Disciplinary Proceeding - finra

This Decision has been published by the NASD Office of Hearing Officers and should be cited asOHO Redacted Decision CAF030014.who generated commissions. 52 Thus, to be seen as a “good client,” TR concluded he had to tradefrequently and pay higher commission rates than would be necessary if he only wanted tradeexecutions. 53TR described his process of selecting a registered representative and becoming a goodclient as follows. First, TR identified firms and registered representatives at those firms whichhad access to IPOs. He would do this by observing the firms listed on the prospectuses hereceived and by reviewing IPO tombstone announcements carried in the Wall Street Journal andother financial publications. 54 Once he identified a broker-dealer that had access to IPOs, hecalled the firm to open an account. 55 TR testified that to his best recollection he made such a callto establish his account at the Firm. 56After TR identified a firm and broker, he would open an account and commence doing alimited amount of business with the broker to evaluate whether the broker was one of the betterproducers of IPO shares at the firm. 57 TR referred to this as a “feeling out period,” during whichhe would do a minimal amount of business with the new broker. If TR was pleased with theallocations he received, he increased the amount of business he did with the broker. 58If a broker proved he had good access to IPOs, TR’s next step was to attempt to increasethe size of his allocations. TR did so by doing more volume and by increasing the cents-per-52 RX 121 at 6446.53 Id.54 RX 121 at 6442.55 Id.56 Id.57 RX 121 at 6495-96.58 RX 121 at 6496.16