FINRA Securities Fraud and Mismanagement Arbitration Attorney, Russell L. Forkey, Esq.
Douglas Christopher Green (CRD #1713027, Registered Principal, Lighthouse Point, Florida, formerly licensed with Crocker Securities, LLC.) was barred from association with any FINRA member in any capacity. The sanction was based on findings that Green affected trades in collateralized mortgage obligation (CMO) bonds in his member firm’s proprietary trading account to conceal inventory positions and create the false appearance of profitability through the use of fictitious and pre-arranged trades. The findings stated that in some cases, no contra-party had agreed to the transaction at the time Green submitted an order, and in other cases, Green had agreed to repurchase the security from the contra-party at an agreed-upon price that guaranteed a profit to the contra-party, causing the beneficial ownership to remain with Green. The findings also stated that Green devised a strategy that not only hedged and concealed the positions, but circumvented trading capital and inventory limits his firm set, and created the impression of profitable trading. The findings also included that Green did so by extending the settlement dates for certain bonds and coordinating fictitious transactions with other broker-dealers. FINRA found that Green received compensation based upon the overall profitability of the firm’s proprietary account, and because Green’s scheme created the appearance of profitability, he received compensation based upon the apparent profits; Green received $7,353,000, which resulted in an overstatement of the firm’s net capital and caused the firm to cease business. FINRA also found that Green caused the firm’s books and records to be inaccurate. In addition, FINRA determined that Green failed to respond to FINRA requests for documents and information, and to appear for on-the-record testimony. (FINRA Case #2008012444201).