UNITED STATES SECURITIES AND EXCHANGE COMMISSION

The Securities and Exchange Commission ("Commission") deems it appropriate and in the public interest that public administrative proceedings be, and hereby are, against Ronald M. Heineman ("Respondent"). In anticipation of the institution of these proceedings, Respondent has submitted an Offer of Settlement (the "Offer") which the Commission has determined to accept. The Commission finds that On April 1, 2024, a final judgment was entered by consent against Heineman, permanently enjoining him from future violations of Section 17(a) of the Securities Act of 1933 and Sections 9(a) and 10(b) of the Exchange Act and Rule 10b-5 thereunder, in the civil action entitled Securities and Exchange Commission v. DiScala, et al., 14-cv-4346, in the United States District Court for the Eastern District of New York. The Commission's complaint alleged that in 2013, as chief compliance officer of Halcyon, Heineman ignored red flags related to trading in CodeSmart and the conduct of one of Halcyon's registered representatives, as well as that he engaged in a scheme to manipulate the price of the stock of CodeSmart Holdings, Inc. by engaging in matched trading.

Order

Bar (Permanent)

Association with a broker, dealer, investment adviser, municipal securities dealer, municipal advisor, transfer agent, or NRSRO

Indefinite

4/3/2024

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

SEC Litigation Release 23400, November 4, 2015: The SEC announced it has identified three additional individuals to charge in a case originally filed on July 17, 2014 against alleged corrupt brokers and others. In that related case (SEC Litigation Release 23046), the SEC charged individuals who pocketed millions of dollars running an elaborate pump-and-dump scheme involving shares of a medical education company and two other microcap stocks. The SEC filed a request in federal court in Brooklyn to lift the stay in its civil action for the purposes of filing an amended complaint alleging that broker Ronald Heineman and another broker facilitated the scheme through their brokerage firm while a third man, an attorney, profited illegally by selling unregistered shares for which no registration exemption applied. According to the SEC's amended complaint two individuals engaged in a scheme to inflate the price of the medical education company stock in mid-2013 in collusion with two brokers. The plan was to profit at the expense of one broker's clients and another's customers as the price of the stock fell. Heineman, an owner of a company where one of the brokers worked, participated in the fraudulent scheme by facilitating the improper conduct by the broker and one of the individuals. In late August 2013, Heineman and another broker secretly agreed to purchase the company shares at pre-set prices in a way that permitted one of the individuals to liquidate his company positions at artificially inflated prices. Heineman is charged with violations of Sections 17(a)(1) and 17(a)(3) of the Securities Act of 1933 and Sections 9(a)(1), 9(a)(2), and 10(b) of the Securities Exchange Act of 1934, and Rules 10b-5(a) and (c) thereunder.

Judgment Rendered

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

Injunction

FINRA

HEINEMAN WAS NAMED A RESPONDENT IN A FINRA COMPLAINT ALLEGING THAT HIS MEMBER FIRM, THROUGH HEINEMAN AND ANOTHER PRINCIPAL, ENTERED INTO A FRAUDULENT SCHEME WITH A VENTURE CAPITAL FIRM AND A CANCER DRUG DEVELOPMENT COMPANY TO SECRETLY KICK BACK NEARLY FIVE PERCENT OF THE VENTURE CAPITAL FIRM'S $35 MILLION INVESTMENT IN THE CANCER DRUG DEVELOPMENT COMPANY TO THE VENTURE CAPITAL FIRM AND THEREBY MISREPRESENT THE PRICE PAID FOR THE SHARES. THE FIRM EXECUTED AN ENGAGEMENT LETTER AND AGREED TO SERVE AS A FAKE PLACEMENT AGENT FOR AN ISSUANCE OF UP TO $40 MILLION OF THE DEVELOPMENT COMPANY'S SECURITIES TO THE VENTURE CAPITAL FIRM AND RECEIVE A FEE OF FIVE PERCENT OF THE VENTURE CAPITAL FIRM'S INVESTMENT. THE RESPONDENT WAS AWARE THAT THE ENGAGEMENT LETTER WAS FALSE AND CONTAINED MISREPRESENTATIONS AND OMISSIONS. THE RESPONDENT WAS AWARE THAT THE CONSULTING AGREEMENTS WITH THE AFFILIATE WERE FALSE AND CONTAINED MATERIAL MISREPRESENTATIONS AND OMISSIONS. THE SOLE, UNDISCLOSED PURPOSE OF THE CONSULTING AGREEMENTS WAS TO ENABLE THE KICK BACK. THEREFORE, THE RESPONDENT VIOLATED SECTION 10B-5 OF THE EXCHANGE ACT OF 1934, RULE 10B-5(A) AND (C) THEREUNDER. THE COMPLAINT ALLEGES THAT THE RESPONDENT FAILED TO REASONABLY SUPERVISE THE ACTIVITIES AT THE FIRM. THE ACTIVITIES OF REGISTERED REPRESENTATIVES, REGISTERED PRINCIPALS, AND OTHER ASSOCIATED PERSONS IN A MANNER REASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITH FEDERAL SECURITIES LAWS AND FINRA RULES AND TO PREVENT AND DETECT MISCONDUCT. INSTEAD, THE RESPONDENT FOSTERED A CULTURE OF NON-COMPLIANCE THAT RESULTED IN WIDESPREAD SUPERVISORY FAILURES AND VIOLATIONS OF FEDERAL SECURITIES LAWS AND FINRA RULES.

Decision & Order of Offer of Settlement

Bar (Permanent)

All Capacities

10/6/2015

Heineman willfully violated Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5(a) and (c) thereunder.

Without admitting or denying the allegations, Heineman consented to the sanction and to the entry of findings that his firm, through him, entered into a fraudulent scheme with a venture capital firm and a cancer drug development company to secretly kick back nearly 5 percent of the venture capital firm's $35 million investment in the cancer drug development company to the venture capital firm, and thereby misrepresent the price paid for the shares. Heineman willfully violated Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5(a) and (c) thereunder. The firm executed an engagement letter and agreed to serve as a fake placement agent for an issuance of up to $40 million of the development company's securities to the venture capital firm and receive a fee of 5 percent of the venture capital firm's investment. Heineman was aware that the engagement letter was false and contained misrepresentations and omissions. Heineman was aware that the consulting agreements with an affiliate of the venture capital firm were false and contained material misrepresentations and omissions. The sole, undisclosed purpose of the consulting agreements was to enable the kick back. The firm and another principal facilitated a now-expelled FINRA firm's concealment of its receipt of additional transaction fees from lateral transfer sellers, and did not disclose its commission-sharing agreement with the now-expelled FINRA firm to the lateral transfer sellers. The firm and the principal covered up a now-barred registered representative's violation of various state Blue Sky Laws by intentionally causing the falsification of the firm's books and records, including customer account statements, new account documents, trade confirmations and commission runs, to inaccurately reflect that another registered representative at the firm, in some instances the principal, was the representative of record for customer transactions the now-barred registered representative initiated. The principal was not only aware of this representative's falsification of the firm's books and records, he assisted with the falsifications. By doing so, the firm and the principal caused the firm to create and maintain false books and records. The firm, through the now-barred registered representative, engaged in churning and excessive trading in customer accounts. These customers did not authorize many of the individual trades the representative placed in their accounts, and the representative effectively controlled the trading in these accounts. The customer did not derive any benefit from the excessive trading in their accounts, and the representative and the firm reaped unwarranted commissions to the detriment of the customers. The firm and the principal failed to establish and implement an adequate AML compliance program reasonably designed to cause the detection and reporting of suspicious activities required under the Bank Secrecy Act and its implementing regulations thereunder. The firm also failed to monitor customer account activity and follow up on AML red flags regarding its penny stock liquidation business and abdicated some of its responsibility to the clearing firm. While designated as the firm's AMLCO, the principal did not have the requisite knowledge, training and experience to adequately discharge his duties as AMLCO. As a result, the firm failed to designate a qualified AMLCO. Heineman, as principal, the chief compliance officer, failed to establish and implement an adequate supervisory system and WSPs. The firm failed to reasonably supervise churning and excessive trading, unauthorized trading, firm email review and registered persons subject to heightened supervision. Instead, Heineman and the firm fostered a culture of non-compliance that resulted in widespread supervisory failures and violations of federal securities laws and FINRA rules.

HALCYON AND ITS PRINCIPALS DENY THOSE ALLEGATIONS AND CONFIRM THAT IT MORE THAN A YEAR AGO TERMINATED THE PARTICULAR BROKER INVOLVED IN THE ALLEGED CHURNING AND THE FAILURE TO SUPERVISE CLAIM, NAMED A NEW AML CO, AND REVISED AND UPDATED ITS AML POLICY AND WSPS. THE FIRM MAINTAINS THAT NEITHER THE FIRM NOR ITS PRINCIPALS ENGAGED IN ANY VIOLATION OF THE SECURITIES LAWS AND RULES AND INTEND TO DEFEND THE CLAIMS. Halcyon and its Principals ultimately decided to agree to a settlement with FINRA based on a number of issues including the cost associated with litigation of the matter.

FINANCIAL INDUSTRY REGULATORY AUTHORITY

GENERAL SUPERVISION

ILLINOIS

DISQUALIFIED UNDER 8.E(1)(J) OF THE ACT DUE TO THE ENTRY OF A NASD ORDER.

Order

CONSENT ORDER OF DISMISSAL. RESPONDENT AGREED NOT TO SERVE AS DESIGNATED ILLINOIS PRINCIPAL FOR 2 YEARS FROM DATE OF ORDER AND PAID COSTS OF $2,500 AND NOTICE OF HEARING WAS DISMISSED.

ILLINOIS ENTERED INTO AN AGREE. WITH HEINEMAN WHEREBY IT DISMISSED STATUTORY REVOCATION REQUEST. HEINEMAN REMAINS REGISTERED IN ILLINOIS BUT AGREED TO NOT SERVE IN CAPACITY OF AN ILLINOIS DESIGNATED PRINCIPAL FOR 2 YRS & TO PAY $2500 IN ADMINISTRATIVE COSTS.

NASD

SECTION 17(B) OF THE SECURITIES ACT OF 1933, NASD CONDUCT RULES 2110, 2210(B)(1)(A), 2210(B)(1)(B), AND 3010(A) AND 3010(B) - RESPONDENT RONALD M. HEINEMAN, ON BEHALF OF HIS MEMBER FIRM, FAILED TO MAINTAIN WRITTEN SUPERVISORY PROCEDURES TO ADDRESS THE STANDARDS AND REQUIREMENTS THAT SHOULD BE MET IN THE PREPARATION OF A RESEARCH REPORT. THE WRITTEN PROCEDURES IN PLACE DID NOT CONTAIN A DESCRIPTION OF THE CRITERIA USED TO EVALUATE RESEARCH REPORTS. RESPONDENT HEINEMAN ACTING ON BEHALF OF HIS MEMBER FIRM, FAILED TO ADEQUATELY SUPERVISE THE PREPARATION OF RESEARCH REPORTS' DISCLOSURES REGARDING THE AMOUNT OF CONSIDERATION RECEIVED BY THE FIRM, HEINEMAN THE AUTHOR OF THE REPORTS AND THE ISSUERS.

Acceptance, Waiver & Consent(AWC)

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

Suspension

WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, THE RESPONDENT RONALD M. HEINEMAN CONSENTED TO THE FINDING OF THE ALLEGATIONS AND TO THE FOLLOWING SANCTIONS: SUSPENDED FROM ASSOCIATION WITH ANY NASD MEMBER IN ANY CAPACITY FOR 30 DAYS AND FINED $22,500.00. THE SUSPENSION WILL COMMENCE WITH THE OPENING OF BUSINESS ON AUGUST 2, 2004, AND WILL CONCLUDE AT THE CLOSE OF BUSINESS ON AUGUST 31, 2004. FINES PAID.

NASD BROUGHT AN ACTION AGAINST ME, THE FIRM AND THE AUTHOR OF RESEARCH REPORTS FOR FAILING TO FULLY DISCLOSE COMPENSATION RECEIVED AND FOR NOT USING SPECIFIC CRITERIA IN PREPARING RESEARCH REPORTS. CHANGES HAVE BEEN MADE TO THE FIRM'S WSP TO ENSURE THAT THE MATTERS THAT GAVE RISE TO THE AWC WILL NOT BE REPEATED.

NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.

07-31-01, NASD RULE 2110 - A MEMBER FIRM, ACTING THROUGH HEINEMAN, UNILATERALLY TERMINATED AN IPO FOR WHICH IT WAS THE LEAD MANAGING UNDERWRITER, WITHOUT JUSTIFICATION, AFTER FOUR DAYS OF AFTERMARKET TRADING AND REQUESTED NASDAQ TO CANCEL ALL TRADES, CONTRARY TO HIGH STANDARDS OF COMMERCIAL HONOR AND JUST AND EQUITABLE PRINCIPLES OF TRADE, CAUSING SIGNIFICANT DISRUPTIONS TO THE MARKETPLACE, INCLUDING DENYING THE COMPANY ITS PROCEEDS AND BURDENING MEMBERS AND CUSTOMERS WHOSE TRADES HAD TO BE UNWOUND AND CANCELED.

Decision & Order of Offer of Settlement

Monetary/Fine

$50,000.00

Suspension

OFFER OF SETTLEMENT ACCEPTED NOVEMBER 27, 2002 WHEREIN RESPONDENT IS FINED $50,000, PLUS INTEREST, AND SUSPENDED FROM ASSOCIATION WITH ANY NASD MEMBER IN ANY CAPACITY FOR TWO MONTHS. SUSPENSION EFFECTIVE JANUARY 21, 2003 TO CLOSE OF BUSINESS MARCH 20, 2003.

ON JULY 23,2001, NASD REGULATION INC. FILED A COMPLAINT AGAINST ME AND OTHERS ALLEGING A VIOLATION OF NASD MARKETPLACE RULE 2110 IN CONNECTION WITH THE TERMINATION IN 1998 OF A PROPOSED INITIAL PUBLIC OFFERING GALACTICOMM TECHNOLOGIES, INC. SECURITIES. WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, THE APPLICANT CONSENTED TO THE NOTED SANCTIONS AND TO FINDINGS THAT APPLICANT VIOLATED NASD RULE 2110 BY CAUSING AN NASD MEMBER FIRM TO CANCEL, PRIOR TO SETTLEMENT, AN IPO WITH RESPECT TO WHICH THE MEMBER FIRM WAS ACTING AS CO-LEAD MANAGER.

NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.

Consent

Monetary/Fine

$3,000.00

Censure

WITHOUT ADMITTING OR DENYING ALLEGATIONS MR. HEINEMAN ACCEPTED AND CONSENTED TO FINDINGS BY THE ASSOCIATION THAT HIS ACTIONS WERE IN VIOLATION OF ARTICLE III SECT 1 OF THE RULES OF FAIR PRACTICE. ALSO, MR. HEINEMAN CONSENTED TO A SANCTION OF CENSURE AND A 3,000 FINE, JOINT AND SEVERALLY WITH APPLE FINANCIAL.