Citigroup Global Markets Inc. f/k/a Salomon Smith Barney, Inc. of New York City, a member firm, and P. Campbell Hillstrom of Chicago, IL, a firm Institutional Equity Salesman, consented without admitting or denying guilt to findings relating to the dissemination of misleading electronic communications.
An NYSE hearing panel found that, in 2000 and prior years, the firm failed to properly train and supervise its employees with respect to the dissemination of electronic communications.
Specifically, the firm failed to have proper procedures and controls in place to prevent employees from disseminating false and misleading electronic communications.
The panel found that as a result of these failures, during June 2000, Hillstrom drafted and sent an e-mail, which contained inaccurate and misleading information about a stock that he attributed to a firm analyst. Although Hillstrom stated in the e-mail that the Firm did not cover the stock, the electronic communication resulted in the misperception in the market that a firm analyst had downgraded the stock. The panel also found that the misperception, in addition to other information contained in the e-mail, caused an increase in trading and a sharp decline in the stock’s price.
The NYSE imposed a penalty on the firm of a censure and a $350,000 fine and on Hillstrom a censure, nine-week suspension, and a $40,000 fine. Citigroup Global Markets and Hillstrom consented to the penalties, respectively.
Muriel Siebert & Co., Inc. of New York City, a member firm, consented without admitting or denying guilt to findings of books-and-records, financial, operational and supervisory deficiencies.
- An NYSE hearing panel found that, during the period of 2002 and 2003, the firm failed to establish and maintain appropriate procedures for supervision and control, through a separate system of follow up and review with respect to its supervisory procedures relating to its floor activities and personnel, supervision of institutional customer accounts and communications with the public. The panel also found, during the same period, the firm incorrectly calculated its required net capital, resulting in the understatement of its assets and liabilities on a general ledger and FOCUS report and maintained incomplete files of institutional customer account documentation. Additionally, during the same 2002 and 2003 period, the Firm did not obtain approval for Allied Membership for two Firm officers, request approval from the Exchange for an affiliated broker and did not properly qualify a Floor clerk.
The NYSE imposed a penalty of a censure and a $45,000 fine. The firm consented to the penalty.
Adam Neil Lesnick of New York City, a former non-registered employee, consented without admitting or denying guilt to findings of misappropriation and books and records violations.
- An NYSE hearing panel found that, during the period June 1998 – June 2002, Lesnick used his supervisory position and authority in the firm’s Institutional Finance and Operations Division to effect at least 13 wire transfers in order to misappropriate approximately $5.4 million from the firm’s accounts and certain customer accounts. The panel found that Lesnick wired these funds to an offshore account he controlled and, at various times during the same period, wired approximately $2.9 million back to the firm on occasions where a customer made a claim for funds Lesnick had previously misappropriated.
- The panel also found that during April 1998 – December 2002, instead of determining the appropriate recipient of un-reconciled funds, Lesnick improperly journaled funds between customer accounts and firm accounts in order to make it appear he had resolved the issue of un-reconciled balances in various accounts.
The NYSE imposed a penalty of a censure and permanent bar. Lesnick consented to the penalty.
Kristina Lynn Kunst of Springfield, Ohio, a former non-registered employee, consented without admitting or denying guilt to findings of misappropriation.
- An NYSE hearing panel found that during February 2001 Kunst, a former firm cashier and wire operator, misappropriated approximately $6,000 from two firm customers by depositing the customers’ checks into her personal account at the firm for her own benefit.
The NYSE imposed a penalty of a censure and permanent bar. Kunst consented to the penalty.
Matthew C. Vroom of Virginia Beach, Virginia, a former registered representative, consented without admitting or denying guilt to findings of misappropriation of customer funds, among other violations.
- An NYSE hearing panel found that during June 2002, Vroom misappropriated $580 from the account of one firm customer and transferred the funds into the account another firm customer. The panel also found that in order to complete the transfer of funds Vroom forged, on a firm document, the signature of the customer from which the funds were misappropriated and the signature of his branch office manager.
The NYSE imposed a penalty of a censure and permanent bar. Vroom consented to the penalty.
Mark K. Isenman of New York City, a former registered representative, consented without admitting or denying guilt to findings that he engaged in sales practice misconduct in seven customer accounts.
- An NYSE hearing panel found that, during the period May 2001, Isenman effected unauthorized transactions in two customer accounts and shared in the losses of one of those customers. In addition Isenman falsified trade error processing requests in order to make it appear that a certain sale transaction in one of the customer accounts was done in error. The panel also found that, during the period May 2001 – August 2002, in one of the customer accounts previously mentioned and in five other customer accounts Isenman exercised discretion to effect trades without first having written authorization from the customers.
The NYSE imposed a penalty of a censure and one-year bar. Isenman consented to the penalty.
Gregory Thomas McNamara of St. Peters, Missouri, a former registered representative, consented without admitting or denying guilt to findings that he engaged in sales practice misconduct in the accounts of three customers.
- An NYSE hearing panel found that, during the period 1998 - 2002, McNamara used discretion to effect transactions in the securities accounts of three customers pursuant to orally granted discretionary authorization but not written authorization and effected unsuitable transactions in one of the customer’s accounts.
The NYSE imposed a penalty of a censure and two-month bar. McNamara consented to the penalty.
Michael Sean DeLine of Blytheville, Arkansas, a former registered representative, consented without admitting or denying guilt to findings that he engaged in sales practice misconduct in the accounts of multiple customers.
- An NYSE hearing panel found that, during the period 1997 – 2001 DeLine engaged in unauthorized trading in two customer accounts and misrepresentation with respect to another customer. The panel also found, during the same period, DeLine engaged in a pattern of unnecessary repositioning of mutual funds in approximately 90 customer accounts, made misrepresentations and omissions to those customers and failed to follow the instructions of some of the customers.
The NYSE imposed a penalty of a censure and three-year bar. DeLine consented to the penalty.
R. Tyler Whitley, Jr. of Richmond, Virginia, a former registered representative, consented without admitting or denying guilt to findings that he engaged in sales practice misconduct in the accounts of more than 50 customers.
- An NYSE hearing panel found that, during the period of approximately 1995 – 2001, Whitley recommended and effected unsuitable transactions in the accounts of more than 50 customers which were unsuitable in view of the customers’ investment objectives, financial experience and financial resources. In addition, the panel found with respect to most of these customers Whitley supplied unapproved communications.
The NYSE imposed a penalty of a censure and three-year bar. Whitley consented to the penalty.
Juan-Carlos Lacey of Los Angeles, California, a former registered representative, consented without admitting or denying guilt to findings that he engaged in conduct inconsistent with just and equitable principles of trade in that, among other violations, he altered an account statement.
- An NYSE hearing panel found that in or about April 2001, in connection with an application for a personal loan, Lacey completed a portion of, and signed an approval signature of a fictitious firm manager on, a verification of deposit form and altered an account statement for an account he maintained at the firm so it would appear the account had a higher balance.
The NYSE imposed a penalty of a censure and three-year bar. Lacey consented to the penalty.
William Allen Zimmer of Los Angeles, California, a former registered representative, consented without admitting or denying guilt to findings that he caused his member firm to make and maintain inaccurate books and records.
- An NYSE hearing panel found that, from at least April 1999 through January 2003, Zimmer placed various manager’s initials on numerous order tickets without the manager’s knowledge or authorization, thereby causing the appearance that the managers had approved the trades and causing his member organization employer to make and maintain inaccurate records.
The NYSE imposed a penalty of a censure and four-month bar. Zimmer consented to the penalty.
Avery Marc Meizner of New York City, a former non-registered employee, consented without admitting or denying guilt that he engaged in an unapproved outside business and made misstatements to his employer concerning that business, among other violations.
- An NYSE hearing panel found that, from late 2001 to on or about May 2003, Meizner engaged in outside business activity without his member firm employer’s approval. Meinzer received payments from a non-member firm for providing his opinion to potential customers about services offered by the non-member firm. The non-member firm paid Meizner a specified amount for each customer who signed up for a seminar offered by the non-member firm or who purchased any of its products.
- The hearing panel also found that Meizner maintained a securities account at another securities firm without the prior written consent of his member firm and made misstatements to the firm concerning his outside business activities and his outside securities account.
The NYSE imposed a penalty of a censure and one-year bar. Meizner consented to the penalty.
Erasmo F. Nuzzi, Jr. of Coral Gables, Florida, a former registered representative, was found guilty of failing to cooperate in an investigation by the NYSE Division of Enforcement.
- An NYSE hearing panel found that Nuzzi failed to comply with written requests by the Exchange that he appear and testify concerning allegations that he engaged in sales practice misconduct and provided customers with fraudulent account summaries with inflated account values.
The NYSE imposed a penalty on Nuzzi of a censure and a permanent bar.
Michael Eugene Snapp of Arvada and Denver, Colorado, 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 Snapp failed to comply with written requests by the Exchange for information and testimony concerning allegations of possible misappropriation.
The NYSE imposed a penalty on Snapp of a censure and bar until he complies with the Exchange’s requests, which will become a permanent bar if he does not comply within three months.
Jonathan Henry of New York City, a former registered representative, was found guilty of failing to disclose his criminal history to his member firm employer and to the Exchange, among other violations.
- An NYSE hearing panel found that Henry failed to disclose, on a Form U-4 registration application submitted his member firm employer and to the Exchange, felony charges relating to burglary and the possession of cocaine and a 2004 conviction related to those charges. The conviction subjected Brown to a statutory disqualification.
- The panel found that Henry also failed to comply with written requests by the Exchange for information.
The NYSE imposed a penalty on Henry of a censure and a five-year bar following the period of statutory disqualification.
John R. Johnson of Kansas City, Missouri, a former non-registered employee of a member firm, was found guilty of failing to disclose his criminal history to his member firm employer.
- An NYSE hearing panel found that Johnson failed to disclose on an application for employment, submitted to his member firm employer, his criminal history including, his arrest and subsequent conviction in 2002 of a felony relating to domestic assault. The conviction subjected Johnson to a statutory disqualification.
The NYSE imposed a penalty on Johnson of a censure and a three-year bar following the period of statutory disqualification.
Linda F. Duncan of Kansas City, Missouri, a former non-registered employee of a member firm, was found guilty of failing to disclose her criminal history to her member firm employer and failing to cooperate in an investigation by the NYSE Division of Enforcement.
- An NYSE hearing panel found that Duncan failed to disclose on an application for employment, submitted to her member firm employer, her criminal history including, among other things, her arrest and/or conviction for misdemeanor theft. The panel also found that Duncan failed to comply with written requests by the Exchange for a written statement relating to her conduct while employed by a member firm.
The NYSE imposed a penalty on Duncan of a censure and four-year bar.
Latanya A. Smith of Kansas City, Missouri, a former non-registered employee of a member firm, was found guilty of failing to disclose her criminal history to her member firm employer and failing to cooperate in an investigation by the NYSE Division of Enforcement.
- An NYSE hearing panel found that Smith failed to disclose on an application for employment, submitted to her member firm employer, her criminal history including, among other things, her arrest and subsequent conviction in 1994 for felony theft. The conviction subjected Smith to a statutory disqualification. The panel also found that Smith failed to comply with written requests by the Exchange for a written statement relating to her conduct while employed by a member firm.
The NYSE imposed a penalty on Smith of a censure and four-year bar.
The cases, prosecuted by the NYSE Division of Enforcement, may be subject to review by the Securities and Exchange Commission and, thereafter, federal courts.
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 92 million customer accounts, or 90 percent of the total public customer accounts handled by broker-dealers, with total assets of over $3 trillion. They operate from 19,000 branch offices around the world and employ 146,000 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 and Enforcement and Listed Company Compliance.
