Broker-Dealer Litigation - Greenberg Traurig LLP

7(a), 10(a) and 30(a) of Regulation S-P. The Commission also ordered each of them to pay a
$20,000 civil penalty.
k. Regulation S-P
In re Zaino, Release No. 64398, 2011 SEC LEXIS 1574 (May 4, 2011).
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The Commission accepted an offer of settlement from Zaino, an employee of a registered
broker-dealer. In a related criminal action in federal court, Zaino pleaded guilty to one count of
conspiracy to allocate and rig bids for investment agreements or other municipal finance
contracts, one count of conspiracy to defraud the Internal Revenue Service by impeding the
collection of revenue due from municipal issuers, and one count of wire fraud. The criminal
indictment alleged that Zaino engaged in fraudulent misconduct in connection with the
competitive bidding process for the selection of firms to provide instruments in which municipal
issuers temporarily invested the proceeds of tax-exempt municipal bonds. Specifically, Zaino
devised a scheme to defraud municipalities of money by facilitating the payment of kickbacks
through the execution of swap transactions and by submitting intentionally losing bids. The
Commission barred Zaino from association.
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SEC v. N. Am. Clearing, Inc., Litig. Release No. 21960, 2011 SEC LEXIS 1608 (M.D. Fla. May
5, 2011).
In an action initiated by the Commission, a federal district court entered a final judgment
against defendant Goble, the founder, sole owner, and director of North American Clearing, Inc.
(the “Firm”), a clearing broker-dealer for approximately 40 correspondent firms and more than
10,000 customer accounts. Following a five-day bench trial, the court found that Goble acted
with a high degree of scienter in directing the Firm to falsely record a $5 million money market
purchase, which artificially lowered the Firm’s reserve requirement under the Customer
Protection Rule and allowed the Firm to improperly withdraw more than $3 million from its
Exclusive Benefit of Customers Account. The court further found that this “sham” transaction
constituted fraud on the market. The court permanently enjoined Goble from future violations of
Sections 10(b), 15(c)(3), and 17(a) of the Securities Exchange Act of 1934 and Rules 10b-5,
15c3-3, and 17a-3 thereunder. Additionally, on its own initiative, the court enjoined Goble from
attempting to secure any securities licenses or attempting to engage in the securities business.
The court also ordered Goble to pay a reduced $7,500 civil penalty based, in part, on the Firm
having been liquidated in a Securities Investor Protection Corporation bankruptcy proceeding.
In re EDGX Exchange, Inc., Release No. 65556, 2011 SEC LEXIS 3592 (Oct. 13, 2011).
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The Commission accepted an offer of settlement from EDGX Exchange, Inc., a
registered national securities exchange, EDGX, a registered national securities exchange, and
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