Broker-Dealer Litigation - Greenberg Traurig LLP

procedures relating to AML and its systems for implementing its supervisory policies and
procedures. The Commission suspended Worthington in a supervisory capacity for 12 months
and ordered him to pay a $45,000 civil penalty. The Commission suspended Kaplan in a
supervisory capacity for 12 months and ordered him to pay disgorgement of $225,000,
prejudgment interest of $63,092, and a $30,000 civil penalty. Worthington and Kaplan each also
undertook to submit an affidavit following the end of their suspensions concerning their full
compliance with the sanctions imposed. The Commission censured Granahan and ordered him
to pay a $20,000 civil penalty.
Q.1e(iii)
In re Lindsey, Release No. 64219, 2011 SEC LEXIS 1286 (Apr. 6, 2011); In re Capital Fin.
Serv., Inc., Release No. 65998, 2011 SEC LEXIS 4438 (Dec. 16, 2011); In re Capital Fin. Serv.,
Inc., Release No. 66000, 2011 SEC LEXIS 4440 (Dec. 16, 2011).
The Commission accepted offers of settlement from Capital Financial, a former
registered broker-dealer (the “Firm”), Boppre, the president and a registered principal of the
Firm, and Lindsey, a registered representative, senior vice president, and due diligence officer of
the Firm. The Commission alleged that the Firm, through Boppre and Lindsey, who together ran
the Firm’s due diligence process, failed to perform reasonable due diligence on numerous oil and
gas private placement offerings prior to recommending them to customers. Specifically, the
Commission alleged that the Firm never independently investigated the information in the
offering materials that the issuer provided to it and never received audited or unaudited financial
statements. The Commission’s complaint alleged that Boppre and Lindsey knew that the
offering materials stated that selling broker-dealers would receive a due diligence fee, which
misleadingly suggested that the Firm was conducting independent due diligence. It further
alleged that Boppre and Lindsey acted at least with severe recklessness by approving the
offerings without first obtaining appropriate due diligence and by not acting on red flags brought
to their attention through third party due diligence reports. The Firm received over $5 million in
sales commissions and over $600,000 in due diligence fees in connection with the offerings,
many of which involved classic Ponzi schemes and offering frauds.
The Commission ordered Respondents to cease and desist from violating the
antifraud provisions of the federal securities laws. It further barred Boppre and Lindsey from
association and from participating in any offering of a penny stock, with the right to reapply after
two years, and ordered each of them to pay, in specified installments, a $25,000 civil penalty.
The Commission censured the Firm. Additionally, the Firm undertook to retain an independent
consultant to review its due diligence policies and procedures.
(iv)
Trading Rules Violations
Q.1.e.(iv)
In re Shaw, Release No. 9174, 2011 SEC LEXIS 251 (Jan. 14, 2011).
The Commission accepted an offer of settlement from Shaw, a registered representative
and institutional order desk manager of a registered broker-dealer. The Commission alleged that,
for more than eight years, Shaw engaged in a best execution fraud on behalf of certain individual
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