Florida Office of Financial Regulation

N/A

Order

Bar (Permanent)

All Capacities, etc.

Scott Mason is permanently barred from the following activity subject to Chapter 517: I. Engaging as a dealer, associated person or issuer in the offer or sale of any security, II. Acting as an affiliate as defined by Section 517.021(1) F.S. of any dealer or issuer offering or selling any security, III. Providing investment advisory services from offices in Florida or to person residing in Florida, IV. Acting as an affiliate of any person who provides investment advisory services, V. Submitting an application or notification for a license or registration with the Office, VI. Engaging in any activity that would require disclosure of Scott Mason's name, status or function in any application for registration,

FINRA

RESPONDENT MASON FAILED TO RESPOND TO FINRA REQUEST FOR INFORMATION.

LETTER

Bar (Permanent)

All Capacities

Indefinite

8/20/2012

PURSUANT TO FINRA RULE 9552 AND IN ACCORDANCE WITH FINRA'S NOTICE OF SUSPENSION LETTER DATED MAY 17, 2012 AND THE SUSPENSION FROM ASSOCIATION LETTER DATED JUNE 11, 2012, RESPECTIVELY, ON AUGUST 20, 2012, MASON IS BARRED FROM ASSOCIATION WITH ANY FINRA MEMBER IN ANY CAPACITY. RESPONDENT FAILED TO REQUEST TERMINATION OF HIS SUSPENSION WITHIN THREE MONTHS OF THE DATE OF THE NOTICE TO SUSPENSION, THEREFORE, HE IS AUTOMATICALLY BARRED FROM ASSOCIATION WITH ANY FINRA MEMBER IN ANY CAPACITY.

FINRA

FINRA RULE 2010, NASD RULES 1031, 2110, 3040, 3050: MASON PARTICIPATED IN THE SALE OF SECURITIES, LIMITED PARTNERSHIP UNITS, WITHOUT THE WRITTEN APPROVAL OF HIS MEMBER FIRM. WHILE REGISTERED WITH HIS MEMBER FIRM, MASON ESTABLISH A HEDGE FUND, A LIMITED PARTNERSHIP, TO POOL FUNDS OF ITS INVESTORS FOR THE PURPOSE OF INVESTING AND TRADING IN A VARIETY OF SECURITIES AND FINANCIAL INSTRUMENTS. MASON PARTICIPATED IN THE SALE OF THE HEDGE FUND'S LIMITED PARTNERSHIP UNITS TO INVESTORS, TWO OF WHICH WERE CUSTOMERS OF HIS MEMBER FIRM; RAISING IN TOTAL OVER $1.0 MILLION THROUGH THE SALE OF THE LIMITED PARTNERSHIP UNITS OUTSIDE THE SCOPE OF HIS BUSINESS WITH HIS FIRM. MASON WAS THE MANAGING MEMBER OF THE GENERAL PARTNER OF THE HEDGE FUND AND WAS DUE A MANAGEMENT FEE FOR MANAGING THE HEDGE FUND'S INVESTMENTS; AS SUCH HE RECEIVED "SELLING COMPENSATION" AS THAT TERM IS DEFINED IN NASD RULE 3040(E)(2). MASON PROVIDED NOTICE OF HIS INTENT TO SELL THE HEDGE FUND'S UNITS TO HIS FIRM; HOWEVER THE FIRM DID NOT PROVIDE WRITTEN APPROVAL TO ENGAGE IN SUCH SALES. INSTEAD THE FIRM ADVISED MASON THROUGH A SERIES OF EMAILS THAT VARIOUS CHANGES NEEDED TO BE MADE TO THE HEDGE FUND PRIVATE PLACEMENT MEMORANDUM, AND FURTHER ADVISED MASON THAT HE NEEDED TO TAKE THE SERIES 62 EXAM (CORPORATE SECURITIES REPRESENTATIVES), SO THAT HE WAS PROPERLY REGISTERED TO SELL THE LIMITED PARTNERSHIP UNITS. MASON SOLD THE HEDGE FUND'S LIMITED PARTNERSHIP UNITS WITHOUT THE APPROVAL OF HIS FIRM AND FAILED TO ADVISE HIS FIRM THAT HE HAD PARTICIPATED IN THE SALE OF THE LIMITED PARTNERSHIP UNITS. MASON COMPLETED ANNUAL CERTIFICATIONS WHICH HE PROVIDED TO HIS FIRM; MASON FAILED TO DISCLOSE HIS PARTICIPATION IN THE SALE OF THE HEDGE FUND'S LIMITED PARTNERSHIP UNITS ON THESE CERTIFICATIONS AND FAILED TO DISCLOSE HIS CONTINUING INVOLVEMENT WITH THE HEDGE FUND ON ANOTHER CERTIFICATION. MASON SOLD THE HEDGE FUND'S LIMITED PARTNERSHIP UNITS TO INVESTORS DURING A SEVEN-MONTH PERIOD WHILE HE WAS REGISTERED ONLY AS AN INVESTMENT COMPANY AND VARIABLE CONTRACTS PRODUCTS REPRESENTATIVE AND PRINCIPAL; MASON WAS NOT REGISTERED WITH FINRA IN A CAPACITY THAT PERMITTED HIM TO SELL THE HEDGE FUND'S LIMITED PARTNERSHIP UNITS WHEN HE SOLD UNITS TO INVESTORS. AFTER MASON HAD RAISED CAPITAL FOR THE HEDGE FUND, HE OPENED SECURITIES ACCOUNTS FOR THE HEDGE FUND WITH TWO OTHER FINRA MEMBER FIRMS; MASON EXERCISED DISCRETIONARY AUTHORITY OVER BOTH ACCOUNTS AND MASON DID NOT ADVISE THE FINRA MEMBER WITH WHOM HE OPENED ONE ACCOUNT THAT HE WAS ASSOCIATED WITH HIS FIRM AND HE DID NOT ADVISE HIS FIRM THAT HE HAD OPENED A SECURITIES ACCOUNT FOR THE HEDGE FUND WITH ANOTHER FINRA MEMBER FIRM. MASON TRADED ON BEHALF OF THE HEDGE FUND IN THE ACCOUNT HE OPENED WITH THE FIRST FINRA MEMBER FIRM; MASON DID NOT DIRECT THAT DUPLICATE CONFIRMATIONS AND ACCOUNT STATEMENTS FOR THE HEDGE FUND ACCOUNT BE FORWARDED TO HIS FIRM. MASON FALSELY INDICATED TO THE SECOND FINRA MEMBER FIRM WITH WHOM THE SECOND WAS OPENED, THAT HE WAS NOT AFFILIATED WITH A BROKER-DEALER WHEN HE OPENED THE SECOND ACCOUNT FOR THE HEDGE FUND. CONSEQUENTLY, MASON DID NOT ADVISE THE SECOND FINRA MEMBER WITH WHOM HE OPENED AN ACCOUNT THAT HE WAS ASSOCIATED WITH HIS FIRM, AND DID NOT REQUEST THAT DUPLICATE CONFIRMATIONS AND ACCOUNT STATEMENTS BE SENT TO HIS FIRM. MASON DID NOT ADVISE HIS FIRM THAT HE HAD OPENED A SECOND ACCOUNT FOR THE HEDGE FUND WITH ANOTHER MEMBER FIRM. MASON TRADED IN THE HEDGE FUND'S ACCOUNT. MASON'S FIRM WAS UNAWARE OF THE TRADING BY HIM ON BEHALF OF THE HEDGE FUND IN EITHER OF THE ACCOUNTS MAINTAINED FOR THE HEDGE FUND AT THE OTHER TWO FINRA MEMBER FIRMS.

Decision & Order of Offer of Settlement

Requalification

Suspension

ANY CAPACITY

18 MONTHS

2/21/2012

8/20/2013

WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, MASON CONSENTED TO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS; THEREFORE, HE IS SUSPENDED FROM ASSOCIATION WITH ANY FINRA MEMBER IN ANY CAPACITY FOR 18 MONTHS AND REQUIRED TO REQUALIFY BY EXAM PRIOR TO ASSOCIATING WITH ANY FINRA MEMBER IN ANY CAPACITY AFTER THE SUSPENSION. IN LIGHT OF MASON'S FINANCIAL STATUS, NO MONETARY SANCTIONS WERE IMPOSED. THE SUSPENSION IS IN EFFECT FROM FEBRUARY 21, 2012 THROUGH AUGUST 20, 2013.

CLAIMENT ASSERTED THE FOLLOWING CAUSES OF ACTION: EXCESS COMMISSIONS, LAON, AND FEES OWED.

$15,467.61

$15,467.61