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FINANCIAL SERVICES GROUP, INC
CASE OUTCOME: TRADING PRIVILEGES REVOKED
• IB REGISTRATION REVOKED
• CEASE AND DESIST ORDER
NFA ID:
0183300
Overview:
Release: 2919-88 May 2, 1988 CFTC Docket #88-1 Washington--The Commodity Futures Trading Commission today announced that it has accepted offers of settlement from all respondents in In the Matter of Financial Services Group, Inc., et al., CFTC Docket No. 88-1. The Commission accepted offers of settlement from Financial Services Group, Inc. (FSG), a New York corporation registered with the Commission as an introducing broker; Harry A. Tsantes, the president and owner of FSG; Harold Edward Seigel, a manager and account executive of FSG's Lauderhill, Florida office; Carlos Manuel Mormeneo, the branch manager of FSG's Lauderhill, Florida office; and Donald F. Murphy, an FSG account executive in FSG's Lauderhill, Florida office. The complaint alleged that FSG, Tsantes, Seigel, Mormeneo and Murphy fraudulently solicited members of the public to invest in exchange-traded commodity options, traded customer accounts without authorization and misrepresented the profit potential of options trading while omitting to adequately inform customers of the effect of FSG's commissions on profitability. The complaint also alleged that (1) FSG, Tsantes, Seigel, and Mormeneo failed to keep a record or journal of all commodity options transactions; (2) FSG, Tsantes, Seigel, Mormeneo and Murphy failed to inform each option customer of the strike price and the premium of options purchased; (3) FSG, Tsantes, Seigel and Mormeneo failed to establish the necessary procedures to ensure compliance with the Commission's regulations; (4) FSG, Tsantes, Seigel and Mormeneo failed to record the date and time, to the nearest minute, that orders were received and transmitted; and (5) FSG, Tsantes, Seigel and Mormeneo failed to supervise diligently the handling of commodity accounts. Without admitting or denying the allegations of the complaint, FSG, Tsantes, Seigel, Mormeneo and Murphy have agreed to Commission orders finding that they violated the Commodity Exchange Act and Commission regulations as charged. All of the respondents also agreed to cease and desist from all violations alleged and have agreed to pay civil penalties totaling $92,500. In addition,FSG, Tsantes, Seigel and Mormeneo have agreed to relinquish an additional $100,000 to pay claims of FSG customers, and any remaining amount will revert to the Commission as additional civil penalties. FSG also agreed to having its registration revoked as an introducing broker, never to seek registration with the Commission or the National Futures Association and a permanent trading prohibition. Tsantes' order also revokes his registration as an associated person, suspends his registration as a floor broker for a period of 45 days, orders him to pay a civil penalty of $10,000 and requires him to not apply for registration with the Commission or the NFA in any capacity, other than as a floor broker, for two years, and not to be an officer, director or shareholder of or be affiliated with or receive any compensation from any Commission registrant, other than in connection with his own floor brokerage business, for two years. The Commission orders regarding Seigel and Mormeneo also suspend Mormeneo's registration as an associated person for 60 days and Seigel's registration as an associated person for 45 days, and require each of them to pay a civil penalty of $37,500. In addition, Mormeneo's order precludes him from supervising associated persons for two years. Since the Commission has settled complaints with Seigel and Mormeneo, FSG International, Inc. (FSGI) an introducing broker, not named in the Commission's complaint, of which Seigel and Mormeneo are officers and principals, has agreed to, among other things, cease and desist from violating the Commodity Exchange Act and Commission regulations as alleged in the complaint, to disclose specific information to customers, to hire a full-time compliance officer and to determine the reasonableness of the risk of loss considering the net worth of customers. Finally, Murphy's order also suspends his registration as an associated person for four months and requires him to pay a $7,500 civil penalty.
Source: National Futures Association
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