Initiated By
FINRA
Allegations
Bocchino was named a respondent in a FINRA complaint alleging that he carried out a scheme to evade, circumvent, and thwart his member firm's policies and procedures regarding Venezuelan bond trading. The complaint alleges that to effect this scheme, respondent used nominee accounts using the names of well-known U.S. financial institutions, hid the identities of customers selling Venezuelan bonds in violation of the firm's policies, entered false information into the firm's order entry system, provided false information to the firm's settlement desk, and falsified documents. As a result of respondent's misconduct, he was able to create the false appearance of compliance with the firm's Venezuelan bond trading restrictions and trade approximately $190 million worth of Venezuelan bonds in violation of the firm's policies and without the appropriate scrutiny of his supervisors and the firm's AML and compliance departments. The complaint also alleges that Bocchino, while registered with the firm, set up the nominee accounts - fictitious accounts opened in the names of well-known financial institutions without their consent - to effect approximately 300 Venezuelan bond transactions totaling approximately $190 million. The financial institutions whose names were associated with the nominee accounts did not authorize any of the activity in their accounts, including the Venezuelan bond transactions. The complaint further alleges that Bocchino falsified or caused to be falsified certain categories of documents, which constituted records of the firm, including but not limited to new account documentation, trade tickets, order confirmations, customer account statements, firm blotters, and firm reports.
Resolution
Decision & Order of Offer of Settlement
Bar
Bar (Permanent)
Registration Capacities Affected
All Capacities
Duration
indefinite
Start Date
6/1/2017
Regulator Statement
Without admitting or denying the allegations, Bocchino consented to the sanctions and to the entry of findings that he carried out a scheme to evade and circumvent his member firm's policies and procedures regarding its restriction on trading in Venezuelan bonds and he created firm documents that contained false information in an advancement of his securities scheme.
The findings stated that in order to evade the firm's policies, Bocchino used nominee accounts in the names of well-known U.S. financial institutions, booked hundreds of unauthorized trades in the nominee accounts, and created firm documents that contained false information. As a result, Bocchino was able to trade approximately 300 Venezuelan bonds, totaling approximately $190 million in Venezuelan bonds, in violation of the firm's policies and avoid the firm's supervision. During the relevant period, Bocchino, with his primary sales assistant's assistance, was one of the largest producers in his branch, primarily due to his Venezuelan bond sales.
The findings also stated that Bocchino used accounts in the names of well-known U.S. financial institutions and brokerage firms (collectively, the "Nominee Accounts") to execute Venezuelan bond trades without those institutions' knowledge or consent. By placing the Venezuelan Bond Transactions through the Nominee Accounts, Bocchino made it appear to his firm that he was complying with the firm's procedures, thereby avoiding the requirement to produce buy-side confirmations, and concealed the true identities of the underlying customers. None of the U.S. financial institutions associated with the Nominee Accounts authorized Bocchino to open an account at the firm to execute trades on behalf of third parties. Similarly, none of these U.S. financial institutions were aware that Bocchino was conducting Venezuelan Bond Transactions in their name on behalf of the Concealed Customers. Bocchino falsely represented in new account documentation for each of the Nominee Accounts that the trading to be conducted in those accounts would be "proprietary." However, the firm's restrictions on Venezuelan bond trading had a negative impact on Bocchino's business. Because of the negative impact of these policies on his business, Bocchino requested permission from his managers to sell Venezuelan bonds for foreign customers without obtaining proof that those bonds had been purchased in U.S. dollars. The firm denied Bocchino's request. Although the firm denied Bocchino's request, the firm did permit Bocchino to engage in proprietary Venezuelan bond trading on behalf of one U.S. financial institution based on Bocchino's false representation that the financial institution intended to trade Venezuelan bonds for its own account. Bocchino also, in incorrect manners, concealed the trades from his firm. As a result of Bocchino's concealing the identities of the Concealed Customers from his firm, the firm was unable to conduct an appropriate suitability and/or AML review of the Concealed Customers' transactions.
The findings also included that Bocchino falsified, or caused to be falsified, certain categories of documents, which constituted records of the firm, including but not limited to new account documentation, trade tickets, order confirmations, customer account statements, firm blotters and firm reports.
