Broker-Dealer Litigation - Greenberg Traurig LLP

The firm was also charged with other violations stemming from the sale of unregistered
securities, including failing to file Suspicious Activity Reports under the Bank Secrecy Act,
allowing unlicensed employees to execute orders, and violating Regulation S-P, among others.
Some of these violations were aided and abetted by Worthington and Kaplan.
To resolve all of these charges, the firm agreed to an undertaking to retain, at its own
expense, an independent consultant to review the firm’s written supervisory procedures, and the
firm’s implementation of same, and make recommendations for necessary improvements. In
addition, the firm consented to the entry of a cease and desist order, a censure, payment of
disgorgement of $275,000, prejudgment interest of $77,113, and a civil penalty of $260,000.
Worthington consented to a cease and desist order, a suspension from association in a
supervisory capacity with any broker or dealer for a period of twelve months, and payment of a
civil penalty of $45,000. Kaplan consented to a cease and desist order, a suspension from
association in a supervisory capacity with any broker or dealer for a period of twelve months,
and payment of disgorgement of $225,000, prejudgment interest of $63,092 and a civil penalty
of $ 30,000.
In re Lopez-Tarre, Admin. Proc. File No. 3-14562, SEC Release No. 34-65391, 2011 SEC
LEXIS 3311 (Sept. 23, 2011).
Respondent was the Chief Compliance Officer of a broker-dealer, but was also
specifically made responsible for supervising the handling of customer accounts and for
reviewing correspondence, including email correspondence, of Clamens, the sole owner of the
firm, and Lopez, an employee who assisted Clamens. During an eight month period, Clamens
allegedly engaged in a large volume of unauthorized trading in the brokerage accounts of two
customers of the firm, resulting in large losses. Lopez allegedly created and sent the customers
false account statements in an attempt to conceal the fraud, which included creating fabricated
rates of return on securities that the firm was not authorized to sell and showing holdings in
certificates of deposit and money market funds, instead of the unauthorized investments. The
SEC charged that respondent failed to follow procedures for reviewing Clamens’ customer
accounts and did not review email correspondence, as required by the firm’s supervisory
procedures. Moreover, he failed to respond to several “red flags” that should have alerted him to
Lopez’s participation in the fraud. For example, when the falsified rate of return prompted one
customer to begin depositing funds for overnight investment, expecting the funds to be wired
back to it the next morning, Lopez had to wire funds from another customer account to cover the
shortfall on numerous occasions. Respondent was responsible, under the firm’s procedures, for
reviewing wire transfers between customer accounts but failed to do so.
Respondent consented to a bar from association with any broker, dealer, investment
adviser, municipal securities dealer, municipal advisor, transfer agent, or nationally recognized
statistical rating organization in a supervisory capacity, with a right to reapply for association
after one year. Based on respondent’s demonstrated inability to pay, the SEC declined to impose
a penalty against respondent.
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