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Enjoined Rep and Investment Adviser Barred

Justin F. Ficken, Exchange Act Rel. 58802 (October 17, 2008)

Time since appeal filed - 7 months 4 days
Time since last brief - 25 days
Pages - 9
Footnotes - 37


Ficken was associated with Prudential Securities.  He was enjoined from violations of the anti--fraud provisions in 2007 based on allegations he had assisted customers in market timing of mutual funds.  He was also ordered to pay disgorgement of $589,000.  His appeal is pending in the First Circuit.  In 2008 he pled guilty to two counts of securities fraud arising from the same conduct.  An ALJ barred Ficken based on the injunction.  The Commission sustained the sanction on appeal. 


Ficken had five clients, but used more than 170 brokerage accounts to evade mutual fund restrictions on frequent trading.  When funds blocked trades by Ficken controlled accounts, he opened new accounts to evade the funds' trading restrictions.  The trial court found Ficken acted with a high degree of scienter and that his fraudulent conduct extended over an extended period.  

The Commission noted the appropriateness of a bar where the previous violations involve fraud as "the securities business is one in which opportunities for dishonesty recur constantly." The Commission cited Ficken's numerous emails to clients advising them how to evade mutual fund trading restrictions.

The opinion rejected Ficken's attempt to lessen the sanction by comparing his situation with a sanctions in other settled market timing cases. The Commission reiterated its long standing policy that settled matters should not serve as a guide in evaluating sanctions against persons who do not settle.


The Commission has recently been stepping up the speed of opinions since three new Commissioners came on the scene.  This is important if sustained as it will reduce the incentive of respondents to file meritless appeals due to the anticipation of a lengthy stay pending appeal.  The Commission could of course speed up the resolution of routine cases such as this by summarily affirming the ALJ.  

The Commission will rarely impose any sanction less than a bar where an individual has been enjoined based on fraud.

Given the egregious violations it is unfortunate that the Commission continues its penchant for justifying sanctions based on Ficken's "failure to acknowledge the wrongful nature of his actions or show remorse . . . ."  It just isn't right to appear to sanction someone for vigorously defending himself.