NEW JERSEY BUREAU OF SECURITIES

DRATEL IS THE SUBJECT OF AN ORDER BY THE SECURITIES AND EXCHANGE COMMISSION BARRING HIM FROM THE SECURITIES INDUSTRY. DRATEL ENGAGED IN DISHONEST OR UNETHICAL PRATICES IN THE SECURITIES BUSINESS.

Order

Revocation

Dratel is denied all exemptions contained in N.J.S.A. 49:3-50 subsections (a) paragraph 9, 10, and 11 and subsection (b); and it is further ORDERED that the exemptions to the registration requirements provided by N.J.S.A. 49:3-56(b), N.J.S.A. 49:3-56(c) and N.J.S.A. 49:3-56(g) are hereby denied.

FINRA

Respondent Dratel failed to pay fines and/or costs of $46,897.96 in FINRA Case #2009016317701.

Letter

Revocation

Pursuant to FINRA Rule 8320, Respondent Dratel's FINRA registration is revoked as of the close of business on March 21, 2016 for failure to pay fines and/or costs.

CALIFORNIA

DRATEL IS SUBJECT TO A BAR ORDER IN THIS JURISDICTION BASED ON THE PRIOR FINRA ACTION IMPOSING SANCTIONS AND BARRING HIM FROM ASSOCIATION WITH ANY MEMBER.

Stipulation and Consent

Bar (Permanent)

EMPLOYMENT, MANAGEMENT OR CONTROL

PERMANENT

6/16/2015

FINRA

ARTICLE IV, SECTION 1(C) AND ARTICLE V, SECTION 2(C) OF FINRA'S BY-LAWS, FINRA RULES 1122, 2010, 2150, 3130, NASD RULES 2110, 2330(F), 3012, 3110(A), 3110(J), MSRB RULES G-2, G-3: DRATEL WILLFULLY FAILED TO DISCLOSE MATERIAL FACTS ON HIS FORM U4 UNTIL AFTER HE WAS INSTRUCTED BY FINRA. DRATEL'S MEMBER FIRM, ACTING THROUGH DRATEL, WILLFULLY FAILED TO DISCLOSE A MATERIAL FACT ON THE FIRM'S FORM BD UNTIL AFTER IT WAS INSTRUCTED TO DO SO BY FINRA. THE FIRM, ACTING THROUGH DRATEL, EITHER FAILED TO PREPARE, OR FAILED TO PRESERVE, ORDER MEMORANDA DESIGNATING THE CUSTOMER ACCOUNTS FOR WHICH THE TRADES WERE ORIGINALLY INTENDED. DRATEL INITIATED AND APPROVED EACH OF THE CANCELLATIONS AND REBILLS TO THE FIRM'S ERROR ACCOUNT. THE FIRM, ACTING THROUGH DRATEL, FAILED TO DOCUMENT THE ESSENTIAL FACTS RELIED UPON BY DRATEL IN CONNECTION WITH THE CANCELLATIONS AND REBILLS. THE FIRM, ACTING THROUGH DRATEL, FAILED TO PRESERVE EMAILS SENT OR RECEIVED OVER THE FIRM'S DOMAIN. THE FIRM, ACTING THROUGH DRATEL, PAID CERTAIN OF ITS CUSTOMERS A TOTAL OF $156,575 TO COMPENSATE THEM FOR LOSSES THEY HAD SUSTAINED IN THEIR ACCOUNTS. SUCH PAYMENTS WERE NOT MADE IN SETTLEMENT OF COMPLAINTS OR TO CORRECT ERRORS. THE FIRM, ACTING THROUGH DRATEL, FAILED TO HAVE A REGISTERED MUNICIPAL SECURITIES PRINCIPAL TO SUPERVISE THE FIRM'S MUNICIPAL SECURITIES ACTIVITIES. FOR THE MONTH ENDING APRIL 30, 2009, THE FIRM, ACTING THROUGH DRATEL, FAILED TO ACCRUE LIABILITIES TOTALING $40,392, CONSISTING PRIMARILY OF UNPAID RENT IN ARREARS, MOVING AND STORAGE EXPENSES, AND AN UNPAID SECURITY DEPOSIT ON A BRANCH OFFICE. AS A RESULT, THE FIRM'S GENERAL LEDGER AND TRIAL BALANCE FOR THE MONTH ENDING APRIL 30, 2009, WERE INACCURATE. FOR THE MONTH ENDING MAY 31, 2009, THE FIRM, ACTING THROUGH DRATEL, FAILED TO ACCRUE LIABILITIES TOTALING $31,026.25, WHICH CONSISTED OF UNPAID RENT IN ARREARS AND AN UNPAID SECURITY DEPOSIT ON A BRANCH OFFICE. AS A RESULT, THE FIRM'S GENERAL LEDGER AND TRIAL BALANCE FOR THE MONTH ENDING MAY 31, 2009, WERE INACCURATE. FOR THE YEAR ENDING DECEMBER 31, 2009, DRATEL SUBMITTED AN ANNUAL COMPLIANCE REPORT WHICH FAILED TO DETAIL THE FIRM'S SUPERVISORY CONTROLS, AND FAILED TO PROVIDE A SUMMARY OF THE RESULTS OF TESTING OF THE FIRM'S SUPERVISORY PROCEDURES AND SIGNIFICANT IDENTIFIED EXCEPTIONS AND ANY ADDITIONAL OR AMENDED SUPERVISORY PROCEDURES CREATED IN RESPONSE TO THE TEST RESULTS. IN ADDITION, SINCE AT LEAST JUNE 2009, DRATEL HAS BEEN RESPONSIBLE FOR GENERATING 100% OF THE FIRM'S REVENUE. HOWEVER, THE FIRM HAD NO PROCEDURES OR POLICIES DESIGNED TO PROVIDE HEIGHTENED SUPERVISION OVER HIS ACTIVITIES. FOR THE YEAR ENDING DECEMBER 31, 2010, DRATEL SUBMITTED AN ANNUAL COMPLIANCE AND SUPERVISION CERTIFICATION WHICH FAILED TO DOCUMENT THE FIRM'S PROCESSES FOR ESTABLISHING, MAINTAINING, REVIEWING, TESTING AND MODIFYING COMPLIANCE POLICIES, THAT ARE REASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITH APPLICABLE FINRA RULES, MSRB RULES AND FEDERAL SECURITIES LAWS AND REGULATIONS, AND FAILED TO INCLUDE THE MANNER AND FREQUENCY IN WHICH THE PROCESSES ARE ADMINISTERED. IN ADDITION, THE CERTIFICATION WAS NOT SIGNED.

Decision

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

$31,000.00

$5,000.00

Monetary Penalty other than Fines

$6,225.96

Suspension

ALL CAPACITIES

25 BUSINESS DAYS

7/6/2015

8/7/2015

RESPONDENT AND HIS FIRM ARE ALSO STATUTORILY DISQUALIFIED FOR THEIR WILLFUL FAILURES TO MAKE TIMELY AMENDMENTS TO THE FORMS U4 AND BD AND THEIR WILLFUL VIOLATIONS OF THE EXCHANGE ACT.

AMENDED HEARING PANEL DECISION RENDERED SEPTEMBER 19, 2013 WHEREIN DRATEL IS FOUND TO HAVE WILLFULLY FAILED TO MAKE TIMELY AMENDMENTS TO HIS FORM U4 TO DISCLOSE MATERIAL FACTS; WILLFULLY FAILED TO MAKE TIMELY AMENDMENTS TO THE FIRM'S FORM BD TO DISCLOSE A MATERIAL FACT; WILLFULLY FAILED TO CREATE AND PRESERVE ORDER MEMORANDA; FAILED TO PRESERVE EMAIL COMMUNICATIONS; COMPENSATED CUSTOMERS FOR LOSES; EXECUTED MUNICIPAL SECURITIES TRANSACTIONS WITHOUT BEING REGISTERED WITH MSRB AND FAILED TO HAVE A REGISTERED MUNICIPAL SECURITIES PRINCIPAL TO SUPERVISE MUNICIPAL SECURITIES AND FAILED TO REPORT MUNICIPAL SECURITIES TRANSACTIONS TO MSRB; MAINTAINED INACCURATE TRIAL BALANCES AND LEDGERS IN VIOLATION OF SECTION 17(A) OF THE EXCHANGE ACT AND RULE 17A-3; FAILED TO ESTABLISH AND ENFORCE WRITTEN SUPERVISORY CONTROL SYSTEMS AND FAILED TO CERTIFY COMPLIANCE AND SUPERVISORY PROCESSES. THEREFORE HE IS SUSPENDED FROM ASSOCIATION WITH ANY FINRA MEMBER IN ANY CAPACITY FOR 20 BUSINESS DAYS, SUSPENDED IN ANY SUPERVISORY CAPACITY FOR 5 BUSINESS DAYS, FINED $5,000, FINED JOINTLY AND SEVERALLY AN ADDITION $31,000, AND ORDERED TO PAY COSTS IN THE AMOUNT OF $4,672. ON OCTOBER 10, 2013, DRATEL APPEALED THE DECISION TO THE NAC. NAC DECISION RENDERED MAY 6, 2015. THE SANCTIONS WERE IMPOSED BY THE NATIONAL ADJUDICATORY COUNCIL FOLLOWING APPEAL OF AN OFFICE OF HEARING OFFICERS DECISION. THE SANCTIONS WERE BASED ON FINDINGS THAT DRATEL FAILED TO AMEND HIS FORM U4 AND HIS MEMBER FIRM, ACTING THROUGH DRATEL, FAILED TO AMEND ITS UNIFORM APPLICATION FOR BROKER-DEALER REGISTRATION (FORM BD), TO DISCLOSE MATERIAL FACTS. BECAUSE RESPONDENT WILLFULLY FAILED TO DISCLOSE MATERIAL INFORMATION ON HIS FORM U4 AND THE FIRM'S FORM BD, RESPONDENT IS STATUTORILY DISQUALIFIED. THE FINDINGS STATED THAT DRATEL WILLFULLY FAILED TO CREATE AND PRESERVE ORDER MEMORANDA. THE FINDINGS ALSO STATED THAT THE FIRM AND DRATEL FAILED TO PRESERVE EMAIL COMMUNICATIONS, HOWEVER, ALTHOUGH RESPONDENTS ARE LIABLE, THEIR VIOLATION WAS TECHNICAL IN NATURE AND DID NOT RISE TO A WILLFUL FAILURE TO PRESERVE EMAIL. THE FINDINGS ALSO INCLUDED THAT THE FIRM AND DRATEL COMPENSATED A SELECT GROUP OF CUSTOMERS A TOTAL OF $156,575 FOR LOSSES, INFLICTED UPON THEM FOR ADVERSE MARKET CONDITIONS. FINRA FOUND THAT THE FIRM AND DRATEL ENGAGED IN MUNICIPAL SECURITIES TRANSACTIONS WHILE THE FIRM WAS NOT REGISTERED WITH THE MUNICIPAL SECURITIES RULEMAKING BOARD (MSRB), AND WHILE THE FIRM LACKED A REGISTERED MUNICIPAL SECURITIES PRINCIPAL. FINRA ALSO FOUND THAT DRATEL'S FIRM FAILED TO REPORT MUNICIPAL SECURITIES TRANSACTIONS AS REQUIRED BY THE RULE AND FAILED TO REPORT CUSTOMER TRANSACTIONS IN CORPORATE BONDS TO TRACE. IN ADDITION, FINRA DETERMINED THAT RESPONDENT WILLFULLY VIOLATED EXCHANGE ACT SECTION 17(A), EXCHANGE ACT RULE 17A-3 OF 1934, BY FAILING TO RECORD THE APARTMENT RENT ARREARAGE, MOVING EXPENSES, AND SECURITY DEPOSIT ON THE FIRM'S TRIAL BALANCE AND GENERAL LEDGERS. MOREOVER, FINRA FOUND THAT THE FIRM'S ANNUAL COMPLIANCE REPORT FOR 2009 WAS INADEQUATE BECAUSE IT DID NOT SUMMARIZE THE RESULTS OF TESTING THE FIRM'S SUPERVISORY PROCEDURES, DID NOT DESCRIBE ANY CHANGES TO THE FIRM'S SUPERVISORY PROCEDURES IN RESPONSE TO TEST FINDINGS, AND FAILED TO ESTABLISH PROCEDURES AND POLICIES REASONABLY DESIGNED TO REVIEW AND SUPERVISE DRATEL'S OWN SALES ACTIVITIES. FURTHERMORE, FINRA FOUND THAT DRATEL FAILED TO PROVIDE PROPER CERTIFICATION OF THE FIRM'S COMPLIANCE AND SUPERVISORY PROCESSES. DECISION BECAME FINAL JUNE 8, 2015.

UNABLE TO COMPLETELY LIST ALL THE ALLEGATIONS IN ITEM (7) ABOVE DUE TO CHARACTER LIMITATIONS IN THE SPACE PROVIDED.AMENDED HEARING PANEL DECISION RENDERED SEPT. 19, 2013 WHEREIN DRATEL IS FOUND TO HAVE WILLFULLY FAILED TO MAKE AMENDMENTS TO HIS U4 TO DISCLOSE MATERIAL JUDGMENTS AND LIENS VIOLATING FINRA RULES 1122 & 2010; WILLFULLY FAILED TO MAKE AMENDMENTS TO FORM BD FOR A MATERIAL JUDGMENT VIOLATING RULES 1122 &2010 ;WILLFULLY FAILED TO CREATE AND PRESERVE ORDER MEMORANDAIN VIOLATION OF RULE 3110A&J AND 2010;FAILED TO PRESERVE EMAILS IN VIOLATION OF RULE 3110A AND 2010;COMPENSATED CUSTOMERS FOR LOSSES IN VIOLATION OF NASD RULES 2110 AND 2330 AND FINRA RULES 2150 & 2010;EXECUTED 23 MUNICIPAL SECURITIES TRANSACTIONS WITHOUT BEING REGISTERED WITH MSRB AND FAILED TO HAVE A REGISTERED MUNI PRINCIPAL IN VIOLATION OF MSRB RULES G2 & G3,AND FAILED TO REPORT MUNI TRANSACTIONS TO MSRB IN VIOLATION OF MSRB RULE G-14;MAINTAINED INNACURATE T/B AND LEDGERS VIOLATING SECTION A OF THE EXCHANGE ACT AND 17A-3, NASD RULE 3110 AND FINRA RULE 2010;FAILED TO ESTABLISH AND ENFORCE WRITTEN SUPERVISORY CONTROL SYSTEMS IN VIOLATION OF NASD RULE 3012 AND FINRA RULE 2010 AND FAILED TO CERTIFY COMPLIANCE AND SUPERVISORY PROCESSES IN VIOLATION OF FINRA RULES 3130 AND 2010. THEREFORE HE IS SUSPENDED FROM ASSOCIATION WITH ANY FINRA MEMBER IN ANY CAPACITY FOR 20 BUSINESS DAY, SUSPENDED IN ANY SUPERVISORY CAPACITY FOR 5 BUSINESS DAYS, FINED $5000, FINED JOINTLY AND SEVERALLY AN ADDITIONAL $31,000, AND ORDERED TO PAY COSTS IN THE AMOUNT OF $4672. DRATEL UNDERSTANDS THAT THIS AMENDED DECISION INCLUDES A FINDING THAT HE WILLFULLY OMITTED TO STATE MATERIAL FACTSON FORMS U4 AND BD,AND THAT UNDER SECTION 3 A 39 F OF THE SECURITIES EXCHANGE ACT OF 1934 AND ARTICLE III, SEC. 4 OF FINRA'S BY-LAWS. THIS OMISSION MAKES HIM SUBJECT TO A STATUTORY DISQUALIFICATION WITH RESPECT TO ASSOCIATION WITH A MEMBER. ON OCTOBER 13, 2013 DRATEL APPEALED THE THE DECISION TO THE NAC.

FINRA

WILLFULLY VIOLATED SECTION 10(B) OF THE SECURITIES EXCHANGE ACT OF 1934 AND RULE 10B-5 THEREUNDER; VIOLATED NASD RULES 2110, 2120, 3010(A), 3010(B), 3110(A), 3110(J)-WILLIAM DRATEL AND HIS MEMBER FIRM ORCHESTRATED AN UNFAIR TRADE ALLOCATION SCHEME, COMMONLY KNOWN AS CHERRY-PICKING, IN WHICH HE WOULD SELECT PROFITABLE DAY TRADES AND OVERNIGHT TRADES FOR HIS OWN ACCOUNT WHILE STEERING UNPROFITABLE TRADES TO HIS DISCRETIONARY CLIENTS' ACCOUNTS. DRATEL AND HIS FIRM FAILED TO DISCLOSE MATERIAL INFORMATION TO THEIR DISCRETIONARY CUSTOMERS. DRATEL AND HIS FIRM, IN CONNECTION WITH THE CHERRY-PICKING SCHEME, FALSIFIED NUMEROUS ORDER TICKETS TO MAKE IT APPEAR THAT THEY HAD ALLOCATED THE CHERRY-PICKED TRADES AT THE TIME OF THE UNDERLYING PURCHASE IN THE FIRM ACCOUNT, WHICH WAS FALSE. IN NUMEROUS INSTANCES, DRATEL TIME STAMPED NUMEROUS BLANK ORDER TICKETS AT THE TIME HE MADE A PURCHASE THROUGH THE FIRM ACCOUNT. LATER ON, AFTER HE DETERMINED WHICH ACCOUNT WOULD BE ALLOCATED THE TRADE, EITHER HE OR HIS STAFF, AT HIS INSTRUCTION, FILLED IN THE NAME OF THE ACCOUNT THAT WAS GETTING THE TRADE. IN OTHER INSTANCES, EITHER DRATEL OR HIS STAFF, AT HIS INSTRUCTION, BACK-DATED THE TIME STAMP ON ORDER TICKETS CONCERNING ALLOCATIONS TO MAKE IT APPEAR THAT THE ALLOCATIONS HAD TAKEN PLACE EARLIER. DRATEL OR HIS STAFF, AT HIS INSTRUCTION, REGULARLY DELAYED PLACING THE NAMES OF THE CUSTOMERS TO WHOM TRADES WERE ALLOCATED ON ORDER TICKETS (THE MEMORANDUM FOR THE TRANSACTION) UNTIL AFTER THE ORDER WAS EXECUTED. DRATEL AND HIS FIRM FAILED TO ESTABLISH, MAINTAIN, AND ENFORCE A SUPERVISORY SYSTEM AND WRITTEN SUPERVISORY SYSTEM PROCEDURES THAT ADEQUATELY ADDRESSED TRADE AGGREGATION AND TRADE ALLOCATION WITH RESPECT TO ITS DISCRETIONARY ACCOUNTS AND THE MANNER IN WHICH CLIENT TRADES WERE TO BE EXECUTED. PRIOR TO 2007, THE FIRM HAD NO SUPERVISORY OR WRITTEN SUPERVISORY PROCEDURES THAT ADDRESSED THE ISSUE OF ALLOCATIONS IN ANY MANNER WHATSOEVER. NOR DID THE FIRM HAVE A SUPERVISORY SYSTEM OR WRITTEN SUPERVISORY PROCEDURES THAT ADDRESSED THE ISSUE OF THE PROPER COMPLETION OF ORDER TICKETS. AS SUCH, DRATEL AND THE FIRM FAILED TO MAINTAIN AND IMPLEMENT APPROPRIATE PROCEDURES FOR SUPERVISION IN ORDER TO PREVENT THE IMPROPER POST-EXECUTION ALLOCATION OF TRADES. IN 2007, THE FIRM UPDATED ITS WRITTEN SUPERVISORY PROCEDURES, BUT THE WRITTEN SUPERVISORY PROCEDURES, AND THE FIRM'S UNDERLYING SYSTEMS AND PROCEDURES, WERE STILL DEFICIENT. THE NEW WRITTEN SUPERVISORY PROCEDURES CONTAINED NO PROCEDURES REQUIRING OR VERIFYING THAT ALLOCATION INSTRUCTIONS BE FORMULATED BEFORE THE TIME A TRANSACTION IS EXECUTED THROUGH THE FIRM ACCOUNT. NOR DID THEY REQUIRE THAT BEFORE A CUSTOMER ORDER IS EXECUTED, THE ACCOUNT NAME OR DESIGNATION MUST BE PLACED UPON THE ORDER TICKET. ACCORDINGLY, IT DID NOT SEEK TO PREVENT DELAYED ALLOCATION. DRATEL HAD SOLE RESPONSIBILITY FOR THE ADEQUACY OF THE FIRM'S SUPERVISORY SYSTEM AND PROCEDURES. THE FIRM, ACTING THROUGH DRATEL, FAILED TO PERIODICALLY UPDATE CUSTOMER ACCOUNT INFORMATION FOR ITS ACCOUNT AT LEAST ONCE EVERY 36 MONTHS AND FAILED TO REVIEW NEW ACCOUNT DOCUMENTS ON A QUARTERLY BASIS AND TO MEMORIALIZE THE REVIEW. DRATEL HAD THE SOLE RESPONSIBILITY FOR REVIEWING AND UPDATING SUCH CUSTOMER INFORMATION.

Decision

Bar (Permanent)

All Capacities

Indefinite

5/2/2014

Disgorgement

$489,000.00

Monetary Penalty other than Fines

$18,611.60

plus prejudgment interest, in disgorgement of profit

EXTENDED HEARING PANEL DECISION RENDERED SEPTEMBER 28, 2012 WHEREIN DRATEL IS BARRED FROM ASSOCIATION WITH ANY FINRA MEMBER IN ANY CAPACITY FOR: ENGAGING IN A FRAUDULENT TRADE ALLOCATION SCHEME IN WILLFUL VIOLATION OF SECTION 10(B) OF THE SECURITIES EXCHANGE ACT OF 1934 AND RULE 10B-5 THEREUNDER, AND IN VIOLATION OF NASD RULES 2120 AND 2110; FAILING TO ENSURE THAT ORDER TICKETS ACCURATELY REFLECTED ACCOUNT DESIGNATIONS AND TIMES OF ENTRY IN VIOLATION OF NASD RULES 3110(A) AND 2110; AND FAILING TO ENSURE THAT ACCOUNT NAMES OR DESIGNATIONS WERE PLACED ON ORDER TICKETS PRIOR TO EXECUTION OF ORDERS IN VIOLATION OF NASD RULES 3110(J) AND 2110. IN LIGHT OF THE SANCTION, THE PANEL MAJORITY DID NOT IMPOSE SANCTIONS ON DRATEL FOR THE FOLLOWING VIOLATIONS: FAILING TO ESTABLISH AND MAINTAIN A REASONABLE SUPERVISORY SYSTEM AND PROCEDURES TO ACHIEVE COMPLIANCE WITH APPLICABLE SECURITIES LAWS AND REGULATIONS IN VIOLATION OF NASD RULES 3010(A) AND 3010(B) AND 2110; AND FAILING TO TIMELY UPDATE CUSTOMER ACCOUNT INFORMATION IN VIOLATION OF NASD RULES 3110(A) AND 2110. DRATEL IS ALSO ORDERED TO DISGORGE $489,000 IN ILL-GOTTEN GAINS THAT HE RECEIVED DURING 2006 FROM HIS FRAUDULENT DAY-TRADING ALLOCATION SCHEME. DRATEL MUST PAY, JOINTLY AND SEVERALLY, THE COSTS OF THIS PROCEEDING IN THE TOTAL AMOUNT OF $16,077.60. ON OCTOBER 19, 2012, DRATEL APPEALED THE DECISION TO THE NATIONAL ADJUDICATORY COUNCIL (NAC). NAC DECISION RENDERED MAY 2, 2014, WHEREIN THE NAC AFFIRMED THE FINDINGS AND SANCTIONS AGAINST DRATEL. THE NAC ALSO AFFIRMED THE HEARING PANEL'S ASSESSMENT OF HEARING COSTS OF $16,077.60 AND ASSESSED APPEAL COSTS OF $2,534. THIS DECISION SUBJECTS DRATEL TO STATUTORY DISQUALIFICATION FROM THE SECURITIES INDUSTRY. THE BAR IS EFFECTIVE IMMEDIATELY. ON MAY 12, 2014, DRATEL APPEALED THE DECISION TO THE SECURITIES AND EXCHANGE COMMISSION (SEC) AND REQUESTED A STAY. THE BAR IS IN EFFECT UNTIL THE STAY IS GRANTED. ON JUNE 2, 2014, THE SEC DENIED DRATEL'S REQUEST FOR A STAY AND AS A RESULT, THE BAR REMAINS IN EFFECT. SEC Decision rendered March 17, 2016. Accordingly, on the basis of the Commission's opinion issued, it is ordered that the disciplinary action taken by FINRA against Dratel, and the assessment of costs imposed, is sustained. The sanctions were based on findings that Dratel willfully engaged in a fraudulent trading scheme and failed to disclose material information to discretionary customers at the firm in willful violation of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder and NASD Rules 2110 and 2120. The findings stated that Dratel cherry-picked profitable day trades for his own account while steering unprofitable (or less profitable) day trades to his discretionary customers' accounts. During the one-year period in question, Dratel earned profits of $489,000 from his day and overnight trading, while his discretionary customers suffered losses of more than $200,000 such trading. The findings also stated that Dratel willfully failed to complete order tickets and, in furtherance of the cherry-picking scheme, created order tickets with inaccurate allocation times. Accordingly, Dratel caused the firm's recordkeeping violations. The findings also included that because the firm was a one-representative firm, Dratel supervised his own day trading and the trading for his discretionary customers. The firm, through Dratel, failed to enforce its WSPs. FINRA found that the firm, through Dratel, willfully failed to periodically update customer account records, review new account documents on a quarterly basis and memorialize the review. The firm had a deficient AML compliance program and Dratel failed to timely verify new customers' identities. Dratel opened accounts without timely obtaining photo identification for each new customer. The decision became final May 16, 2016.

NASD

NASD RULES 2110, 3070 (B), 3070(C), NASD BYLAWS ARTICLE V, SECTION 2(C) - DRATEL, ACTING ON BEHALF OF HIS MEMBER FIRM, FAILED TO REPORT TO NASD STATISTICAL AND SUMMARY INFORMATION REGARDING A CUSTOMER COMPLAINT THAT SETTLED ON MARCH 9, 2005 UNTIL JUNE 14, 2006. DRATEL, ACTING ON BEHALF OF HIS FIRM, FAILED TO REPORT TO NASD CONCERNING THE SETTLEMENT WITH RESPECT TO THE FIRM UNTIL APRIL 8, 2005, AND FAILED TO REPORT TO NASD THE SETTLEMENT WITH RESPECT TO DRATEL UNTIL JUNE 14, 2006. DRATEL'S FORM U-4 WAS NOT AMENDED TO REPORT THE COMPLAINT UNTIL DECEMBER 12, 2003 AND WAS NOT AMENDED TO REPORT THE SETTLEMENT UNTIL JUNE 14, 2006. THE FIRM ACTING THROUGH DRATEL, FAILED TO TIMELY OBTAIN AN OPINION OF COUNSEL CONCERNING A LAWSUIT ASSERTING A CLAIM FOR $1,250,000 THAT COULD HAVE HAD A MATERIAL IMPACT ON THE FIRM'S NET CAPITAL, AND FAILED TO INCLUDE THE CLAIM IN THE CALCULATION OF AGGREGATE INDEBTEDNESS FOR JANUARY 31, 2005 AND FEBRUARY 28, 2005. IN ADDITION, THE FIRM FAILED TO NOTIFY THE SEC OR NASD OF THE DEFICIENCIES UNTIL MARCH 31, 2005.

Acceptance, Waiver & Consent(AWC)

Censure

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

WITHOUT ADMITTING OR DENYING THE FINDINGS, DRATEL CONSENTED TO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS; THEREFORE HE IS CENSURED AND FINED $15,000, JOINTLY AND SEVERALLY. FINES PAID ON 08/29/2008.

NASD

THE DRATEL GROUP INC. AND WILLIAM DRATEL SIGNED A LETTER OF ACCEPTANCE, WAIVER AND CONSENT FOR THE RESOLUTION OF ALLEGED CHARGES UNDER CONSIDERATION AGAINST THE FIRM BY THE NASD. SUCH VIOLATIONS INCLUDED IMPROPER MARKING OF CUSTOMER TRADE TICKETS AND FAILURE TO RECORD THE TIME ON ORDER TICKETS IN SECONDS.

Acceptance, Waiver & Consent(AWC)

Monetary/Fine

$3,000.00

CENSURE, $9,000 FINE FOR DRATEL GROUP INC. AND $3,000 FINE FOR DRATEL GROUP INC AND WILLIAM DRATEL TO BE JOINTLY AND SEVERALLY FINED.

AWC SIGNED BY THE DRATEL GROUP INC. AND WILLIAM DRATEL. MATTER RESOLVED ON 11/25/2003.