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by Bill Singer
 
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Written: April 19, 2014

April 18, 2014
We just made it through another tax season. The good news is that you filed and are fully paid up -- or, the bad news is that you didn't file or you h... Read On
April 17, 2014
In this digital age there are still folks who physically cut-and-paste. How quaint. Of course, quaint or not, when you start using the terms "cut-and-... Read On
April 16, 2014
Here's an interesting cocktail of facts: an IRA, a mother, powers of attorney, and a stockbroker son. Add into that mix questions about whether a $60,...Read On
April 15, 2014
Stockbroker, Compliance, Legal, and Regulatory JobsFor a full listing of current job openings, visit the BrokeAndBroker Employment Page ... Read On
April 14, 2014
Auction Rate Securities are the unwanted gift that keeps on giving. In today's BrokeAndBroker.com Blog, we report about yet another bit of collateral ...Read On

 

Written: April 18, 2014

We just made it through another tax season. The good news is that you filed and are fully paid up -- or, the bad news is that you didn't file or you haven't fully paid your tab.  That's bad enough because the state and federal tax folks smell the blood and are likely hunting you down as we speak. On top of that, some of you may soon learn that there's a nasty tax lien filed against you.  Then it gets worse. FINRA may unleash its own hounds on you!

For the purpose of proposing a settlement of rule violations alleged by the Financial Industry Regulatory Authority (“FINRA”), without admitting or denying the findings, prior to a regulatory hearing, and without an adjudication of any issue, William Earl Boone, Jr. submitted a Letter of Acceptance, Waiver and Consent (“AWC”), which FINRA accepted. In the Matter of William Earl Boone, Jr., Respondent (AWC 2013036433201, April 10, 2014).

In 1980, Boone entered the securities industry and was first registered in 1987 with AXA Advisors, Inc., where he was solely registered until March 2013; however, he was dually employed by AXA and the Equitable Life Assurance Society of the United States from October 1980 through January 2000. The AWC asserts that Boone had not prior relevant disciplinary history.

Four Liens

The AWC asserts that during the period from April 2006 through August 2009, Boone had one Internal Revenue Service and three Alabama Department of Revenue tax Iiens (totaling $58,840.18) filed against him but he failed to timely update his Uniform Application For Securities Industry Registration Or Transfer (“Form U4”) to disclose each item. The AWC asserts that the liens were only first disclosed on November 9, 2011, following discovery by AXA. Additionally, Boone signed AXA's annual Agent Interview Questionnaires in 2009 and 2010, in which he falsely indicated the non-existence of any unsatisfied liens. 

Going To The Rulebook

Article V of FINRA’s By-Laws: Registered Representatives and Associated Person, provides as follows:

Application for Registration

Sec. 2.  (a) Application by any person for registration with the Corporation, properly signed by the applicant, shall be made to the Corporation via electronic process or such other process as the Corporation may prescribe, on the form to be prescribed by the Corporation and shall contain:

(1) an agreement to comply with the federal securities laws, the rules and regulations thereunder, the rules of the Municipal Securities Rulemaking Board and the Treasury Department, the By-Laws of the Corporation, NASD Regulation, and NASD Dispute Resolution, the Rules of the Corporation, and all rulings, orders, directions, and decisions issued and sanctions imposed under the Rules of the Corporation; and
(2) such other reasonable information with respect to the applicant as the Corporation may require.

(b) The Corporation shall not approve an application for registration of any person who is not eligible to be an associated person of a member under the provisions of Article III, Section 3.

(c) Every application for registration filed with the Corporation shall be kept current at all times by supplementary amendments via electronic process or such other process as the Corporation may prescribe to the original application. Such amendment to the application shall be filed with the Corporation not later than 30 days after learning of the facts or circumstances giving rise to the amendment. If such amendment involves a statutory disqualification as defined in Section 3(a)(39) and Section 15(b)(4) of the Act, such amendment shall be filed not later than ten days after such disqualification occurs. 

In addition to the above By-Law provision, FINRA Rule 1122: Filing of Misleading Information as to Membership or Registration, provides:

No member or person associated with a member shall file with FINRA information with respect to membership or registration which is incomplete or inaccurate so as to be misleading, or which could in any way tend to mislead, or fail to correct such filing after notice thereof.

Finally, the Form U4 asks the following:

Financial Disclosure

14K. Within the past 10 years:

(1) have you made a compromise with creditors, filed a bankruptcy petition or been the subject of an involuntary bankruptcy petition?
(2) based upon events that occurred while you exercised control over it, has an organization made a compromise with creditors, filed a bankruptcy petition or been the subject of an involuntary bankruptcy petition?
(3) based upon events that occurred while you exercised control over it, has a broker or dealer been the subject of an involuntary bankruptcy petition, or had a trustee appointed, or had a direct payment procedure initiated under the Securities Investor Protection Act?

14L. Has a bonding company ever denied, paid out on, or revoked a bond for you?

14M. Do you have any unsatisfied judgments or liens against you?

Paying The Price

FINRA deemed Boone’s conduct to constitute violations of NASD Conduct Rule 2110 (prior to Dec. 15, 2008), NASD IM 1000-1 (conduct prior to Aug. 17, 2009), FINRA Rules 2010 and 1122 (conduct commencing on Dec. 15, 2008 and Aug. 17, 2009, respectively), and FINRA By-Laws Article V, Section 2(c). In accordance with the terms of the AWC, FINRA imposed upon Boone a $10,000 fine and a six-month suspension from association with any FINRA member firm in all capacities. 

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Topics: Form U4  U4  Rule 1122  Tax Liens  Bill Singer  BrokeAndBroker  FINRA  AWC  Article V    
 

Written: April 17, 2014

In this digital age there are still folks who physically cut-and-paste. How quaint. Of course, quaint or not, when you start using the terms "cut-and-paste" "Individual Retirement Account" and "Letter of Authorization" in the same sentence, and that sentence is something written by a Wall Street regulator involving your conduct, well, you know, what can I say? You may just be asking for some old-fashioned regulatory justice.

For the purpose of proposing a settlement of rule violations alleged by the Financial Industry Regulatory Authority (“FINRA”), without admitting or denying the findings, prior to a regulatory hearing, and without an adjudication of any issue, Kaori Hagihara submitted a Letter of Acceptance, Waiver and Consent (“AWC”), which FINRA accepted. In the Matter of Kaori Hagihara, Respondent (AWC 2013036928801, April 8, 2014).

Hagihara entered the securities industry in 2006 and during the relevant time between January 2009 and May 2013, she was registered with FINRA member firm UBS Financial Services, Inc. The AWC asserts that Hagihara did not have any prior disciplinary history.

LOA

Sometime around April 27, 2009, Hagihara allegedly sent a Letter of Authorization (“LOA”), dated March 12, 2009, to another FINRA member firm, requesting the redemption of an alternative investment held by a customer of the other firm. Asserting that the LOA was out of date, the other firm rejected the redemption. In response to this rejection, Hagihara purportedly cut the customer’s signature from the submitted LOA and pasted it onto a new LOA, dated May 1, 2009. Thereafter, on May 7, 2009, Hagihara submitted the doctored LOA to the other firm.  

Beneficaries Of The Doubt

Separately, another UBS customer had multiple Individual Retirement Accounts (“IRA”) and on September 20, 2012, Hagihara allegedly had the IRA’s two beneficiaries sign an IRA Beneficiary Processing Form – but the two beneficiaries only signed for one of the customer’s two IRAs. Thereafter, Hagihara copied the forms, changed the IRA account number, and submitted the document for the other IRA

Signing Off

Finally, on October 11, 2012, Hagihara allegedly had another customer sign an IRA Distribution Form for one of her UBS IRA accounts. Thereafter, Hagihara copied the original signature page from the form and attached the copied signature to a new IRA Distribution Form.

Endgame

According to online FINRA documents as of April 16, 2014, UBS “Discharged” Hagihara on April 11, 2013, based upon allegations that:

MS. HAGIHARA’S EMPLOYMENT WAS TERMINATED ON THE BASIS OF MANAGEMENT’S LOSS OF CONFIDENCE IN HER ABILITY TO PERFORM THE RESPONSIBILITIES OF HER ROLE AFTER MULTIPLE VIOLATIONS OF THE FIRM’S POLICIES ON ALTERING OR ADDING INFORMATION TO SIGNED CLIENT DOCUMENTS.

As a result of the conduct described above, FINRA deemed that Hagihara had violated FINRA Rule 2010. In accordance with the terms of the AWC, FINRA iposed upon Hagihara a $5,000 fine and a one-month suspension from association with any FINRA-registered firm in all capacities. 

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