Barron Chase Securities (CRD #18969, Boca Raton, Florida), Robert Thomas
Kirk, Jr. (CRD #1204425, Registered Principal, Parkland, Florida), and Brian
Dean Fitzgerald (CRD #1259552, Registered Principal, Boca Raton, Florida)
submitted a Letter of Acceptance, Waiver, and Consent in which the firm was
expelled from NASD membership and Kirk was barred from association with any
NASD member in any capacity. Fitzgerald was fined $7,500, suspended from
association with any NASD member in any capacity for 30 days, and ordered to
requalify by exam for the Series 24 license before acting again in a principal
capacity. Without admitting or denying the allegations, the respondents consented
to the described sanctions and to the entry of findings that the firm acted as lead
managing underwriter for many initial public offerings (IPOs), that the firm and
Kirk failed to ensure that the prospectus for an IPO was not false and misleading,
and that they failed to amend the prospectus to reflect material changes in the
offering and the use of IPO proceeds.
The findings also stated that the firm, acting through Kirk, engaged in continuing
distributions of other IPOs while maintaining a market, bidding for, and
purchasing the stock and warrants prior to the completion of the distribution. The
firm transferred the IPO balances from the firm's syndicate account to its trading
account and continued the distribution of IPO securities while the firm maintained
a market in the securities and sold the securities to the firm's public customers at
prevailing higher aftermarket prices. The NASD found that Kirk failed to inform
the firm's brokers or customers that the firm had withheld IPO shares and
warrants, made the inventory transfers of the IPO securities, and sold the IPO
shares and warrants to the customers at inflated aftermarket prices. In addition,
the NASD found that Fitzgerald assisted in the firm's and Kirk's violations of
Regulation M by opening aftermarket trading in securities before their distribution
was completed and transferring the IPO securities from the firm's syndicate
account to its trading account without verifying that these distributions were
complete. Moreover, Fitzgerald assisted the firm's and Kirk's violation of the
Freeriding and Withholding Interpretation by failing to verify that the firm
maintained inventory balances in the IPO securities. Furthermore, the NASD
found that Kirk failed to respond to NASD requests to provide information and
documents and to appear to give testimony.
Fitzgerald's suspension began April 1, 2002, and will conclude at the close of
business April 30, 2002. (NASD Case #CAF020008) |
