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Member Firm Disciplined for Supervisory Violations and other failures
Prudential Equity Group, LLC f/k/a Prudential Securities Incorporated of New York City, a member firm, consented without admitting or denying guilt to findings of operational and supervisory deficiencies.
- An NYSE hearing panel found that during an approximately eight-year period between May 1995 and April 2003, the firm inaccurately reported or failed to report its short interest positions to the Exchange on approximately 1,225 occasions and also submitted inaccurate short interest reports to NASD and the American Stock Exchange (AMEX).
- The panel also found that the firm failed to provide for appropriate procedures of supervision and control, and to implement a separate system of follow-up and review, over its business activities relating to its regulatory obligation to accurately report short interest.
Former Member Firm Disciplined for Supervisory Violations and Other Failures
Brill Securities, Inc. of New York City, a former 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 September 2000 to April 2002, the firm failed to create and maintain required books and records relating to its Floor business, failed to accurately prepare its net capital computation and submitted an inaccurate FOCUS report with regard to its Floor commission income.
- In addition, the panel found the firm did not file or timely file with the Exchange Forms
- The panel also found that the firm did not have adequate policies and procedures to supervise its Floor business and Floor personnel, and failed to otherwise supervise these areas of its business.
Individual Disciplined for Improper Trading
Seth Wilhelm Chadbourne of Carrboro, North Carolina, a former registered representative, consented without admitting or denying guilt to findings that he engaged in improper trading in his personal securities account.
- An NYSE hearing panel found that, during April 2002, Chadbourne, an analyst for an asset management fund managed by his member firm, sold short securities from his personal securities account prior to the execution of an order by the fund to sell short the same securities. The panel found that Chadbourne was aware of the fund’s intent to enter the short sale orders and knew or was reckless in not knowing that the fund’s order had not been executed prior to his transaction.
Individual Barred for Misappropriation and Other Violations
Marley Kay Burchfield of Palestine, Texas, a former registered representative of a member firm, was found guilty of misappropriating customer funds and failing to cooperate in an investigation of this matter by the NYSE Division of Enforcement.
- An NYSE hearing panel found that, during the period February 2004-March 2004, Burchfield converted for her own use and benefit funds totaling approximately $28,700 from two checks she caused to be issued from the securities accounts of two customers without their knowledge or authorization. The panel also found that Burchfield caused a wire transfer totaling approximately $30,000 from a third customer’s securities account to the bank account of Burchfield’s friend without the customer’s knowledge or authorization.
- Burchfield also failed to comply with written requests by the Exchange that she appear and testify concerning matters occurring prior to the termination of her employment with the firm.
Individual Barred for Failure to Cooperate
Angie D. Crumby of Benton, Arkansas, 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 Crumby failed to comply with written requests by the Exchange for information concerning the circumstances surrounding her employment termination.
Individuals Disciplined for Failing to Disclose Criminal History and Other Violations
Rizalina Dones Flores of Fort Washington, Maryland, a former non-registered employee, was found guilty of failing to disclose her criminal history to her member firm employer.
- An NYSE hearing panel found that Flores failed to disclose on an employment application submitted to her member firm employer a misdemeanor conviction relating to theft. The conviction subjected Flores to a statutory disqualification.
Nicholas Michael Clements of Phoenix, Arizona, 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 Clements failed to disclose on an employment application submitted to his member firm employer, and on a Form U-4 registration application submitted to the Exchange, his criminal history including pending felony charges relating to aggravated driving while under the influence of alcohol. Clements was later convicted of the charge, which made him subject to a statutory disqualification.
Jing Wang of Temple City, California, a former non-registered employee of a member firm, was found guilty of failing to disclose his criminal history to his member firm employer and failing to cooperate in an investigation by the NYSE Division of Enforcement.
- An NYSE hearing panel found that Wang failed to disclose on an application for employment submitted to his member firm employer, his criminal history including, among other things, his arrest and subsequent conviction in 1996 for theft of property. The panel also found that Wang failed to comply with written requests by the Exchange for a written statement relating to his conduct while employed by a member firm.
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 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, Enforcement and Listed Company Compliance, as well as a Risk Assessment Unit and Dispute Resolution/Arbitration.
