FINRA

Without admitting or denying the findings, Polakoff consented to the sanction and to the entry of findings that he refused to appear for on-the-record testimony requested by FINRA in connection with its investigation into certain municipal bond offerings.

Acceptance, Waiver & Consent(AWC)

Bar (Permanent)

All capacities

indefinite

9/27/2019

New Jersey Bureau of Securities

POLAKOFF IS THE SUBJECT OF AN ORDER ENTERED WITHIN THE PAST FIVE YEARS BY A STATE SECURITIES ADMINISTRATOR REVOKING HIS AGENT REGISTRATION.

Order

Revocation

The agent and investment adviser registrations of Victor Polakoff be REVOKED. Polakoff shall not reapply for registration with the Bureau in any capacity until February 28, 2019. Polakoff is permanently denied all exemptions contained in N.J.S.A. 49:3-50 subsections (a) paragraph 9, 10, and 11 and subsection (b). The exemptions to the registration requirements provided by N.J.S.A. 49:3-56(b), N.J.S.A. 49:3-56(c) and N.J.S.A. 49:3-56(g) are hereby permanently revoked as to Polakoff.

Applicant will vigorously challenge this action as it is believed to be without merit.

Connecticut

On October 20, 2016, the Banking Commissioner issued an Order to Cease and Desist, Order to Make Restitution, Notice of Intent to Suspend or Revoke Registrations as a Broker-dealer, an Investment Adviser and a Broker-dealer Agent and a Notice of Intent to Fine (Docket No. CRSRF-16-8108-S) against Cantone Research Inc. and its broker-dealer agent Victor Polakoff. The firm, which is registered as a broker-dealer and an investment adviser under the Connecticut Uniform Securities Act, maintains its principal office at 766 Shrewsbury Avenue, Suite E-401, Tinton Falls, New Jersey 07724. In addition to being an agent of the firm, respondent Polakoff was a control person of the firm as well as its Executive Vice President and Supervisor of the firm's main office. The action alleged that the firm and respondent Polakoff permitted one Robert Lawrence Gray, an individual barred from the securities industry, to direct trading in the account of a Connecticut investor at a time when there was no written firm record evidencing the investor's acquiescence to the arrangement. The action alleged that the respondents materially aided Gray's transacting business as an unregistered investment adviser, and that both respondents engaged in dishonest or unethical practices in the securities business. Ultimately, the investor lost approximately $200,000 due to trades directed by Gray and effected through Cantone Research Inc. and agent Polakoff. As a separate matter, the action alleged that 1) the respondents violated Section 36b-16 of the Act by selling unregistered shares of XenaCare Holdings, Inc.; 2) the firm failed to keep books and records that accurately characterized certain trades as solicited or unsolicited; 3) respondent Polakoff engaged in outside business activity with a client (the spouse of Robert Gray) without providing notice to the firm; and 4) the firm failed to enforce and maintain adequate supervisory procedures.

Consent

Cease and Desist

Civil and Administrative Penalty(ies)/Fine(s)

$20,000.00

The 8/28/2017 Consent Order acknowledged that respondent Polakoff filed to withdraw his Connecticut broker-dealer agent registration on August 25, 2017 and that Polakoff had represented that, upon effectiveness of the withdrawal, he would not reapply for registration as a broker-dealer agent for 18 months or engage in any activity that would require registration under the Act. The withdrawal became effective on August 28, 2017. The Consent Order also acknowledged that the respondents had paid $185,000 in restitution to the affected Connecticut investor. The Consent Order directed the respondents to cease and desist from regulatory violations and fined them $20,000, jointly and severally.

Activities in question date back to 2010. Respondents neither admit or deny the allegations. Paragraph 7. of the Consent Order provided that, as long as respondents complied with the Consent Order, "this Consent Order is not intended by the Commissioner to subject CRI or Polakoff to any disqualifications under the laws of the United States, any state, the District of Columbia, Puerto Rico, or the U.S. Virgin Islands, including, without limitation, any disqualification from relying upon state or federal registration exemptions or safe harbor provisions."

Unhappy with performance of investments and circumstances surrounding some of the Borrowers involved in certain private placements, including alleged misappropriation. Timeframe from 2008 to present

$2,500.00

$85,000.00

Customer's private placements sold to me for par/face value of $85,000. Customer suffered no loss on these investments. I deny all of the customer's allegations. Customer closed accounts and left on good terms.

THE CLAIMANTS ALLEGE FAILURE TO SUPERVISE, BREACH OF FIDUCIARY DUTY, NEGLIGENCE IN THE CRIMINAL ACTIVITIES OF MAXWELL SMITH AWAY FROM THE FIRM. OVER THE COURSE OF 18 YRS, SMITH WAS EMPLOYED BY RICKEL, SECURITIES, ATLANTIC GRP, PNC INVESTMENTS, JJB HILLIARD, WL LYONS AND IN HIS LAST FEW YRS, CANTONE RESEARCH. MAXWELL SMITH CONVERTED CUSTOMER FUNDS TO HIS OWN USE IN HIS PERSONAL MERRILL LYNCH ACCOUNT FOR 18 YRS FROM 1992 TO 2009 AT WHICH TIME OUR FIRM DISCOVERED HIS SCHEM..

$1,300,000.00

$800,000.00

[CUSTOMER] CASE 10-02923 WAS CONSOLIDATED INTO THIS ARBITRATION. CANTONE RESEARCH SETTLED FOR $300,000 PAYABLE IN 5 INSTALLMENTS OVER SEVERAL YEARS AND THE FIRM'S FIDELITY BOND DIRECTLY PAID OUT $500,000 TO THE CLAIMANT'S ATTORNEY ESCROW ACCOUNT. THESE TWO AMOUNTS TOTAL THE $800,000.

RESPONSIBLE FOR SUPERVISION OF ACCOUNT/BROKER AND RESPONSIBLE AS CONTROL PERSON FOR FIRM

$175,000.00

$93,000.00

I WAS NAMED AS SUPERVISOR