FINRA

FINRA RULE 2010, 8210: WHILE ASSOCIATED WITH HIS MEMBER FIRM, NEWSOM CONVERTED MORE THAN $400,000 FROM SEVERAL BANK CUSTOMERS' ACCOUNTS AT THE FIRM'S AFFILIATE. IN EACH INSTANCE, NEWSOM CAUSED FUNDS TO BE WITHDRAWN BY HAVING CASHIER'S CHECKS DRAWN ON THEIR ACCOUNTS AND MADE PAYABLE TO HIS PERSONAL ACCOUNTS AT OTHER FINANCIAL INSTITUTIONS. NEWSOM WITHDREW THE FUNDS FROM THESE CUSTOMERS' ACCOUNTS, WITHOUT ANY KNOWLEDGE OR PERMISSION FROM THE CUSTOMERS, AND DEPOSITED THE FUNDS, BY CASHIER'S CHECKS, PRIMARILY INTO HIS PERSONAL ACCOUNTS AT A BANK, FOR ONE OF THE WITHDRAWALS, AND INTO HIS PERSONAL ACCOUNT AT A CREDIT UNION FOR THE OTHER WITHDRAWALS. NEWSOM ALSO CAUSED LETTERS TO BE SIGNED AND ISSUED ON BANK LETTERHEAD VERIFYING THAT A CERTAIN ENTITY HAD A PURPORTED $586 MILLION LINE OF CREDIT AT THE BANK FOR THE PURCHASE OF PETROLEUM PRODUCTS. IN FACT, NEWSOM HAD NO AUTHORITY TO ISSUE LETTERS AND THE ENTITY HAD NO LINE OF CREDIT. NEWSOM SIGNED EACH LETTER AS DAVID NEWSOM OR DAVID NEWSOM VICE PRESIDENT OF INVESTMENTS. IN FACT, NEWSOM WAS NOT EMPLOYED BY THE BANK AND HAD NO AUTHORITY TO ISSUE ANY CORRESPONDENCE ON THE BANK'S BEHALF. NEWSOM NEITHER SOUGHT NOR OBTAINED APPROVAL TO ISSUE THE CORRESPONDENCE. MOREOVER, THE LETTERS WERE MATERIALLY FALSE BECAUSE THE ENTITY DID NOT HAVE A $586 MILLION LINE OF CREDIT AT THE BANK. IT HAD NO BANK LINE OF CREDIT, WHATSOEVER. AFTER THE FIRM TERMINATED NEWSOM, FINRA SENT NEWSOM SEVERAL REQUESTS FOR INFORMATION AND DOCUMENTS. NEWSOM FAILED TO RESPOND TO FINRA REQUESTS FOR INFORMATION AND DOCUMENTS.

Decision & Order of Offer of Settlement

Bar (Permanent)

All Capacities

6/21/2012

WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, NEWSOM CONSENTED TO THE DESCRIBED SANCTION AND TO THE ENTRY OF FINDINGS; THEREFORE HE IS BARRED FROM ASSOCIATION WITH ANY FINRA MEMBER IN ANY CAPACITY FOR VIOLATING: (I) FINRA RULE 2010 BY CONVERTING MORE THAN $400,000 FROM FIVE CUSTOMERS' BANK ACCOUNTS; (II) FINRA RULE 2010 BY ISSUING UNAUTHORIZED AND MATERIALLY FALSE CORRESPONDENCE; AND (III) FINRA RULES 8210 AND 2010 BY FAILING TO RESPOND TO MULTIPLE FINRA REQUESTS FOR INFORMATION: NEWSOM CONVERTED MORE THAN $400,000 FROM THE ACCOUNTS OF SEVERAL BANK CUSTOMERS AT HIS MEMBER FIRM'S AFFILIATE. IN EACH INSTANCE, NEWSOM CAUSED FUNDS TO BE WITHDRAWN BY HAVING CASHIER'S CHECKS DRAWN ON THEIR ACCOUNTS AND MADE PAYABLE TO HIS PERSONAL ACCOUNTS AT OTHER FINANCIAL INSTITUTIONS. NEWSOM WITHDREW THE FUNDS FROM THESE CUSTOMERS' ACCOUNTS, WITHOUT ANY KNOWLEDGE OR PERMISSION FROM THE CUSTOMERS. NEWSOM SIGNED AND ISSUED SEVERAL LETTERS, ON BANK LETTERHEAD, TO VARIOUS ENTITIES. EACH LETTER CONFIRMED THAT AN ENTITY HAD A PURPORTED $586 MILLION LINE OF CREDIT AT THE BANK FOR THE PURCHASE OF PETROLEUM PRODUCTS. NEWSOM SIGNED EACH LETTER AS "DAVID NEWSOM" OR "DAVID NEWSOM/VICE PRESIDENT OF INVESTMENTS" WHEN HE WAS NOT EMPLOYED BY THE BANK AND DID NOT HAVE ANY AUTHORITY TO ISSUE ANY CORRESPONDENCE ON THE BANK'S BEHALF. NEWSOM NEITHER SOUGHT NOR OBTAINED APPROVAL TO ISSUE THE CORRESPONDENCE. THE LETTERS WERE MATERIALLY FALSE BECAUSE THE ENTITY DID NOT HAVE A BANK LINE OF CREDIT, WHATSOEVER. NEWSOM FAILED TO RESPOND TO FINRA REQUESTS FOR INFORMATION AND DOCUMENTS.