South Florida Arbitration & Litigation Lawyer Blog
Unregistered Investment Advisor and Broker/Dealer Fraud and Misrepresentation FINRA Arbitration and Litigation Attorney, Russell L. Forkey, Esq.
April, 2012:
Headwaters BD, LLC (CRD #117042, Denver, Colorado), Paul Edward Janson (CRD #4992234, Registered Principal, Avon, Connecticut), Roberta Ann Laraway (CRD #4845302, Registered Principal, Lone Tree, Colorado) and Philip Williams Seefried Jr. (CRD #1747086, Registered Principal, Denver Colorado) submitted an Offer of Settlement in which the firm was censured and fined $60,000, of which $40,000 was jointly and severally with Janson, Laraway and Seefried. Janson was also suspended from association with any FINRA member in a General Securities Principal (Series 24) capacity for one year. Laraway was also suspended from association with any FINRA member in an Operations Professional (Series 99) capacity for one year and Seefried was suspended from association with any FINRA member in any General Securities Principal (Series 24) capacity for one month.
Without admitting or denying the allegations, the firm, Janson, Laraway and Seefried consented to the described sanctions and to the entry of findings that the firm, acting through Laraway and Seefried, created false and misleading annual chief executive officer (CEO) certifications and that the firm, acting through Laraway and Janson, created false and misleading 3013 reports in response to FINRA’s request for the documents during a routine examination. The findings stated that the firm provided FINRA with two annual CEO certifications during the examination instead of the required four, but Laraway later emailed two CEO certifications to FINRA, which were backdated and had been provided to FINRA to cause FINRA staff to conclude that the firm was in compliance with the annual certification requirement. The findings also stated that the firm was unable to evidence that it conducted certain branch office inspections during the examination but later, Laraway emailed FINRA inspection reports that were prepared after the fact and backdated.
The findings also included that the firm, by failing to create branch office inspection reports at or about the time of the inspections, failed to retain the reports for much of the three year period for which NASD Rule 3010(c)(2) requires retention. FINRA found that the firm failed to prepare or provide Rule 3013/3130 reports and Rule 3012 reports to the CEO or anyone else in a senior position for four years. FINRA also found that the firm did not have distinct and clearly identifiable written supervisory control procedures; did not have procedures setting forth how the firm would review and supervise for the identification of producing managers, the supervision of producing manager accounts or detail how the firm would ensure that none of its managers were producing managers; did not have procedures addressing heightened supervision of producing managers’ activities; lacked procedures concerning how the firm would supervise the transmittal of customer funds and securities, customer changes of address, customer changes in investment objective, including confirmation, notification or follow-up that can be documented, or for ensuring that the firm did not engage in businesses to which the Rule 3012 provision applies; and procedures addressing CEO annual certifications in sufficient detail were deficient. In addition, FINRA determined that the firm had not conducted an anti-money laundering (AML) test since it became a member firm until FINRA filed a complaint, which was a period of almost 10 years.
Janson’s suspension is in effect from March 19, 2012, through March 18, 2013. Laraway’s suspension is in effect from March 19, 2012, through March 18, 2013. Seefried’s suspension will be in effect from March 25, 2013, through April 24, 2013. (FINRA Case #2010020941501)