NASD Notices to Members
1989 NASD LEXIS 57
June 1989
NASD DISCIPLINARY ACTIONS
Disciplinary Actions Reported for June
The National Association of Securities Dealers, Inc. (NASD), is taking
disciplinary actions against the following firms and individuals for violations
of the NASD Rules of Fair Practice and/or the rules of the Municipal Securities
Rulemaking Board. Unless otherwise indicated, suspensions began with the
opening of business on Monday, June 5, 1989.
<snip>
Porcari, Fearnow and Associates, Inc., Houston, Texas, Arthur J. Porcari
(General Securities Principal, Houston, Texas) and Michael T. Fearnow (General
Securities Principal, Houston, Texas), MS-459. On April 28, 1989, the Market
Surveillance Committee accepted an Offer of Settlement pursuant to which
Porcari, Fearnow and Associates, Inc., Arthur J. Porcari, and Michael T.
Fearnow were censured, fined $ 10,000, jointly and severally, and Porcari and
Fearnow were suspended from association with any NASD member in any capacity for
three (3) months.
Without admitting or denying the allegations, the Respondents consented to
the described sanctions and findings that they violated Article III, Section 1
of the Rules of Fair Practice. In early December 1985, they decided to purchase
securities of Petra Resources, Inc., ("PETR") and entered into an arrangement
with another member to acquire such securities on their behalf. Subsequently,
they came into possession of information which, in the Committee's view, was of
a material and nonpublic nature concerning the possible merger of PETR with
another company. Nevertheless, they did not cancel the pre-existing
arrangement with the member but continued to purchase shares from the member.
The firm also consented to findings that it violated Article III, Sections 1 and
27 of the Rules of Fair Practice in that it failed to adopt written procedures
that would have required the firm to cancel existing arrangements with another
member for the purchase of a security when the firm comes into possession of
material, nonpublic, information concerning that security.
In a separate action, the District Business Conduct Committee for District 6
accepted an Offer of Settlement submitted by Porcari, Fearnow and Associates,
Inc., Arthur J. Porcari, and Michael T. Fearnow, pursuant to which they were
fined $ 10,000, jointly and severally, and Arthur J. Porcari and Michael T.
Fearnow were suspended from association with any NASD member in any capacity for
three (3) months.
Without admitting or denying the allegations, the Respondents consented to
the sanctions imposed and findings that the firm, acting through Arthur J.
Porcari and Michael T. Fearnow, effected at least 25 corporate securities
transactions as principal with retail customers at prices that were not fair and
reasonable. In addition, the firm, acting through Arthur J.
Porcari, failed to accurately record the time of entry on order tickets
relating to 756 transactions executed by the firm, and failed to execute certain
customer orders to sell shares. Also, the firm, acting through Arthur J.
Porcari and Michael T. Fearnow, effected transactions in securities while
failing to maintain minimum required net capital.
The suspensions of Arthur J. Porcari and Michael T. Fearnow imposed in
both actions will run concurrently.
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