The Following Disciplinary Actions were taken by FINRA in 2019 that included the use of texting:
Dennis Allen Hayes (CRD #4403550, Charlotte, North Carolina) March 22, 2019 – An Offer of Settlement was issued in which Hayes was barred from association with any FINRA member in all capacities. Without admitting or denying the allegations, Hayes consented to the sanction and to the entry of findings that he participated in private securities transactions without providing prior written or any other notification to his member firm. The findings stated that Hayes recommended that investors, most of whom were firm customers, invest a total of $2.7 million in five companies, and facilitated those investments. The investors suffered losses of at least 10 Disciplinary and Other FINRA Actions May 2019 $2.3 million, after one of the companies filed for bankruptcy and the other companies ceased operations. The findings also stated that Hayes used personal email addresses to correspond with customers about their firm accounts and communicated via text message with a firm customer about her account. Hayes did not provide these communications to the firm. Therefore, the firm failed to review or retain this securities-related correspondence as books and records, as required. The findings also included that Hayes failed to provide documents and information requested by FINRA related to customer complaints received regarding his handling of the customers’ investments. (FINRA Case #2016050883001)
Sam Aziz (CRD #1721932, 1932, Powell, Ohio) March 27, 2019 – An AWC was issued in which Aziz was barred from association with any FINRA member in all capacities. Without admitting or denying the findings, Aziz 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 his sales practices at his member firms. The findings stated that FINRA was investigating allegations of excessive trading and unsuitable recommendations involving the use of margin, whether Aziz attempted to settle a customer’s complaint away from his firm, and whether he used an undisclosed personal email account and text messages to conduct securities business, among other allegations.
Farrukh Shazad Kazmi (CRD #2855915, Moorestown, New Jersey) March 22, 2019 – An Offer of Settlement was issued in which Kazmi was fined $20,000, suspended from association with any FINRA member in all capacities for five months, and is required to disgorge a portion of the commissions he received, which is ordered to be paid in the amount of $10,350.71, plus interest. Without admitting or denying the allegations, Kazmi consented to the sanctions and to the entry of findings that he used unapproved communications methods to conduct securities business. The findings stated that after learning that Kazmi had been using instant messaging to communicate with a customer, Kazmi’s supervisor verbally informed him that his member firm’s procedures strictly prohibited its registered representatives from using instant messaging to conduct securities business. That same day, Kazmi confirmed in writing to his supervisor that he would no longer use instant messaging. Despite the firm’s admonition and his own explicit agreement to cease using instant messaging to communicate with customers, Kazmi continued to use instant messaging in conducting securities business. In addition, Kazmi regularly corresponded with firm customers via text messaging regarding securities activity in their accounts. Kazmi did not inform the firm that he used text messaging or instant messaging to conduct securities business, nor did he provide copies of these communications to the firm. In doing so, Kazmi prevented the firm from reviewing and retaining correspondence with the public and making and preserving books and records. The findings also stated that Kazmi exercised discretion over customer accounts without written authorization. Although Kazmi received the customers’ verbal authorization, he never sought or obtained written authorization from them to exercise discretion in any of their accounts at the firm, and the firm never approved any of these customer accounts as discretionary accounts. The findings also included that Kazmi made false statements to the firm regarding his use of instant messaging, and provided false answers to FINRA regarding his use of instant and text messaging and use of discretion. FINRA found that Kazmi sold initial equity public offerings to a restricted person. Kazmi received a total of $10,350.71 in commissions on the purchases and the subsequent sale transactions by the restricted person.
Raymond John Pirrello Jr. (CRD #2782019, Sparta, New Jersey) November 20, 2018 – An AWC was issued in which Pirrello was fined $20,000 and suspended from association with any FINRA member in all capacities for 18 months. Without admitting or denying the findings, Pirrello consented to the sanctions and to the entry of findings that he caused his member firm to fail to comply with its recordkeeping obligations by using text messaging and his personal email account to engage in businessrelated communications with a customer. The findings stated that these communications included a written complaint by a customer alleging that Pirrello failed to follow the customer’s instructions, which the customer alleged caused him to suffer approximately $300,000 in damages. Pirrello did not take steps to retain or provide his firm with any of the text messages or emails he exchanged with the customer, all of which were deleted. The findings also stated Pirrello provided misleading on-the-record testimony to FINRA stating that he did not send text messages to his customers, which Pirrello later corrected in subsequent testimony. The findings also stated that Pirrello willfully failed to disclose the above-referenced customer complaint on his Form U4. FINRA also found that Pirrello attempted to settle away two customer complaints and did not tell his firm about the complaints or his efforts to settle them. FINRA also found that Pirrello further hid his actions from his firm by signing compliance attestations falsely attesting that he used only firm-sanctioned electronic communication methods to communicate with firm customers, complied with his obligation to update his Form U4, reported all customer complaints to the firm, and that he had not settled away any customer complaints. The suspension is in effect from December 3, 2018, through June 2, 2020.