Financial Industry Regulatory Authority (FINRA) issues a report on
disciplinary and other actions involving registered brokers, investment
advisers and brokerage firms every month.
Follow this link to the FINRA website for the entire report for the month of May 2012 as well as to access earlier time periods.
Here are the Florida related actions for May 2012.
Global Transition Solutions, Inc. (CRD #21622, Peoria Heights, Illinois) and James Edward Zogby (CRD #2549557, Registered Principal, Placida, Florida) were censured and fined $10,000, jointly and severally. The firm and Zogby consented to the described sanctions and to the entry of findings that the firm entered into an operating agreement with a non-registered entity by which the nonregistered entity would provide executive management services and administrative support for which the member firm would pay for these services. According to the report, the firm paid approximately $1,050,000 in commissions and
fees to the non-registered entity, and Zogby received a $4,000 monthly fee from the entity for compliance-related services. The firm improperly paid the non-registered entity rather than paying compensation, commissionsor fees directly to the registered representatives who owned the non-registered entity.
Raymond James Financial Services, Inc. ( St. Petersburg, Florida) the firm was censured, fined $400,000,
and is required to undertake to conduct a comprehensive review of the adequacy of its AML (anti money laundering) policies and procedures. The firm consented to the described sanctions and to the entry of findings that it failed to implement procedures reasonably designed to detect and cause the reporting of suspicious transactions in the
accounts of its customer who used his brokerage accounts at the firm to conduct a Ponzi scheme that resulted in losses of approximately $17.8 million to the individuals who provided funds to him. The findings also stated that the firm
failed to devote adequate resources to its AML program, failed to adequately investigate suspicious activity in the customer’s accounts, failed to implement its AML program to
adequately consider numerous red flags related to the customer’s accounts, and failed to conduct adequate due diligence or monitoring of the customer’s accounts.
Ultralat Capital Markets, Inc. ( Miami, Florida) the firm was censured and fined $20,000 and the firm consented to the described sanctions and to the entry of findings that for approximately 10 months, it allowed an individual to serve as its president and CEO and to act in a General Securities Principal (GSP) capacity without being so registered or qualified. The findings stated that although the individual had a General Securities Representative (GSR) license and had registered to take the GSP exam, he did not pass it until after he had left the firm. The findings also stated that for approximately four months, the firm allowed another individual to serve as its president and CEO, and to act in a GSP capacity without being so registered. The findings also included that for a total of approximately 15 months, the firm operated with only one officer or partner who was registered or authorized to function as a GSP, without a waiver of the two principal requirement and, for almost a month, the firm operated without any officer or partner who was registered or authorized to function as a GSP.
Jose Vicente Alvarado ( Registered Representative, Key Biscayne, Florida): was fined $10,000 and suspended from association with any FINRA member in any capacity for 10 business days. Alvarado consented to the described sanctions and to the entry of findings that for approximately 10 months, he served as the president and CEO of, and acted in the capacity of, a GSP for his member firm, without being registered or qualified as a GSP.
John Brian Busacca III (Registered Principal, Orlando, Florida) fined $30,000 and suspended from association with any FINRA member in any principal capacity for six months. The SEC sustained the sanctions following appeal of a NAC decision. The U.S. Court of Appeals denied Busacca’s petition for review. The sanctions were based on findings that Busacca failed to reasonably supervise the firm’s operations system conversion and its operations activities to detect and/or prevent certain violations, including, but not limited to, inaccurate box counts, erroneous records of customer
securities, failure to timely validate or take exception to transfer instructions, failure to make timely buy-ins, failure to timely liquidate unpaid-for customer securities positions
in cash accounts in violation of Regulation T of the Federal Reserve Board and FINRA rules. The findings stated that Busacca failed to reasonably supervise the firm’s operations
considering his extensive travel and focus on business development despite his knowledge of the firm’s significant operational problems, the lack of adequate personnel in place to address the firm’s problems, and Busacca’s failure to diligently and promptly address all of the firm’s operational issues. The suspension is in effect from April 16, 2012, through October 15, 2012.
Philip Christopher Crescimanno ( Registered Representative, Land O’Lakes, Florida) was barred from association with any FINRA member in any capacity.
Crescimanno consented to the described sanction and to the entry of findings that he operated an outside business without providing prompt written notice to his member firm and failed to obtain the firm’s approval. The findings stated that by failing to report that he was an officer of his company and was involved in its operation, Crescimanno failed to comply with firm policies and procedures. The findings also stated that Crescimanno failed to provide on-the-record testimony, materially impeding FINRA’s investigation.
Paul Andrew Fischetti (Registered Supervisor, Palm Harbor, Florida) was fined $5,000 and suspended from association with any FINRA member in any capacity for six months. Fischetti consented to the described sanctions and to the entry of findings that he failed to timely respond to FINRA requests for information. The suspension is in effect from April 2, 2012, through October 1, 2012.
Harrison A. Hatzis (Registered Principal, Hallandale, Florida) was fined $30,000 and suspended from association with any FINRA member in any capacity for two
years. The NAC imposed the sanctions following appeal of an Office of Hearing Officers (OHO) decision. The sanctions were based on findings that Hatzis provided incomplete
and inaccurate information concerning his firm’s application for FINRA membership and misled FINRA. The findings stated that Hatzis was responsible for the firm’s filing
of incomplete and inaccurate membership information and the resultant misleading of FINRA. The firm failed to accurately, completely and timely disclose the source and nature of its initial funding and ownership. The firm’s membership application and Application for Broker-
Dealer Registration (Form BD) also inaccurately indicated that Hatzis solely owned the firm, when in fact an entity was the firm’s sole, direct owner. The findings also included that the firm misled FINRA concerning a $250,000 payment under an Investment Agreement and sought to shield the Investment Agreement from regulatory review.
executed the Investment Agreement. FINRA found that the firm’s obligation to forego $285,000 in net commissions otherwise due from another firm alone affected a significant aspect of the firm’s financing and revenues, and raised considerable questions concerning the firm’s ability to maintain adequate net capital. Nonetheless, the firm never disclosed these key terms to FINRA.
The decision has been appealed to the SEC and the sanctions are not in effect pending the appeal.
< b>Rudolf Lucian Molnar (Registered Representative, Windermere, Florida) was fined $5,000 and suspended from association with any FINRA member in any capacity for one month. Molnar consented to the described sanctions
and to the entry of findings that he impersonated customers in order to expedite the transfer of their accounts from his former broker-dealer to his new one. The findings stated
that in each instance, Molnar placed a telephone call to his former broker-dealer, identified himself as the customer, and proceeded to impersonate the customer, sometimes using
the customer’s personal information. The findings also stated that the customers had authorized the transfer of their accounts, but did not authorize the impersonations.
The suspension is in effect from April 16, 2012, through May 15, 2012.
Sean Donald Premock (Registered Representative, Fort Lauderdale, Florida) was barred from association with any FINRA member in any capacity. Premock consented to the described sanction and to the entry of findings that
he facilitated private securities transactions away from his member firm. The findings stated that Premock was paid commissions from the sales totaling $18,820 without
providing written notice to, or obtaining approval from, his firm prior to facilitating any of the investments. The findings also stated that Premock made a series of material
misrepresentations and omissions of fact in connection with the offering and selling of investment notes, including promising a monthly minimum rate of return, claiming
that the investors’ principal was safe and would be repaid in its entirety after a period ranging from nine to 12 months, and representing that investor funds would be pooled and invested in a fund for the purpose of executing a unique trading strategy that would protect investor principal by employing a hedging strategy using reversible convertible
notes (RCNs). Premock did not purchase RCNs, and he used some of the investment funds for his personal benefit. The findings also included that Premock prepared and issued monthly and quarterly fund statements that showed inflated account values. The statements uniformly showed steady account appreciation based on the accrual of fictitious monthly interest and cash bonuses. In addition, FINRA determined that Premock failed to fully respond
to FINRA requests for information and documents. Premock stated that he was unwilling to provide a response to all of the requested items and that he intended not to comply any further.
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