DIRECTLY OUT OF THEIR SECURITIES ACCOUNTS WITHOUT AUTHORIZATION. RESPONDENTS HID THE THEFTS BY DESIGNATING THE FUND MOVEMENTS AS FEES OF VARIOUS TYPES. RESPONDENTS TRANSFERRED APPROXIMATELY $90,781.06 FROM APPROXIMATELY 45 CUSTOMER ACCOUNTS TO ACCOUNTS OWNED OR CONTROLLED BY RESPONDENTS. RESPONDENTS PROVIDED A NEW VERSION OF THE FIRM'S ADVISORY SERVICES AGREEMENTS (ASAV2), TO THEIR CUSTOMERS AND REQUESTED THAT THE CUSTOMERS SIGN IT. RESPONDENTS OMITTED AND/OR MISREPRESENTED MATERIAL FACTS TO CUSTOMERS IN CONNECTION WITH THE PROCUREMENT OF CUSTOMERS' SIGNATURES ON THE ASAV2. THESE NEW VERSIONS CONTAINED ADDED LANGUAGE OSTENSIBLY AUTHORIZING SOME OF THE FEES. HOWEVER, BEFORE HAVING THE CUSTOMERS SIGN THE AGREEMENTS, RESPONDENTS FAILED TO INFORM THE CUSTOMERS ABOUT THIS CHANGE IN THE NEW VERSION AND, IN AT LEAST SOME INSTANCES, THEY AFFIRMATIVELY MISREPRESENTED THAT THE TWO VERSIONS WERE THE SAME. AS TO EACH ASAV2, PERRY CAUSED THE FALSIFICATION OF THE DOCUMENT BY EITHER ALTERING THE DATE(S) APPEARING BY THE CUSTOMER SIGNATURE LINE(S) OR BY REQUESTING THAT THE CUSTOMER BACKDATE THE DOCUMENT. PERRY PROVIDED FALSIFIED DOCUMENTS TO FINRA IN RESPONSE TO REQUEST MADE AND PROVIDED FALSE TESTIMONY TO FINRA. PERRY PROVIDED FALSE TESTIMONY TO FINRA. PERRY BORROWED APPROXIMATELY $300,000 FROM HER CUSTOMER UNDER CIRCUMSTANCES PROHIBITED BY FINRA RULES, AND WITHOUT THE CUSTOMER'S AUTHORIZATION. PERRY FURTHER INFORMED THE CUSTOMER THAT THE LOAN WOULD BE SECURED BY A DEED OF TRUST ON THE PROPERTY IN FAVOR OF THE CUSTOMER. PERRY CAUSED $300,000 TO BE WIRED OUT OF THE CUSTOMER'S SECURITIES ACCOUNT AT THE FIRM. PERRY USED THE FUNDS TO PAY OFF A SECOND MORTGAGE ON A PROPERTY OWNED BY PERRY. AT THE TIME THAT PERRY CAUSED THE CUSTOMER'S FUNDS TO BE WIRED OUT OF HER ACCOUNT, THE CUSTOMER HAD NOT AGREED TO LOAN THAT MONEY TO PERRY. RESPONDENTS FAILED TO REPORT AT ALL OR FAILED TO TIMELY REPORT VARIOUS CUSTOMER COMPLAINTS TO FINRA. RESPONDENTS FAILED TO REPORT AT ALL OR FAILED TO TIMELY REPORT VARIOUS CUSTOMER COMPLAINTS TO FINRA. PERRY WAS THE SOLE PERSON AT THE FIRM RESPONSIBLE FOR ENSURING THAT ITS BOOKS AND RECORDS WERE KEPT IN ACCORDANCE WITH ALL APPLICABLE RULES AND REGULATIONS AND HE FAILED TO DO IT. THE FIRM, ACTING THROUGH PERRY, PRESERVED COMMUNICATIONS PERTAINING TO ITS BUSINESS USING ELECTRONIC STORAGE MEDIA OTHER THAN OPTICAL DISK TECHNOLOGY. RESPONDENTS DID NOT NOTIFY FINRA OF THEIR INTENT TO EMPLOY ELECTRONIC STORAGE MEDIA TO PRESERVE SUCH COMMUNICATIONS UNTIL ON OR ABOUT SEPTEMBER 20, 2011. RESPONDENTS HAVE NEVER PROVIDED FINRA WITH A REPRESENTATION THAT THEIR SELECTED STORAGE MEDIA MEETS THE CONDITIONS SET FORTH IN EXCHANGE ACT RULE 17A-4(F)(2). THE ELECTRONIC STORAGE MEDIA EMPLOYED BY RESPONDENTS DID NOT PRESERVE THE COMMUNICATIONS EXCLUSIVELY IN A NON-REWRITABLE, NON-ERASABLE FORMAT. PERRY WAS THE ONLY FINANCIAL AND OPERATIONS PRINCIPAL AT THE FIRM AND WAS SOLELY RESPONSIBLE FOR ITS COMPLIANCE WITH EXCHANGE ACT RULE 15C3-1. THE FIRM CONDUCTED SECURITIES BUSINESS ON MULTIPLE DATES WHILE FAILING TO MAINTAIN MINIMUM REQUIRED NET CAPITAL AND FAILED TO FILE TIMELY NOTICE OF ITS NET CAPITAL DEFICIENCY. RESPONDENTS FAILED TO CONDUCT RECORDS SEARCHES IN RESPONSE TO REQUESTS FOR INFORMATION FROM THE FINANCIAL CRIMES ENFORCEMENT NETWORK (FINCEN), AND THEN MADE MISREPRESENTATIONS TO FINRA IN CONNECTION WITH THEIR FAILURE TO CONDUCT SUCH SEARCHES. PERRY WILLFULLY FAILED TO TIMELY UPDATE HER FORM U4 TO DISCLOSE AN UNSATISFIED CIVIL JUDGMENT AGAINST HER, AND SHE WILLFULLY FILED A MATERIALLY INCOMPLETE AND MISLEADING FORM U4 AMENDMENT IN CONNECTION WITH THE INVESTIGATION THAT RESULTED IN THIS COMPLAINT. THE RESPONDENTS FAILED TO RESPOND TO FINRA REQUESTS FOR INFORMATION AND DOCUMENTS.

Decision & Order of Offer of Settlement

Bar (Permanent)

All Capacities

8/23/2012

WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, PERRY CONSENTED TO THE DESCRIBED SANCTION AND TO THE ENTRY OF FINDINGS; THEREFORE SHE IS BARRED FROM ASSOCIATION WITH ANY FINRA MEMBER IN ALL CAPACITIES.

JOAN PERRY AND TAKE CHARGE FINANCIAL ACTED ON BEHALF OF CUSTOMERS TO PROVIDE VARIOUS SERVICES AND CHARGE FEE FOR THE SERVICES PROVIDED. FINRA HAS DISAGREED WITH THE FEES CHARGED AND FAILED TO CONSIDER FEES THAT WERE RETURNED TO CUSTOMERS VOLUNTARILY BY THE FIRM TO MITIGATE ANY CONCERNS AND IN GOOD FAITH BY THE FIRM. THE FIRM HAD CUSTOMERS SIGN ADVISORY AGREEMENTS ON AN 'AS OF' BASIS WHICH IS LEGALLY ACCEPTABLE AND WAS CONSITENT WITH CLIENT SERVIES. JOAN PERRY DID NOT PROVIDE FALSE TESTIMONY AS ALLEDGED. THE CUSTOMER FOR THE LOAN OF $300,000 DID AGREE TO THE LOAN AND WAS PRESENT TO THE TRANSACTION WITH THE TITLE CO. THAT COMPLETED THE LOAN, WHICH HAS ALWAYS BEEN IN GOOD STANDING, ON HER BEHALF. PERRY BELIEVES THAT THIS HAS BEEN A WITCH HUNT AND THAT FINRA INTENDS TO PUT SMALL FIRMS SUCH AS HERS OUT OF BUSINESS. NO CUSTOMER MONEY IS MISSING FROM ACCOUNTS, CUSTOMERS HAVE NOT FILED COMPLAINTS AGAINST THE FIRM AND HARM HAS NOT BEEN CAUSED TO WARRANT THE ESCALATION OF ISSUES TO THE LEVEL OF THIS PROCEEDING.

FINRA

NASD RULES 2110, 2210(D): A MEMBER FIRM AND PERRY, AS ITS PRESIDENT, DISSEMINATED A LETTER TO CUSTOMER OF THE FIRM, WHICH PERRY PREPARED AND APPROVED. IN THE LETTER, PERRY, ON BEHALF OF THE FIRM, RECOMMENDED THAT CUSTOMERS MOVE THEIR VARIABLE UNIVERSAL LIFE (VUL) POLICY FROM ONE ENTITY TO ANOTHER ENTITY. THE FIRM'S AND PERRY'S USE OF BROKERAGE ACCOUNT PERFORMANCE AS AN INCENTIVE FOR CUSTOMERS TO SWITCH VARIABLE CONTRACTS WAS UNWARRANTED AND MISLEADING, IN THAT THERE WAS NO RELATIONSHIP BETWEEN THE PERFORMANCE OF THE FIRM'S GENERAL SECURITIES BROKERAGE ACCOUNTS AND THE VUL POLICIES. THE LETTER ALSO IMPROPERLY MADE A PROMISE OF FUTURE INVESTMENT SUCCESS. ADDITIONALLY, THE LETTER FAILED TO DISCLOSE HOW THE FIRM WOULD "ACTIVELY MANAGE" THE INVESTMENTS IN THE VUL POLICY. THE LETTER OMITTED TO DISCLOSE MATERIAL INFORMATION REGARDING THE BASIS FOR USING THE VARIOUS INDICES AS BENCHMARKS IN COMPARING PERFORMANCE OF THE PORTFOLIO. MOREOVER, THE PERFORMANCE DATA CITED WAS OUTDATED. THE LETTER ALSO INCORRECTLY STATED THAT THE RESULTS WERE NET OF THE FIRM'S TWO PERCENT MONEY MANAGEMENT FEE, WHEN, IN FACT, THEY WERE INCLUSIVE OF SUCH FEE. THE LETTER FAILED TO DISCLOSE THAT NEW, AND HIGHER, CHARGES COULD BE IMPOSED WITH A NEW CONTRACT AND/OR COULD INCREASE THE TIME PERIOD FOR WHICH SURRENDER CHARGES APPLY.

Acceptance, Waiver & Consent(AWC)

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

$1,000.00

Undertaking

WITHOUT ADMITTING OR DENYING THE FINDINGS, PERRY CONSENTED TO THE DESCRIBED SANCTION AND TO THE ENTRY OF FINDINGS; THEREFORE SHE IS FINED $1,000, JOINTLY AND SEVERALLY. ORDERED TO COMPLETE TEN HOURS (OR EQUIVALENT) OF TRAINING, BY A PROVIDER NOT UNACCEPTABLE TO FINRA, ON THE SUBJECT OF NASD RULE 2210. THE TRAINING SHALL BE COMPLETED WITHIN ONE YEAR OF THE ISSUANCE OF THIS AWC AND PRIOR TO PERRY ACTING AGAIN IN A PRINCIPAL CAPACITY WITH RESPECT TO APPROVAL OF COMMUNICATIONS WITH THE PUBLIC. PERRY SHALL SUBMIT WRITTEN PROOF OF HER COMPLETION TO FINRA. IN LIGHT OF PERRY'S FINANCIAL STATUS, A LOWER MONETARY SANCTION HAS BEEN IMPOSED.

NASD

NASD CONDUCT RULES 1120(B) AND 2110 - THE RESPONDENT, ACTING THROUGH MEMBER FIRM, FAILED TO CONDUCT A NEEDS ANALYSIS AND PREPARE A WRITTEN TRAINING PLAN.

Decision & Order of Offer of Settlement

Censure

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

WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, RESPONDENT PERRY CONSENTED TO THE DESCRIBED AND TO THE ENTRY OF FINDINGS, THEREFORE, SHE IS CENSURED AND FINED $8,500, JOINTLY AND SEVERALLY. FINES PAID.

NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.

06-02-00, SEC RULE 17A-5,NASD RULE 2110 - A RESPONDENT MEMBER, ACTING THROUGH PERRY, FILED MATERIALLY INACCURATE FOCUS IIA REPORTS WITH THE NASD.

Acceptance, Waiver & Consent(AWC)

Monetary/Fine

$1,000.00

11/02/00GS: $1,000 PAID ON 07/25/00, INVOICE NO. 00-3B-347.

NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.

Decision

Monetary/Fine

$18,500.00

Censure

WE FELT THAT THE NASD WAS PARTICULARLY HARD IN ITS SANCTIONS OF OUR FIRM. THERE WAS NO FRAUD, MISUSE OF CUSTOMER FUNDS, MISREPRESENTATION TO THE PUBLIC OR MISREPRESENTATION OF INFORMATION TO THE NASD. AND FOR ADMINISTRATIVE INFRACTIONS WE WERE SUMMARILY FINED NEARLY $20,000. THIS IS LIKE GETTING THE KID JAY WALKING WITH HIS BIKE AS OTHERS SELL DRUGS.