The following disciplinary actions were taken against both firms and individuals due to violations of FINRA rules, federal securities laws and MSRB rules:
Wilson-Davis & Co., Inc.
The Firm was fined $32,500 for failing to maintain and establish policies within its Written Supervisory Procedures (“WSP”) to effectively review email communications sent and received by Registered Representatives (“RR”). It was found that the WSPs did not have policies or procedures to describe how email review would be conducted and the sample size of emails captured by the Firm’s email vendor was not sufficient. Due to the Firm’s size, a much larger sample of emails should have been captured for principal review and key words flagged were not broad enough to generate a true sample of flagged emails. (FINRA Case #2014042949704)
Gelband & Co., Inc.
The firm was fined $5,000 for failing to conduct an annual independent test of its Anti-Money Laundering Compliance Program (AMLCP) for four years. During the four calendar years, the firm’s Anti-Money Laundering Compliance Officer (AMLCO) or his/her designee conducted the review, thus failing to fulfill the independent requirement of the testing. Once FINRA informed the Firm of its failure to conduct an independent test, the Firm then conducted independent testing of the AMLCP for the requisite years. (FINRA Case #2018056465601)
Michael Paul Lessard Jr.
Lessard was barred from association with any member firm for borrowing $82,750 from two customers without approval. It was found that Lessard borrowed $60,000 from a senior customer and only repaid the customer after being confronted. Additionally, Lesard borrowed $22,750 from another customer whom he did not repay. (FINRA Case #2018058520801)
James Bradley Schwartz
Schwartz was barred from association with any FINRA member due to churning in customer accounts, excessive trading in customer accounts, exercising de facto control over customer accounts and exercising unauthorized trading in customer accounts, specifically in an account for a customer that had died. These actions caused losses of more than $660,000 in customer accounts and resulted in over $194,000 in commission for Schwartz. It was found that the excessive trading valued approximately $10 million. (FINRA Case #2016051704302)
Caroline Elizabeth Wisniewski
Wisniewski was fined $10,000, suspended in Financial and Operations Principal (“FINOP”) capacity for one month and required to retake the FINOP examination. It was found that Wisniewski allowed the Firm to engage in securities business while below net capital requirement. Wisniewski was also found to have filed inaccurate FOCUS reports, failed to prepare net capital computations timely and did not file notifications of the Firm’s net capital deficiencies. These actions resulted in the Firm holding inaccurate books and records. (FINRA Case #2017054968802)
Gerard N. Whelan
Whelan was fined $7,500 and suspended from association with any FINRA member for three months for participating in private securities transaction without prior written consent from his member firm. Although Whelan was a non-registered fingerprint person (“NRF”), he entered into an agreement with a former investment advisory customer and continued to manage her brokerage account. The executed securities transactions resulted in an increase in value in the customer’s account. Whelan did not receive any commission for these executions. (FINRA Case #2018057602801)
Click here to read the Disciplinary Brief in its entirety.
Please contact an ARG Analyst with any questions regarding the matters discussed.