Initiated By
FINRA
Allegations
SECTION 10(B) OF THE SECURITIES EXCHANGE ACT OF 1934, SEC RULE 10B-5, FINRA RULES 2010, 2020, 8210, NASD RULES 2110, 2330(A), 3040: PREMOCK FACILITATED PRIVATE SECURITIES TRANSACTIONS AWAY FROM HIS MEMBER FIRM, TOTALING AT LEAST $1,419,071. PREMOCK WAS PAID COMMISSIONS FROM THE SALES TOTALING $18,820. PREMOCK DID NOT PROVIDE WRITTEN NOTICE TO, OR OBTAIN APPROVAL FROM, HIS FIRM PRIOR TO FACILITATING ANY OF THE INVESTMENTS. PREMOCK KNOWINGLY, DIRECTLY AND INDIRECTLY, BY USE OF THE MEANS AND INSTRUMENTALITIES OF INTERSTATE COMMERCE, AND OF THE MAILS, AND OF THE FACILITIES OF NATIONAL SECURITIES EXCHANGES, IN CONNECTION WITH THE PURCHASE AND SALE OF SECURITIES, DID USE AND EMPLOY MANIPULATIVE AND DECEPTIVE DEVICES AND CONTRIVANCES BY (A) EMPLOYING DEVICES, SCHEMES AND ARTIFICES TO DEFRAUD; (B) MAKING UNTRUE STATEMENTS OF MATERIAL FACTS AND OMITTING TO STATE MATERIAL FACTS NECESSARY TO MAKE THE STATEMENTS MADE, IN THE LIGHT OF THE CIRCUMSTANCES UNDER WHICH THEY WERE MADE, NOT MISLEADING; AND (C) ENGAGING IN ACTS, PRACTICES AND COURSES OF BUSINESS WHICH OPERATED AND WOULD OPERATE AS A FRAUD AND DECEIT UPON PERSONS. AMONG OTHER THINGS, PREMOCK MADE A SERIES OF MATERIAL MISREPRESENTATIONS AND OMISSIONS OF FACT, INCLUDING: PROMISING A MONTHLY MINIMUM RATE OF RETURN IN THE RANGE OF 7% TO 9% PER ANNUM; CLAIMING THAT THE INVESTORS' PRINCIPAL WAS "SAFE" AND WOULD BE REPAID IN ITS ENTIRETY AFTER A PERIOD RANGING FROM 9 MONTHS TO 12 MONTHS; AND REPRESENTING THAT INVESTOR FUNDS WOULD BE POOLED AND INVESTED IN A FUND FOR THE PURPOSE OF EXECUTING A UNIQUE TRADING STRATEGY THAT WOULD PROTECT INVESTOR PRINCIPAL BY EMPLOYING A HEDGING STRATEGY USING REVERSIBLE CONVERTIBLE NOTES (RCNS). WHILE PREMOCK OPENED TRADING ACCOUNTS IN THE NAME OF THE FUND AND CONDUCTED SECURITIES, FUTURES AND OPTIONS TRADING WITH THE FUND'S INVESTOR MONEY, INVESTORS WERE NOT PAID A MONTHLY RATE OF RETURN, CERTAIN INVESTORS DID NOT RECEIVE THEIR PRINCIPAL AT MATURITY, PREMOCK DID NOT PURCHASE RCNS, AND HE USED SOME OF THE INVESTMENT FUNDS FOR HIS PERSONAL BENEFIT. IN ADDITION, PREMOCK PREPARED AND ISSUED MONTHLY AND QUARTERLY FUND STATEMENTS THAT SHOWED INFLATED ACCOUNT VALUES. FOR EXAMPLE, THE STATEMENTS UNIFORMLY SHOWED STEADY ACCOUNT APPRECIATION BASED ON THE ACCRUAL OF FICTITIOUS MONTHLY INTEREST AND CASH BONUSES. ON FEBRUARY 4, 2009, FEBRUARY 14, 2009, AND FEBRUARY 24, 2009, PREMOCK RECEIVED $9,000, $3,000, AND $20,000 (TOTAL OF $32,000) FROM THREE INVESTORS FOR INVESTMENTS IN THE FUND. PREMOCK DEPOSITED THESE FUNDS IN THE BUSINESS CHECKING ACCOUNT OF A NON-FUND ENTITY. THE BALANCE OF THAT ACCOUNT WAS $2.55 ON JANUARY 27, 2009. OVER THE COURSE OF FEBRUARY, NONE OF THE $32,000 FROM INVESTORS WAS TRANSFERRED TO ANY ACCOUNT BELONGING TO THE FUND. INSTEAD, PREMOCK MADE SEVERAL CASH WITHDRAWALS, PURCHASED SEVERAL PERSONAL ITEMS, TRANSFERRED FUNDS TO ONE FAMILY MEMBER, AND TRANSFERRED FUNDS TO HIS PERSONAL TRADING ACCOUNT. ON OCTOBER 4, 2010, PREMOCK RECEIVED $20,000 FROM ONE INVESTOR FOR AN INVESTMENT IN THE FUND. PREMOCK DEPOSITED THIS MONEY IN THE CHECKING ACCOUNT OF THE FUND. THE BALANCE OF THAT ACCOUNT ON OCTOBER 1, 2010 WAS $1,636.15. ON OCTOBER 12, 2010, PREMOCK TRANSFERRED $59,382.50 FROM ONE OF THE TRADING ACCOUNTS OF THE FUND TO THE FUND'S CHECKING ACCOUNT. THAT SAME DAY, A $79,422.45 TRANSFER WAS MADE FROM THE FUND'S CHECKING ACCOUNT TO PREMOCK'S BUSINESS PARTNER. THE BALANCE OF THE CHECKING ACCOUNT WAS $39.95 ON OCTOBER 31, 2010, AND THE ACCOUNT WAS CLOSED SOON THEREAFTER. THE INVESTORS WERE UNAWARE OF THESE USES OF THEIR MONEY AND DID NOT AUTHORIZE OR CONSENT TO SUCH USES. PREMOCK FAILED TO FULLY RESPOND TO FINRA REQUESTS FOR INFORMATION AND DOCUMENTS. PREMOCK STATED THAT HE WAS UNWILLING TO PROVIDE A RESPONSE TO ALL OF THE REQUESTED ITEMS AND THAT HE INTENDED NOT TO COMPLY ANY FURTHER.
Resolution
Acceptance, Waiver & Consent(AWC)
Bar
Bar (Permanent)
Registration Capacities Affected
All Capacities
Duration
Indefinite
Start Date
3/12/2012
Regulator Statement
WITHOUT ADMITTING OR DENYING THE FINDINGS, PREMOCK CONSENTED TO THE DESCRIBED SANCTION AND TO THE ENTRY OF FINDINGS; THEREFORE HE IS BARRED FROM ASSOCIATION WITH ANY FINRA MEMBER IN ANY CAPACITY.