Initiated By
NASD
Allegations
NASD RULES 2110, 3040 - RESPONDENT PARTICIPATED IN PRIVATE SECURITIES TRANSACTIONS WITHOUT PROVIDING PRIOR WRITTEN NOTICE TO HIS MEMBER FIRM OF THE PROPOSED TRANSACTIONS AND HIS ROLE THEREIN.
Resolution
Acceptance, Waiver & Consent(AWC)
Sanctions
Civil and Administrative Penalty(ies)/Fine(s)
Sanctions
Suspension
Regulator Statement
WITHOUT ADMITTING OR DENYING THE FINDINGS, JAFFE CONSENTED TO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS, THEREFORE HE IS FINED $20,000 AND SUSPENDED FROM ASSOCIATION WITH ANY NASD MEMBER IN ANY CAPACITY FOR NINE MONTHS. THE SUSPENSION IN ANY CAPACITY WILL BE IN EFFECT FROM AUGUST 21, 2006, THROUGH MAY 20, 2007. FINES PAID.
Broker Comment
THE AWC WAS THE MOST COST EFFECTIVE MANNER TO RESOLVE THIS MATTER. LEGAL COUNSEL ADVISED THAT IT WOULD TAKE OVER $150,000 TO DEFEND THE POTENTIAL ALLEGATIONS SOUGHT, AS WELL AS THE TIME TO DEFEND SUCH ACTIONS. JAFFE FEELS THAT FSC WAS ADEQUATELY NOTIFIED OF ALL ACTIVITIES AND REQUESTED GUIDANCE ON HOW TO FULLY COMPLY WITH ALL RULES. FSC GAVE THEIR GUIDANCE ON HOW JAFFE SHOULD DISCLOSE TO FSC, WHICH JAFFE DID. NASD AGREED TO SOME EXTENT, STATING IN THE AWC THAT JAFFE'S DISCLOSURE WAS MADE TO FSC, BUT WAS INADEQUATE AND NOT IN WRITING. JAFFE CONTENDS THAT FSC FAILED TO OFFER JAFFE THE APPROPRIATE GUIDANCE IN WHICH TO FULLY DISCLOSE, WHICH HE HAD REQUESTED. IF THE PROPER GUIDANCE HAD BEEN GIVEN, THEN JAFFE WOULDN'T HAVE BEEN IN ANY VIOLATION. FURTHER, FSC DID NOT STEP UP TO THIS FACT IN THE INQUIRY, AN ACT THAT ONLY SERVED TO PROTECT THEMSELVES FROM ANY REGULATORY SANCTIONS.