Unauthorized OBA and Referral Fees
Re Alfonso Chin, File No. 201361
The MFDA approved a settlement agreement in circumstances where the respondent, Alfonso Chin, acknowledged having engaged in securities related business outside the Member by referring or facilitating the sale of at least $3,105,000.00 worth of investments in a mortgage investment corporation to two clients and eleven other individuals, contrary to MFDA Rules 1.1.1(a) and 2.1.1. Chin also admitted to receiving at least $102,053.56 in referral fees for referring or facilitating the sale of the investments.
Chin agreed to the terms of settlement which included a fine in the amount of $30,000.00, a permanent prohibition on his authority to conduct securities related business in any capacity while in the employ of any MFDA Member, costs in the amount of $2,500.00, and attendance at the Settlement Hearing in person.
A full text of the Reasons for Decision approving the settlement can be read here.
Non-Approved Persons Conducting Securities Related Business
Re Blair Stonewall Jackson Roche, File No. 201420
The MFDA approved a settlement agreement in circumstances where the Respondent, Blair Roche, admitted to permitting two non-Approved Persons to conduct securities related business with clients through the Member, contrary to MFDA Rules 1.1.1(c), 1.1.2 and 2.1.1; and further admitted to producing and distributing approximately 80 portfolio summaries to approximately 45 clients without the knowledge or involvement of the Member, thereby interfering with the ability of the Member to supervise the respondent, contrary to MFDA Rules 1.1.2, 2.5.1 and Rule 2.1.1.
The Respondent further admitted to violating MFDA Rule 2.1.3 by producing portfolio summaries for clients who were spouses that disclosed the spouses’ individual accounts on the same portfolio summary without the clients’ prior written consent to authorize the sharing of individual account information.
The Respondent agreed to pay a fine in the amount of $12,500 and costs in the amount of $2,500. He further agreed to a prohibition from conducting securities related business in any capacity while in the employ of or associated with any MFDA member for a period of three (3) months.
The full text of the settlement agreement can be read here.
Pre-Signed Forms and Discretionary Trading – MFDA Orders Voluntary Payment to Clients
Re Mervyn Jacheil Fried, File No. 201242
The MFDA approved a settlement agreement in circumstances where the Respondent, Mervyn Fried, acknowledged having failed to learn the essential facts relative to the opening of two joint accounts for his clients DH and EH, including the clients’ risk tolerance, time horizon, and investment objectives, in violation of MFDA Rule 2.2.1(a). He further acknowledged having failed to obtain a New Account Application Form in respect of the two joint accounts, in violation of MFDA Rule 2.2.2.
Fried also acknowledged having obtained signatures of the same clients on blank order entry forms, which he then used to execute trades in the clients’ accounts in violation of MFDA Rule 2.3.1, which prohibits discretionary trading even in instances where it is authorized by clients. Fried further agreed that he had made unsuitable recommendations to his clients having regard to the clients’ personal circumstances, including risk tolerance, time horizon, and inability to withstand investment losses.
Finally, Fried acknowledged having used blank signed forms with other clients, contrary to MFDA Rule 2.1.1, and having collected remuneration and fees totaling $9.953.00 directly from 21 clients in relation to business carried on by Fried on behalf of the Member, thereby violating MFDA Rules 2.4.1, 1.1.(b) and 2.1.1.
As a result of his misconduct, the MFDA ordered a permanent prohibition on the authority of Fried to conduct securities related business, a global fine in the amount of $30,000.00; and costs of $10,000.00. Mr. Fried further agreed to make a voluntary payment of $25,000.00 to his two clients DH and EH.
A full text of the settlement agreement can be read here.
MFDA Releases Status Report on Payment of Fines
The MFDA has started to release the status of unpaid fines for all respondents ordered to pay fines by MFDA Hearing Panels. On the MFDA website, there is now a column under “Completed Cases” which indicates whether an Order Payment Status is paid or unpaid.
In its 2014 fiscal year, MFDA Hearing Panels levied fines against Approved Persons who are currently registered totaling $54,500, all of which have been collected. Hearing Panels imposed fines of $3,642,500.00 against Approved Persons who are no longer registered, of which $51,000.00 has been collected.
The status of fine payments can now be found here. These figures will be updated quarterly, on an ongoing basis.