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Bon mots

"You can observe a lot just by watching." Yogi Berra

"We do not distain to borrow wit or wisdom from any man who is capable of lending us either." Henry Fielding, Tom Jones

"In our complex society the accountant's certificate and the lawyer's opinion can be instruments for inflicting pecuniary loss more potent than the chisel or the crowbar." United States v. Benjamin, 328 F.2d 854, 862 (2d Cir. 1964)

Stephen J. Horning, Exchange Act Rel. 56886, December 3, 2007

Failure to supervise, Net capital, Broker-dealer books and records, SIPC trustee appointment

Time between appeal and decision - 1 year, 1 month, 24 days.
Time between final brief and decision - 10 months, 8 days.

Pages - 23


This was the last case I tried while I was still at the Commission so I will refrain from lengthy discussion or comment.  The ALJ barred respondent from association with a broker-dealer in a supervisor capacity and suspended him from all association for twelve months.  She found that he failed to supervise, that the firm or its associated persons committed various violations, including fraud, net capital, books and records and that the respondent caused those violations.   

On appeal, the Commission upheld the sanctions and findings of violations found by the ALJ.  It noted that even "simple neglect or nonfesance" provides grounds for sanctions under Exchange Act Section 14(b) when a SIPC trustee is appointed.  Note - this section authorizes sanctions against any person associated with a broker-dealer solely on the grounds that  a SIPC trustee was appointed.  

This is an interesting failure to supervise case against the principal of a broker-dealer that resulted from the embezzlement of several million dollars of customer funds by a back office employee of the firm.  The firm failed as a result and a SIPC trustee was appointed. 


I cannot resist --- 10 months and 8 days to issue an opinion?