FINRA

FINRA RULES 2010, 8210, NASD RULES 2110, 2370, 3030: DUARTE OBTAINED A $50,000 LOAN FROM A CUSTOMER, WHICH WAS PROHIBITED BY HIS MEMBER FIRM'S POLICIES. THE PROMISSORY NOTE, WHICH MEMORIALIZED THE TERMS OF THE LOAN, REQUIRED DUARTE TO MAKE MONTHLY PAYMENTS FOR 12 MONTHS WITH A BALLOON PAYMENT OF $50,000. DUARTE MADE MOST OF THE MONTHLY PAYMENTS AND PAID $25,000 TO THE CUSTOMER. DUARTE PAID THE $25,000 SHORTLY AFTER HIS SUPERVISOR LEARNED OF THE LOAN AND TOLD DUARTE THAT THE CIRCUMSTANCES OF THE LOAN WOULD BE REVIEWED BY THE FIRM. DUARTE HAS NOT REPAID THE REMAINING BALANCE. DUARTE TOLD THE CUSTOMER HE NEEDED TO BORROW THE $50,000 TO SET UP A LINE OF CREDIT IN ORDER TO INVEST IN A BUSINESS OF PURCHASING DISTRESSED REAL ESTATE. AS AN ADDITIONAL INDUCEMENT TO THE CUSTOMER TO LOAN $50,000 TO DUARTE, HE PROVIDED THE CUSTOMER WITH A DOCUMENT STATING THAT SHE WOULD BE ENTITLED TO TWO PERCENT OF DUARTE'S PROFITS WITHIN THE LIMITED LIABILITY PARTNERSHIP THAT INTENDED TO PURCHASE DISTRESSES PROPERTIES. HOWEVER, DUARTE FAILED TO DISCLOSE AND OBTAIN PRIOR WRITTEN APPROVAL FROM HIS FIRM FOR THE OUTSIDE BUSINESS ACTIVITY. MOREOVER, DUARTE MISSTATED TO HIS FIRM THAT HE WAS NOT ENGAGED IN OUTSIDE BUSINESS ACTIVITIES. DUARTE'S FIRM REQUIRED ALL REGISTERED REPRESENTATIVES TO CERTIFY ON AN ANNUAL BASIS THAT THEY HAD REVIEWED AND WERE FAMILIAR WITH THE FIRM'S COMPLIANCE MANUAL AND WOULD ABIDE BY ITS TERMS. DUARTE ATTESTED THAT HE HAD REVIEWED THE FIRM'S COMPLIANCE MANUAL, THAT HE WOULD ABIDE BY ITS TERMS, THAT HE HAD DISCLOSED ALL RELEVANT INFORMATION, AND THAT HE DID NOT HAVE ANY OUTSIDE BUSINESS ACTIVITY. AT THAT TIME, HE HAD ALREADY OBTAINED THE LOAN FROM THE CUSTOMER AND WAS ENGAGED IN UNDISCLOSED BUSINESS ACTIVITIES. IN ADDITION, DUARTE FAILED TO RESPOND IN A TIMELY MANNER TO NUMEROUS WRITTEN FINRA REQUESTS FOR INFORMATION AND TESTIMONY. IN THE ALTERNATIVE, IF THERE WAS NO OUTSIDE BUSINESS ACTIVITY OR INTENTION TO ESTABLISH ONE, THEN DUARTE MISLED THE CUSTOMER AND THEREBY FAILED TO OBSERVE HIGH STANDARDS OF COMMERCIAL HONOR AND JUST AND EQUITABLE PRINCIPLES OF TRADE IN VIOLATION OF NASD RULE 2110.

Decision

Bar (Permanent)

All Capacities

Indefinite

9/6/2011

Restitution

$25,000.00

DEFAULT DECISION RENDERED AUGUST 9, 2011 WHEREIN DUARTE IS BARRED FROM ASSOCIATION WITH ANY FINRA MEMBER IN ANY CAPACITY FOR FAILING TO COMPLY IN A TIMELY MANNER WITH FINRA REQUESTS FOR INFORMATION AND TESTIMONY, IN VIOLATION OF FINRA RULES 8210 AND 2010. IN LIGHT OF THE BAR, SANCTIONS ARE NOT IMPOSED FOR: (1) BORROWING FROM A CUSTOMER, IN VIOLATION OF NASD RULES 2370 AND 2110; (2) ENGAGING IN AN UNAPPROVED OUTSIDE BUSINESS ACTIVITY, IN VIOLATION OF NASD RULES 3030 AND 2110; AND (3) MAKING MISREPRESENTATIONS TO HIS MEMBER FIRM IN VIOLATION OF NASD RULE 2110. IN ADDITION, DUARTE IS ORDERED TO PAY RESTITUTION TO A CUSTOMER IN THE AMOUNT OF $25,000, TOGETHER WITH INTEREST ON THE UNPAID BALANCE, CALCULATED AT THE RATE ESTABLISHED UNDER SECTION 6621(A)(2) OF THE INTERNAL REVENUE CODE, UNTIL PAID IN FULL. DECISION IS FINAL SEPTEMBER 6, 2011.

FINRA

RESPONDENT FAILED TO COMPLY WITH AN ARBITRATION AWARD OR SETTLEMENT AGREEMENT OR TO SATISFACTORILY RESPOND TO A FINRA REQUEST TO PROVIDE INFORMATION CONCERNING THE STATUS OF COMPLIANCE.

LETTER

Suspension

ALL CAPACITIES

N/A

11/4/2010

PURSUANT TO ARTICLE VI, SECTION 3 OF FINRA BY-LAWS, AND FINRA RULE 9554, RESPONDENT'S FINRA REGISTRATION IS SUSPENDED NOVEMBER 4, 2010 FOR FAILURE TO COMPLY WITH AN ARBITRATION AWARD OR SETTLEMENT AGREEMENT OR TO SATISFACTORILY RESPOND TO FINRA REQUESTS TO PROVIDE INFORMATION CONCERNING THE STATUS OF COMPLIANCE.

FINRA

RESPONDENT DONALD A. DUARTE FAILED TO RESPOND TO FINRA REQUEST FOR INFORMATION.

LETTER

Bar (Permanent)

All Capacities

Indefinite

9/20/2010

10/26/2010

PURSUANT TO FINRA RULE 9552(H) AND IN ACCORDANCE WITH THE INTENT TO SUSPEND AND NOTICE OF SUSPENSION LETTERS, DATED MARCH 17, 2010 AND APRIL 12, 2010 RESPECTIVELY, ON SEPTEMBER 20, 2010, DUARTE IS BARRED FROM ASSOCIATION WITH ANY FINRA MEMBER IN ANY CAPACITY. RESPONDENT FAILED TO REQUEST TERMINATION OF HIS SUSPENSION WITHIN SIX MONTHS OF THE DATE OF THE NOTICE OF INTENT TO SUSPEND, THEREFORE PURSUANT TO FINRA RULE 9552(H) HE IS AUTOMATICALLY BARRED FROM ASSOCIATION WITH ANY FINRA MEMBER IN ANY CAPACITY. BAR VACATED OCTOBER 26, 2010. THE BAR DURATION DATES (SEPTEMBER 20, 2010 - OCTOBER 26, 2010).