Broker-Dealer Litigation - Greenberg Traurig LLP

trades in the penny stock for a new client and information on the stock purchase agreement
showing that the client acquired the shares directly from the issuer. The Commission also
alleged that the Firm failed to have adequate supervisory policies in that its policies failed to
address unregistered distributions through statutory underwriters and situations in which
certificates without restrictive legends were acquired by a customer from an issuer with a view to
distribution. The Commission censured the Firm, ordered it to cease and desist from violating
the securities registration provisions of the federal securities laws, suspended it from
participating in any offering of a penny stock for twelve months, and ordered it to pay
disgorgement of $33,762, prejudgment interest of $6,921, and a $60,000 civil penalty. The
Commission suspended Hughes from association in a supervisory capacity for four months and
ordered her to pay a $25,000 civil penalty.
Q.1.f
In re Gautney, Release No. 65124, 2011 SEC LEXIS 2841 (Aug. 12, 2011); In re Gautney,
Release No. 65151, 2011 SEC LEXIS 2944 (Aug. 17, 2011).
The Commission accepted offers of settlement from Bellia, a registered branch manager
and branch owner of a registered broker-dealer (the “Firm”), and Blum, a registered branch
manager of a separate branch office of the Firm. The Commission alleged that Bellia failed to
reasonably supervise two registered representatives who churned the accounts of seven
customers, and that Blum failed to reasonably supervise one registered representative who
churned the accounts of two customers. In particular, Respondents failed to follow the Firm’s
written supervisory procedures requiring “immediate attention” be given to accounts with
annualized turnover rates greater than six. The registered representatives Respondents
supervised were also the subject of complaints that reinforced the need for Respondents to
contact their customers about the large trading volume. During his time at the Firm, Bellia was
under heightened supervision due to a FINRA disciplinary history for failing to supervise
registered representatives at another broker-dealer. The Commission barred Bellia from
association and from participating in any offering of a penny stock, and ordered him to pay
disgorgement of $5,959 and prejudgment interest of $901. The Commission waived the
obligation to pay these amounts and did not impose a civil penalty based upon Bellia’s sworn
statement of financial condition. The Commission barred Blum from association, with the right
to reapply after two years, and ordered him to pay disgorgement of $4,753, prejudgment interest
of $355, and a $10,000 civil penalty.
In re Lopez-Tarre, Release No. 65391, 2011 SEC LEXIS 3311 (Sept. 23, 2011).
Q.1.f
The Commission accepted an offer of settlement from Lopez-Tarre, a former CCO of a
registered broker-dealer (the “Firm”). In an earlier action brought by the Commission, a federal
district court entered a final judgment by consent against Clamens, the Firm’s sole owner, and
Lopez, one of the Firm’s employees, enjoining them from violating the antifraud provisions of
the federal securities laws. The Commission alleged that Clamens had engaged in unauthorized
trading in the brokerage accounts of two customers, causing losses exceeding $20 million, and
that Lopez participated in the fraud through the creation and sending of fake account statements.
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