An irreverent Wall Street Blog
by Bill Singer
by Bill Singer
Stockbroker Failed To Timely Disclose Attempted Child Rape Felony Charge
July 23, 2014
This one ain't pretty and there's sure as hell nothing here to laugh about. In 2012, a stockbroker finds himself charged with felony child molestation and felony attempted rape of a child. Eventually, he pleads to three misdemeanors of communication with a minor for immoral purposes. How does all of that impact his Wall Street career? Read on.
Case In Point
For the purpose of proposing a settlement of rule violations alleged by the Financial Industry Regulatory Authority ("FINRA"), without admitting or denying the findings, prior to a regulatory hearing, and without an adjudication of any issue, Moses G. Torres submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA accepted. In the Matter of Moses G. Torres, Respondent (AWC 2013037723201, July 15, 2014).
Torres was first registered in 2009, and in February 2011 was associated with TIAA-CREF Individual & Institutional Services, LLC. The AWC asserts that he had no prior disciplinary history in the securities industry.
September 2012 Criminal History
According to online FINRA records as of July 23, 2014, on September 5, 2012, Torres was charged in the Superior Court of the State of Washington with two felony charges: Child Molestation and Attempted Rape of a Child. On June 20, 2013, the felony charges were reduced to three misdemeanor counts of communication with a minor for immoral purposes, to which Torres pleaded guilty.
The FINRA records assert that he was incarcerated from June 20, 2013 to July 3, 2013 and fined $17,000.
The AWC asserts that in June 2013, Torres requested paid time off to care for his wife, when he was in fact using the time to serve his jail sentence.
By The Book
FINRA By-Laws Article V, Section 2(c): applications for registration must be kept current at all times and amendments must be filed within 30 days of learning facts or circumstances giving rise to the amendment.FINRA Rule 1122: prohibits associated persons from filing information that is incomplete or inaccurate or failing to amend an incomplete or inaccurate filing after receiving notice of the need for the amendment.The Uniform Application for Securities Industry Registration or Transfer ('Form U4") Questions 14A(1) and 14B(1) : require registered representatives to disclose any conviction or charge of a felony or of certain specified misdemeanors (among which are the wrongful taking of property).FINRA Rule 2010: registered representatives shall observe high standards of commercial honor and just and equitable principles of trade.
Failure To Report
On July 23, 2013, TIAA-CREF filed a Uniform Termination Notice for Securities Industry Registration (''Form U5") reporting that it terminated Torres's employment on June 25, 2013, because he "did not report criminal proceedings for which he was charged, convicted, sentenced and, from June-July 2013, jailed."
SIDE BAR: On December 27, 2012, Torres completed and signed a Compliance Policies and Procedures Acknowledgment Form, acknowledging that he would notify the firm immediately about any issue that would require an amendment to his Form U4. Torres failed to disclose his September 2012 felony charges to TIAA-CREF, and failed to amend his Form U4 to reflect the felony charges. Torres also failed to disclose his June 2013 guilty plea and misdemeanor conviction to the firm.
FINRA Follows Up
In a written response to FINRA, Torres stated that he should have disclosed the criminal proceeding but failed to do so because he feared losing his job. FINRA apparently concluded that Torres was fully aware of the charges, and his obligation to report such information, and, accordingly, the AWC characterized his failure to disclose his felony charges as "willful."
In accordance with the terms of the AWC, FINRA found that Torres willfully violated Article V, Section 2(c) of FINRA's By-Laws and FINRA Rules 1122 and 2010 and the self-regulatory organization imposed a $5,000 fine and a six-month suspension from association with any member of FINRA in any capacity.
Willfully
As set forth in the AWC, Torres acknowledged the impact of the "willful" finding:
I understand that this settlement includes a finding that I willfully omitted to state a material fact on a Form U4, and that under Section 3(a)(39)(F) of the Securities Exchange Act of 1934 and Article III, Section 4 of FINRA's By-Laws, this omission makes me subject to a statutory disqualification with respect to association with a member.
For further discussions of the impact of willful non-disclosure and various issues pertaining to felony histories, visit the BrokeAndBroker.com FELONY PAGE.