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CHURCHILL GROUP, INC
CASE OUTCOME: EXPELLED FROM MEMBERSHIP
NFA ID:
0211644
Individuals Involved:
- DOROTHY KATHRYN ADESSO
- JAMES DAVID BROWNING
- JOHN FISCHER
- STEVEN FRIED
- WILLIAM PAUL GALINSKY
- MITCHELL STUART LIPTON
- KENNETH K MADSEN, JR
- DAVID SAMUEL MESSINGER
- BRUCE L RAWDIN
- STANLEY L RUBIN
- EDWARD JAY ZEFF
ON MAY 17, 1990, THE CENTRAL REGIONAL BUSINESS CONDUCT COMMITTEE ("CENTRAL COMMITTEE") ISSUED A COMPLAINT AGAINST CHURCHILL GROUP, INC. ("CHURCHILL"), STEVEN FRIED ("FRIED"), DAVID SAMUEL MESSINGER ("MESSINGER"), KENNETH K. MADSEN, JR. ("MADSEN"), EDWARD JAY ZEFF ("ZEFF"), DOROTHY KATHRYN ADESSO ("ADESSO"), JOHN FISCHER ("FISCHER"), JAMES DAVID BROWNING ("BROWNING"), STANLEY L. RUBIN ("RUBIN"), MITCHELL STUART LIPTON ("LIPTON") AND BRUCE L. RAWDIN ("RAWDIN"). THE COMPLAINT ALLEGES THAT CHURCHILL, FRIED, MESSINGER, MADSEN, ADESSO, BROWNING AND RUBIN VIOLATED NFA COMPLIANCE RULE 2-2(A) BY CHEATING, DEFRAUDING OR DECEIVING OR ATTEMPTING TO CHEAT, DEFRAUD OR DECEIVE COMMODITY FUTURES CUSTOMERS. THE COMPLAINT ALSO ALLEGES THAT CHURCHILL, RUBIN, RAWDIN, LIPTON, FISCHER, ADESSO, MADSEN, ZEFF AND BROWNING VIOLATED NFA COMPLIANCE RULES 2-2(A) AND 2-29(A)(1) BY DECEIVING COMMODITY FUTURES CUSTOMERS. THE COMPLAINT FURTHER ALLEGES THAT CHURCHILL, RUBIN, RAWDIN, LIPTON, FISCHER, ADESSO, MADSEN AND BROWNING VIOLATED NFA COMPLIANCE RULES 2-29(B)(1), 2-29(B)(2) AND 2-29(B)(3) BY USING A STANDARDIZED ORAL PRESENTATION WHICH IS LIKELY TO DECEIVE THE PUBLIC, WHICH CONTAINED MATERIAL MISSTATEMENTS OF FACT OR WHICH THEY KNEW OMITTED FACTS, THE OMISSION OF WHICH MADE THE PRESENTATION MISLEADING AND WHICH MENTIONED THE POSSIBILITY OF PROFIT WITHOUT MAKING AN EQUALLY PROMINENT STATEMENT OF THE RISK OF LOSS. THE COMPLAINT ALSO ALLEGES THAT CHURCHILL AND FISCHER VIOLATED NFA COMPLIANCE RULE 2-29(A)(2) BY USING A HIGH-PRESSURE APPROACH WHILE COMMUNICATING WITH THE PUBLIC. THE COMPLAINT ALLEGES THAT CHURCHILL, FRIED, MESSINGER, RUBIN, RAWDIN, LIPTON, FISCHER, ADESSO, MADSEN, ZEFF AND BROWNING VIOLATED NFA COMPLIANCE RULE 2-4 BY FAILING TO UPHOLD HIGH STANDARDS OF COMMERCIAL HONOR AND JUST AND EQUITABLE PRINCIPLES OF TRADE IN THE CONDUCT OF COMMODITY FUTURES BUSINESS. THE COMPLAINT ALLEGES THAT WILLIAM GALINSKY ("GALINSKY") WAS A CAUSE OF ALL THE ABOVE VIOLATIONS AS THEY RELATE TO THE SOLICITATION OF RUTH ZITOMER'S ("ZITOMER") CUSTOMER ACCOUNT. THE COMPLAINT FURTHER ALLEGES THAT CHURCHILL VIOLATED NFA BYLAW 301(B) BY ALLOWING A PERSON TO ACT AS AN ASSOCIATED PERSON WITHOUT PROPER REGISTRATION AND THAT GALINSKY IS ALLEGED TO BE A CAUSE OF THIS VIOLATION. THE COMPLAINT ALSO ALLEGES THAT CHURCHILL VIOLATED NFA COMPLIANCE RULE 2-29(B)(2) BY USING PROMOTIONAL MATERIAL WHICH CONTAINED MATERIAL MISSTATEMENTS OF FACT OR WHICH THEY KNEW OMITTED FACTS, THE OMISSION OF WHICH MADE THE PROMOTIONAL MATERIAL MISLEADING. THE COMPLAINT ALSO ALLEGES THAT CHURCHILL VIOLATED NFA COMPLIANCE RULE 2-9 BY FAILING TO DILIGENTLY SUPERVISE ITS EMPLOYEES AND AGENTS AND ALLEGES THAT FRIED, MESSINGER AND ZEFF ARE THE CAUSES OF THIS VIOLATION. FINALLY, THE COMPLAINT ALLEGES THAT ZEFF VIOLATED NFA COMPLIANCE RULE 2-5 BY FAILING TO COOPERATE IN AN NFA INVESTIGATION. Decision:
ON SEPTEMBER 5, 1990, THE CENTRAL COMMITTEE ISSUED A DECISION IN WHICH IT ACCEPTED CHURCHILL'S AND MESSINGER'S SETTLEMENT OFFER. THE DECISION EXPELS CHURCHILL FROM NFA MEMBERSHIP AND BARS MESSINGER FROM NFA MEMBERSHIP OR ASSOCIATE STATUS OR PRINCIPAL STATUS WITH ANY NFA MEMBER FOR A PERIOD OF FORTY-EIGHT MONTHS FROM THE DATE OF THE DECISION.
Source: National Futures Association
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