PLAINTIFFS ALLEGE THAT FUNDS WERE ILLEGALLY TRANSFERRED FROM PLAINTIFFS' BROKERAGE ACCOUNTS IN A SERIES OF UNAUTHORIZED TRANSFERS FROM THE PLAINTIFFS' ACCOUNTS AT VARIOUS BROKERAGE FIRMS INCLUDING WINDHAM SECURITIES, INC.

$2,000,000.00

$24,999.99

THE LITIGATION RESULTED FROM THE ACTIONS OF A BROKER, REGISTERED AT ANOTHER FIRM, WHO FORGED HIS CUSTOMER'S SIGNATURE AND OPENED ACCOUNTS ONLINE IN THE CUSTOMER'S NAME AT A NUMBER OF BROKERAGE FIRMS INCLUDING WINDHAM SECURITIES, INC. ("WINDHAM"). THE BROKER SUBMITTED A FORGED WIRE REQUEST (VIA FAX) FOR PAYMENT OUT OF THE CUSTOMER'S BROKERAGE ACCOUNT TO A BANK ACCOUNT BEARING THE SAME NAME OF THE CUSTOMER. IT TURNS OUT THAT THE RECEIVING ACCOUNT WAS ACTUALLY IN THE NAME OF THE WIFE OF THE BROKER. WINDHAM WAS INCLUDED BECAUSE IT RE-FAXED THE WIRE REQUEST TO ITS CLEARING FIRM AND I WAS NAMED BECAUSE I WAS THE PRESIDENT OF WINDHAM. IN THE LITIGATION, THE CUSTOMER INCLUDED NUMEROUS BROKERAGE FIRMS WHERE ACCOUNTS HAD BEEN OPENED IN HIS NAME BY THE BROKER, DESPITE THE FACT THAT HE HAD RECEIVED CONFIRMATIONS AND MONTHLY STATEMENTS FROM EACH FIRM. THE CUSTOMER WAS AWARE OF THE FRAUDULENT ACTIVITY OF THE BROKER, BUT DID NOTHING TO STOP IT OR REPORT IT TO ANY OF THE FIRMS FOR ALMOST TWO YEARS. ULTIMATELY, THE BROKER AND HIS WIFE PAID OVER $500,000 TO THE CUSTOMER. THE OTHER BROKERAGE FIRMS WERE EVENTUALLY DISMISSED. HOWEVER, WINDHAM SECURITIES, INC WAS A SMALL FIRM AND IT WAS ECONOMICALLY LESS EXPENSIVE TO SETTLE THE CASE THAN CONTINUE TO PAY LEGAL FEES. WINDHAM SETTLED FOR $24,999.99. THE ACTIONS AGAINST ME WERE DISCONTINUED WITH PREJUDICE.

NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.

VIOLATIONS OF ART. III, SECT. 1 & 21 OF THE RULES OF FAIR PRACTICE IN THAT A MEMBER FIRM, THROUGH JAMES TAORMINA, ET AL. FAILED TO COMPLY WITH VARIOUS PROVISIONS OF SEC RULES 17A-3, 17A-4 AND 17A-13; FAILED TO COMPLY WITH PROVISIONS OF SEC RULE 15C3-3; AND, A MEMBER FIRM, THROUGH RESPONDENTS JAMES TAORMINA, ET AL. FAILED TO ABIDE BY RESTRICTIONS PLACED ON THE FIRM BY THE DISTRICT SURVEILLANCE COMMITTEE IN CONTRAVENTION OF SECTION 38 OF THE RULES OF FAIR PRACTICE.

Decision & Order of Offer of Settlement

Monetary/Fine

$2,500.00

Censure

Suspension

UNDERTAKINGS

DECISION 6/29/87,WHEREIN THE SETTLEMENT OFFER SUBMITTED BY THE RESPONDENTS WAS ACCEPTED; THEREFORE, RESPONDENT JAMES TAORMINA IS CENSURED,FINED $2,500, MAY NOT EMPLOY OR SUPERVISE OTHER RESPONDENTS AT ANY BROKERAGE FIRM IN WHICH HE CURRENTLY HAS OR ACQUIRES AN INTEREST, IS SUSPENDED IN ANY CAPACITY FOR 10 BUSINESS DAYS, AND SHALL NOT BECOME A FINANCIAL PRINCIPAL FOR ANY SELF-CLEARING MEMBER FOR A PERIOD OF 2 YEARS WITHOUT THE PRIOR APPROVAL OF THE DBCC FOR DISTRICT NO. 12.

NOT PROVIDED