Wall Street Discount Corporation of New York, New York, a former Exchange member firm, consented without admitting or denying guilt to findings of violations concerning financial and operational deficiencies and supervision and control.
- An NYSE hearing panel found that Wall Street Discount Corporation violated Rule 15c3-1 promulgated under the Securities and Exchange Act in that, in its September 2001 FOCUS Report, it overstated its net capital by approximately $118,600 (46% of its net capital) by failing to take an appropriate haircut on a money market fund account, failing to classify petty cash as a non-allowable asset, and failing to take an appropriate net capital deduction with respect to an unsecured margin debit balance in a customer account. The firm also failed to record its Floor brokerage income on an accrual basis.
- In addition, the firm violated Exchange Rule 342(a) and (b) during 2001-2002 by failing to supervise its business activities reasonably and to provide for, establish and maintain adequate procedures of supervision and control to ensure that Floor commissions were recorded on its books and records as required by Exchange Rule 301.36(3), that the activities of its Floor broker were appropriate, and that its Floor orders were written on its stationery as required by Exchange Rule 123A.23 and Exchange Information Memo 98-43.
The NYSE imposed a penalty of a censure and $30,000 fine on Wall Street Discount Corporation. The firm consented to the penalty.
Individual Disciplined for Unauthorized Internet Communications
Mitchell Allan Romano of Miami, Florida, a non-registered employee, consented without admitting or denying guilt to findings of violations concerning unauthorized communications on Internet message boards.
- An NYSE hearing panel found that during the period August 2000 through May 2002, on one or more occasions, Romano violated Exchange Rule 472(a) by posting communications on Internet message boards without the knowledge and approval of his member firm employer. In addition, he engaged in conduct inconsistent with just and equitable principles of trade in that several of these communications contained speculative statements regarding securities which could reasonably have been expected to affect investor interest and he made misrepresentations on his annual compliance certifications to his member firm employer.
The NYSE imposed a penalty of a censure and a one-month suspension. Romano consented to the penalty.
Individual Barred for Detrimental Conduct and Failure to Cooperate
Kimberly A. Vonduhn of Lorraine, Ohio, a former non-registered employee, was found guilty of engaging in acts detrimental to the interest or welfare of the Exchange and of failing to cooperate in an investigation by the NYSE Division of Enforcement.
- An NYSE hearing panel found that Vonduhn engaged in acts detrimental to the interest or welfare of the Exchange in that she was convicted of two felonies, Theft with Elderly Specification and Forgery, which involved the misappropriation of funds belonging to another employee of her firm; and that she failed to comply with or respond to requests by the Exchange for information concerning matters that occurred prior to the termination of her employment.
The NYSE imposed a penalty on Vonduhn of a censure and permanent bar.
Individual Barred for Failure to Cooperate
Rosemarie Berrow of Houston, Texas, a former non-registered employee, was found guilty of failing to cooperate in an investigation by the NYSE Division of Enforcement.
- An NYSE hearing panel found that Berrow failed to comply with one or more written requests by the Exchange for information and for testimony concerning matters that occurred prior to the termination of her employment.
The NYSE imposed a penalty on Berrow of a censure and a bar until she complies with the Exchange’s requests, the bar to become permanent if she does not comply within three months.
The cases, prosecuted by the NYSE Division of Enforcement, may be subject to review by the Securities and Exchange Commission and, thereafter, federal courts.
About NYSE Regulation
On December 17, 2003, the SEC approved a new governance structure for the NYSE. Under the new design, the NYSE Board of Directors is comprised solely of independent directors, except for the chief executive officer, who have no affiliation with any regulated member firm. A new position of chief regulatory officer was created and reports directly to the board of directors through a new Regulatory Oversight Committee. As a result, NYSE Regulation is insulated from potential influence from NYSE members and member firms, operates separately from the business side and is independent in its decision-making.
NYSE Regulation plays a critical role in monitoring and regulating the activities of its members, member firms and listed companies, as well as enforcing compliance with NYSE rules and federal securities laws. Nearly 400 of the largest securities firms in America are members of the New York Stock Exchange. These firms service 98 million customer accounts, or 84 percent of the total public customer accounts handled by broker-dealers, with total assets of over $4 trillion. They operate from 20,000 branch offices around the world and employ 144,000 registered personnel. Nearly 700 employees, or more than 40 percent of the Exchange’s staff, work for NYSE Regulation, which consists of four divisions: Market Surveillance, Member Firm Regulation, Enforcement and Listed Company Compliance, as well as a Risk Assessment Unit and Dispute Resolution/Arbitration.
