Initiated By
FINRA
Allegations
FINRA RULE 2010, NASD RULES 2110, 3040, 3050: AS PART OF AN INVESTMENT ANALYSIS AND FINANCIAL PLAN THAT WACKER PREPARED FOR HIS MEMBER FIRM'S CUSTOMER, WACKER RECOMMENDED, AMONG OTHER THINGS, THAT THE CUSTOMER OPEN AN OPTIONS-TRADING ACCOUNT AT AN ONLINE BROKER-DEALER THAT WAS NOT AFFILIATED WITH HIS FIRM. WACKER PROPOSED TO MANAGE THE ACCOUNT FOR A FEE OF $1,000 PER YEAR. THE CUSTOMER ACCEPTED THE PROPOSED ARRANGEMENT AND WACKER SUBSEQUENTLY PREPARED A CONSULTING SERVICES AGREEMENT (CSA) TO WHICH HIS FIRM AND THE CUSTOMER WERE PARTIES. ALTHOUGH THE CSA SET FORTH WACKERS $1,000 ANNUAL FEE, IT DID NOT REFERENCE ANY PARTICULAR OUTSIDE BROKERAGE ACCOUNTS OR ANY SECURITIES ACTIVITY THAT WOULD OCCUR AT A BROKER-DEALER OTHER THAN THE FIRM. AS THE FIRM REQUIRED, WACKER SIGNED THE CSA AS INVESTMENT ADVISOR REPRESENTATIVE (IAR) OF THE BROKER-DEALER. WACKER PROVIDED HIS SUPERVISOR WITH THE CSA AND ACCOUNT-OPENING DOCUMENTS FOR THE CUSTOMER'S OUTSIDE ACCOUNT. ALTHOUGH WACKER'S SUPERVISOR APPROVED THE CSA AND SOME CORRESPONDENCE FROM WACKER CONCERNING THE CUSTOMER'S OUTSIDE ACCOUNT, THE FIRM NEVER EXPLICITLY APPROVED WACKER'S INVOLVEMENT WITH THE CUSTOMER'S OUTSIDE BROKERAGE ACCOUNT. THE FIRM NEVER GAVE WACKER ANY WRITTEN APPROVAL FOR IT. THE CUSTOMER OPENED THE OUTSIDE BROKERAGE ACCOUNT AND EXECUTED A LIMITED TRADING AUTHORIZATION THAT GAVE WACKER DISCRETIONARY AUTHORITY TO CONDUCT TRANSACTIONS IN THE ACCOUNT. WACKER REGULARLY MADE TRADES ON THE CUSTOMER'S BEHALF IN THE OUTSIDE ACCOUNT AND RECEIVED A TOTAL OF $1,500 FROM THE CUSTOMER FOR MANAGING THE OUTSIDE ACCOUNT. WACKER VOLUNTARILY TERMINATED THE FEE LATER AND RECEIVED NO FURTHER COMPENSATION OR COMMISSION FOR MANAGING THE ACCOUNT. WACKER MADE INACCURATE STATEMENTS TO THE FIRM IN RESPONSE TO COMPLIANCE QUESTIONNAIRES THAT HE COMPLETED. WACKER DENIED RECEIVING COMPENSATION FROM PERSONS OR ENTITIES OTHER THAN THE FIRM, AND ALSO STATED THAT HE DELIVERED ALL TRANSACTION DOCUMENTS AND OTHER ITEMS REQUIRING APPROVAL TO HIS SUPERVISOR OR DESIGNATED PRINCIPAL AT THE FIRM, WHEN HE HAD NOT, HOWEVER, DELIVERED DOCUMENTS REGARDING ANY TRANSACTIONS IN THE CUSTOMER'S OUTSIDE ACCOUNT TO HIS SUPERVISOR OR DESIGNATED PRINCIPAL. THE CUSTOMER FILED A COMPLAINT WITH THE FIRM CONCERNING THE OPTIONS TRADING IN HIS OUTSIDE ACCOUNT AND THE FIRM INVESTIGATED AND RESOLVED THIS COMPLAINT WITHOUT WACKER'S INPUT OR PARTICIPATION, ALTHOUGH IT DID REQUIRE WACKER TO PAY THE CUSTOMER THE SETTLEMENT AMOUNT, AS WELL AS A $5,000 PENALTY TO THE FIRM. THE FIRM ALSO PLACED WACKER ON HEIGHTENED SUPERVISION PENDING RESOLUTION OF THIS MATTER. WACKER HAD AN INDIRECT FINANCIAL INTEREST IN SOME OUTSIDE BROKERAGE ACCOUNTS THAT WERE ESTABLISHED IN HIS WIFE'S NAME, ONE OF WHICH ENGAGED IN SECURITIES TRANSACTIONS. AT NO TIME DID WACKER NOTIFY HIS FIRM THAT EITHER OF THESE ACCOUNTS EXISTED.
Resolution
Acceptance, Waiver & Consent(AWC)
Sanctions
Civil and Administrative Penalty(ies)/Fine(s)
Amount
$13,500.00
Sanctions
Suspension
Registration Capacities Affected
ALL CAPACITIES
Duration
20 BUSINESS DAYS
Start Date
11/19/2012
End Date
12/17/2012
Regulator Statement
WITHOUT ADMITTING OR DENYING THE FINDINGS, WACKER CONSENTED TO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS; THEREFORE HE IS FINED $13,500 AND SUSPENDED FROM ASSOCIATION WITH ANY FINRA MEMBER IN ALL CAPACITIES FOR 20 BUSINESS DAYS. THE SUSPENSION IS IN EFFECT FROM NOVEMBER 19, 2012, THROUGH DECEMBER 17, 2012. FINE PAID IN FULL ON 10/26/2012
Broker Comment
WITHOUT ADMITTING OR DENYING THE FINDINGS, WACKER CONSENTED TO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS; THEREFORE HE IS FINED $13,500 AND SUSPENDED FROM ASSOCIATION WITH ANY FINRA MEMBER IN ALL CAPACITIES FOR 20 BUSINESS DAYS. THE SUSPENSION IS IN EFFECT FROM NOVEMBER 19, 2012, THROUGH DECEMBER 17, 2012. FINE PAID IN FULL ON 10/26/2012.