Disciplinary Proceeding - finra

This Decision has been published by the NASD Office of Hearing Officers and should be cited asOHO Redacted Decision CAF030014.KL founded the Firm in 1974, and he has headed the Firm since then. 75 During the sixmonthperiod in issue, October 1, 1999, to March 31, 2000, KL was the Firm’s Chief ExecutiveOfficer; CK was the Chief Operating Officer; JB was the Chief Compliance Officer and ChiefFinancial Officer; and LS was the head trader and sales supervisor. 76Commission business was a minor portion of the Firm’s revenue. The Firm earned mostof its revenue from its investments. 77 During the relevant period, the Firm derived 11.8% of itsgross revenue from commissions. 78 The Firm did not stress commission business, and most of itsorder flow was unsolicited. 79 JB testified that commission business was relatively unimportant toKL, who, JB believed, looked to commission revenue merely to cover the Firm’s overhead. 80The Firm actively participated in new offerings. Thanks to a close relationship withCredit Suisse First Boston (“CSFB”) forged in the 1980s, the Firm often was brought into thesyndicate or selling group in offerings lead-managed or co-lead-managed by CSFB. 81 Most of the57 IPOs in which the Firm participated during the relevant period were such offerings. 82 TheFirm’s allocations ranged from a low of 400 shares to a high of 300,000 shares. 83 In one-third ofthese IPOs, the Firm received 10,000 shares or fewer. 84 In a given IPO, the Firm’s four sales75 JX 14 4 (Joint Stipulations); Ans. 1.76 JX 14 4 (Joint Stipulations); Tr. 1241, 1244, 1452, 1569.77 Tr. 1566–67.78 RX 350.79 Tr. 1570:2-3 (JB).80 Tr. 1568:11-14 (JB).81 See Compl. 12.82 JX 14 7–8, 54–55 (Joint Stipulations).83 See CX 7 (All Review Period IPOs).84 Id.; see also Tr. 620 (Ozag).20