Today's article is the BrokeAndBroker.com Blog's final update of its coverage of the plight of Richard S. Botkin, a 15-year Marine Corps veteran and a registered representative since 1986. "Grassroots Movement To Revise FINRA Fine And Suspension Of Richard Botkin" (BrokeAndBroker.com Blog, July 25, 2017).
The 2017 Botkin AWC
As alleged by the Financial Industry Regulatory Authority, In the Matter of Richard S. Botkin, Respondent (FINRA AWC 2015045890001, June 30, 2017), Respondent Botkin had received authorization from his former employer Morgan Stanley to engage in an outside business activity ("OBA") involving his participation in a production company designed to create a documentary film. The AWC asserts that in January 2013, Botkin began selling shares in the production company. Among his share sales, which extended to August 2014, were $170,000 worth to four Morgan Stanley customers and another $75,000 worth of shares to two non-customers. Pointedly, the AWC asserts that:
Botkin participated in the customers' and non-customers' investments in the production company by advertising the production company to potential investors; communicating with investors about their investments; receiving investment checks from the investors and depositing them into the production company's bank account; sending subscription agreements and suitability questionnaires to each investor, who then mailed signed copies back to Botkin; and, as one of only two managing members, running the production company.
VETERAN MENTORING PROGRAMA former Marine Corps infantry officer (active service with 2nd Battalion, 7th Marines and 1st Reconnaissance Battalion), Richard Botkin served 15 years of combined active and reserve duty.Rich and his wife have been married for 32 years and they have two adult sons. He is also the author of the book "Ride the Thunder-A Vietnam War Story of Honor and Triumph." The book is currently on the Commandant's Reading List.Since 1998 Rich has been involved in annually leading short-term dental / medical missions to Cambodia where they work with Agape International Missions-an organization dedicated to ending the sexual trafficking of young children-and other in-country Christian missionaries to provide basic relief for the poor and hurting of that country.In addition to the notion of aiding those who have selflessly served our nation, Botkin subscribes completely to the Allegiant Battle-concept of not just giving assistance to our veterans, but helping them to become the successful, productive members-and business LEADERS-of society they were created to be. He refers to the old proverb: "Give a man a fish and you feed him for a day. TEACH a man to fish and you feed him for life." This idea and model-combining entrepreneurial opportunities with strategic mentoring-brought to the table by Mark Haney, is something which will not only resonate with the veterans we intend to serve, but also the larger American public which will support and bless these efforts.
Everything Americans know about the end of the Vietnam War is wrong, contends Richard Botkin, former Marine infantry officer and author of the groundbreaking book Ride the Thunder: A Vietnam War Story of Honor and Triumph.
Now the inspiration for a major motion picture of the same name Ride the Thunder reveals the heroic, untold story of how Vietnamese Marines and their US advisers fought valiantly, turning the tide of an unpopular war and actually winning while Americans 8,000 miles away were being fed only one version of the story.
Focusing on three Marine heroes Colonel John W. Ripley, USMC, Lieutenant Colonel Gerald Turley, USMC and Vietnamese Lieutenant Colonel Le Ba Binh Botkin tells the real history of the Vietnam War with the grainiest of detail he captured through scores of interviews and thousands of hours of tireless research in Vietnam, Cambodia and the US. Highly readable and thoroughly researched, Ride the Thunder profiles numerous American and Vietnamese warriors who sacrificed themselves and their families in the pursuit of freedom. Many paid the ultimate price in the effort to keep their country free of communism.
Reporters would fly into the combat base just long enough to film Marines being shelled and ducking for cover before flying out again to safe areas. Focusing only on dying US soldiers, the American media refused to cover the atrocities committed by the Communists against their own people. Despite these horrors and the fact that the South Vietnamese were fighting desperately for their fledgling democracy the 93rd Congress pulled the plug on all US support and funding.
Even though the American troops were winning on the ground, it was the media and politicians, not warriors, who decided the outcome of the war.
From: Hugh [redacted]
Sent: Thursday, July 06, 2017 4:19 PM
To: Stephen [redacted]
Subject: From Hugh Hewitt re Richard Botkin
Dear Mr. Kohn:
I read with interest the article in BrokeandBroker.com by Bill Singer concerning Mr. Botkin. I am a journalist and lawyer, currently host of a nationally syndicated radio talk show, host of an MSNBC weekly television show, Washington Post columnist and partner with the Los Angeles law firm of Larson O'Brien and the author of a dozen books on law, politics and religion. I am a graduate of Harvard College and the University of Michigan Law School, have been confirmed unanimously by the United States Senate to be Deputy Director of the US Office of Personnel Management, served as Assistant Counsel in the White House for President Reagan and as Special Assistant to two Attorneys General as well as having been appointed to two state wide boards in California and serving for 18 years on the Orange County Children and Families Commission. I tell you all this on the chance that it might incline you might take seriously what I have to tell you about Richard Botkin.
He is among the finest men I know. What FINRA did to him was a travesty. A genuine injustice and the consequences of every bad tendency of bureaucracy I have observed over four decades in public service, the law and media. If you spend 30 minutes on the matter you would agree. It shocks my conscience what the government did here and I am not easily shocked. But it's just regulators doing what regulators do: damaging lives while doing no discernible good for anyone and a great deal of harm to Richard's clients of which I am one as are all three of my children. I urge you to follow Bill's advice and investigate. The "investigators" on this matter should at a minimum be disciplined, not Mr. Botkin. Mr. Botkin did not ask me to write this nor do I know if he would approve of me doing so, but Mr. Singer suggested it might save some other innocent victim of this out of control staff down the road, so I write. I am happy to discuss with you at any time
UPDATE July 25, 2017Stephen A. KohnStephen A. Kohn & Associates, Ltd.
FROM: Stephen Kohn
TO: Bill Singer
I am contacting you regarding the BrokeAndBroker.com coverage of the FINRA regulatory settlement involving Richard Botkin, a 15 year U.S. Marine Corp. veteran who was released from Morgan Stanley for an alleged private securities transaction (PST) violation.
In my humble opinion, FINRA Rule 3280, Private Securities Transaction of an Associated Person, is like so many other industry rules that require having a "Law Degree" to really understand its true meaning and the full ramifications attendant to running afoul of it. As your coverage of Botkin's settlement suggests, he appears to have copped to FINRA's charge and entered into an AWC under some duress and without fully appreciating how sympathetic his case may have been if he had argued for sanctions less than a $15,000 fine and four-month suspension. Another "feather in the cap" for FINRA enforcement. I'm guessing that Mr. Botkin accepted a $15,000 fine coupled with a four month suspension rather than going bankrupt. The cost of contesting the charges and pursuing any appeals would have saddled Botkin with a huge legal expense.
Not believing everything I read, I reviewed Mr. Botkin's BrokerCheck, his AWC and read and re-read the BrokeAndBroker.com Blog as well as his "Team" listing on the Allegiant Giving website. In the interim, I was contacted by Hugh Hewitt by an unsolicited email, which I previously sent to you for your information. My personal research and communications only amplified my resolve to try to bring this travesty to the attention of top FINRA management. Being satisfied with whom Mr. Botkin is after only reading about him, I reached out to him to get his take on the issue. He is a sincere guy and quite humble, given his background and accomplishments. As a veteran industry reform advocate, I recognize that Botkin signed off on a settlement with FINRA in which he admitted to the findings of fact pertaining to his alleged violation of the PST rule. I will not argue that he was wrongly charged or did not engage in the violation. I will respect the AWC to that extent. I do not respect the sanctions imposed upon him because they strike me as draconian and excessive to the point of absurdity.
As a sitting member of the FINRA National Adjudicatory Council ("NAC") I have formally moved to have Mr. Botkin's AWC called for review by the full NAC.
On July 10, 2017, I called the Director of the Appellate Group, described the situation and requested putting Mr. Botkin's AWC on the calendar for review at the next meeting of the NAC.
On July 13, 2017, I made a formal request for review, emailing the Director of the Appellate Group, the Chief Legal Officer of FINRA and the President and CEO of FINRA. I have attached a copy of that email, with redactions of personal information, for your republication.
I quickly received a response from FINRA's Chief Executive Officer that my request will be discussed by the addressees of my email.
In the meantime, Mr. Botkin has entered his suspension window and I await word from FINRA about a full review of his AWC, fine and suspension. I am hopeful, but not optimistic that FINRA will suspend his suspension until his AWC is reviewed.
I will keep you apprised of the progress of this important issue. Please feel free to be in touch.
On Monday morning, July 10, 2017, you and I spoke of my concern about Richard Botkin, CRD #1571729, and the AWC to which he recently entered into.
I have been reviewing the circumstances of his "violation" and I find, as did "Enforcement" that he was, technically in violation of, I believe, FINRA 3280. (Private Securities Transactions of an Associated Person)
However, I do believe that there is reason to address the penalty meted out and accepted in Mr. Botkin's AWC and call for a review of same before the NAC.1. Richard Botkin has made the following OBA disclosures:a. Allegiant Giving. A non-profit geared towards assisting returning military members, members of the Board of Directors, assisting with the functioning of the organization. Disclosed 06/30/13.b. Ride the Thunder Productions. An LLC formed to promote a movie based on his book about the Vietnam War. Disclosed 11/10/12c. Author. Non-profit geared towards assisting returning military veterans. Member of the Board of Directors. Hoping to co-author a book about a friend and client that details his life story. Disclosed 06/01/102. Having read the AWC, I'm concerned that the fine and suspension imposed on Mr. Botkin is excessive and unwarranted and raises the following questions.a. Did Mr. Botkin knowingly and intentionally violate 3280?b. Did Mr. Botkin personally invest in this venture?c. Did Mr. Botkin personally benefit financially from this movie venture?d. Have any investors filed any claims or assertions about Mr. Botkin or their support of the production of this movie?
3. I attach an unsolicited email from Hugh Hewitt in support of Mr. Botkin's character.
[REDACTED] being fully aware of the financial and emotional stress inherent in appealing an Enforcement decision, I completely understand Mr. Botkin's entering into an AWC as the path of least resistance to being able to continue his humanitarian work and career path albeit with a four month hiccup.
I am asking for review because I feel the penalties are excessive and keeping with my continued, passionate assertion that the Sanction Guidelines are just that; GUIDELINES and not mandates. I feel the penalties meted out are draconian and considering that there has been no harm to anyone, we should look at them and make an adjustment; reduce his suspension to one month as opposed to three and earmark his "fine" to be a donation to Allegiant Giving to further support its work to combat child sex trafficking, globally. Additionally, this would be viewed as a benevolent gesture to support Mr. Botkin's missionary work, providing dental and medical services to the needy in Cambodia.
I appreciate your consideration.
StephenUPDATE: July 30, 2017
FROM: Stephen KohnAttachmentsTO: Bill SingerDear Bill:As you know, on July 13, 2017 I raised the Richard Botkin AWC, fine and suspension issue with FINRA, via email, addressed and cc'd to the top FINRA management.Attached, please find the response I received on July 26, 2017, which, in my estimation, totally misses the message I conveyed. I did not ask that the AWC that Mr. Botkin was bullied into be reviewed, since it is clear that he was in violation of FINRA Rule 3280.As a sitting member of the NAC, my request for review was directed at the severity of the fine and suspension that Mr. Botkin "accepted" and nothing more.As is pointed out in FINRA's response, "Mr. Botkin certifies that he has agreed to the provisions of the settlement voluntarily." What would have happed if Mr. Botkin had executed the AWC and beneath his signature wrote "Accepted Under Duress?" Would the Office of Disciplinary Affairs ("ODA") have approved the AWC? I think not.Mr. Botkin is a gentle soul and, most likely, would never have thought to question the language and form of the AWC.I asked FINRA several questions in my appeal to their sensibilities, and I quote the response:
"In your email, you asked several factual questions about the events described in the settlement, including what was Mr. Botkin's state of mind, and his personal activities. Although I have read the five pages of the settlement, I do not know the answers to these questions. FINRA's settlements ordinarily contain a brief summary of the facts related to the violation. Mr. Botkin's settlement follows this pattern, but leaves unanswered the questions you raise."
Of course the questions I raised were never addressed by "Enforcement." I think the reason is that they, very calculatingly, felt that including answers to these and any personal, mitigating narrative would have watered down their Bullying Tactics.Personal experience says that if you change anything in an AWC, even one word, the ODA will not accept it and insist on the original document's wording.I've said it before and I'll say it again, FINRA's tactics are given many names, called many different things, but it's all the same and won't ever change. Until they start dealing with the "members" the attrition rate will continue to rise and pretty soon, there will be no one left to regulate.So, it is with a sad hand that I let you know the result of our joint effort to give FINRA the opportunity to show the membership that they can have a heart, have some sense of humanity, has failed again.Don Quixote lives and the windmills multiply.Sincerely and with sorrow,StephenFrom: [REDACTED} @finra.org>Sent: Wednesday, July 26, 2017 1:57 PMTo: Stephen KohnCc: [REDACTED]Subject: RE: Richard S. Botkin - CRD #15711729Dear Stephen:I read with interest your email regarding the recent FINRA settlement involving Richard Botkin. I have reviewed the settlement between FINRA's Department of Enforcement and Mr. Botkin, the Letter of Acceptance, Wavier, and Consent, accepted by FINRA on June 30, 2017.You explained that-based on your review of the settlement-the conduct involved is a violation of FINRA's rule prohibiting private securities transactions, which was NASD Rule 3040 until September 2015, and is now FINRA Rule 3280. Your concern is with the sanction agreed to, which you strongly believe is excessive in this case.You asked if the NAC could call this settlement for review. Here are the terms of the settlement and FINRA rules that are relevant to this question. On page 5 of the Letter of Acceptance, Waiver, and Consent, Mr. Botkin certifies that he has agreed to the provisions of the settlement voluntarily. The settlement also shows that Mr.Botkin was represented by an attorney, who also reviewed and signed the settlement. The settlement contains a waiver of Mr. Botkin's right to have a complaint issued that would set forth the allegations against him. Mr. Botkin waived the right to defend against those allegations at a hearing. And Mr. Botkin also waived any appeal to the NAC. Instead, the settlement resolved the issues between the Department of Enforcement and Mr. Botkin and avoided litigation of the matter. Under the terms of the settlement, the two parties resolved this matter definitively. The settlement does not provide for further review of its terms by the NAC.Moreover, the waivers in the settlement are consistent with FINRA's rule regarding settlements. When an associated person, such as Mr. Botkin, accepts the same terms that FINRA has agreed to in a Letter of Acceptance, Wavier, and Consent, the settlement becomes "final" and serves as the final decision in the matter. See FINRA Rule 9216(a)(4). This settlement, like most, was accepted by the Office of Disciplinary Affairs, which makes the settlement final. See FINRA Rule 9216(a)(3). Although the NAC has the authority to call for review a Hearing Panel decision that is not final, it does not have the ability to call for review a settlement that has been accepted by the Office of Disciplinary Affairs and is final. See FINRA Rule 9312(a) (ability of NAC or the NAC's Review Subcommittee to call for review a Hearing Panel disciplinary decision within 45 days of it being issued).In your email, you asked several factual questions about the events described in the settlement, including what was Mr. Botkin's state of mind, and his personal activities. Although I have read the five pages of the settlement, I do not know the answers to these questions. FINRA's settlements ordinarily contain a brief summary of the facts related to the violation. Mr. Botkin's settlement follows this pattern, but leavesunanswered the questions you raise.Nevertheless, you have reached out to me as your point of contact and I will relay to FINRA Enforcement the concerns raised in your email. I appreciate your interest in FINRA's disciplinary process and look forward to seeing you at the next NAC meeting.