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FIRST SIERRA CORPORATION
CASE OUTCOME: PERMANENT WITHDRAWAL FROM NFA MEMBERSHIP
NFA ID:
0205421
Complaint:
ON MARCH 9, 1992, NFA'S WESTERN REGIONAL BUSINESS CONDUCT COMMITTEE ("WESTERN COMMITTEE") ISSUED AN ELEVEN COUNT COMPLAINT AGAINST FIRST SIERRA CORPORATION ("FSC"), DAVID BURT ("BURT"), MICHAEL HARRISON ("HARRISON"), GREGG HAVASS ("HAVASS"), CHARLES HOFFECKER ("HOFFECKER"), CHARLES MASTROPAOLO, SALVATORE MASTROPAOLO, STEVEN OSHINSKY ("OSHINSKY"), ANTONY PADRO ("PADRO"), HANNELORE PELISSIER ("PELISSIER"), DANNY STERK ("STERK"), AND JOHN A. FIELD, III ("FIELD"). THE COMPLAINT ALLEGES THAT BURT, STERK, PADRO, CHARLES MASTROPAOLO, HAVASS, HARRISON, AND PELISSIER MADE SALES SOLICITATIONS WHICH WERE FALSE AND DECEPTIVE, OPERATED AS FRAUD AND DECEIT, AND WERE UNBALANCED IN THEIR DISCUSSIONS OF PROFIT POTENTIAL AND RISK OF LOSS IN VIOLATION OF NFA COMPLIANCE RULES 2-2(a), 2-29(a)(1), AND 2-29(b)(1) AND (3). FSC IS ALSO CHARGED WITH THESE VIOLATIONS. THE COMPLAINT ALSO ALLEGES THAT SALVATORE MASTROPAOLO, HOFFECKER, AND OSHINSKY MADE SALES SOLICITATIONS WHICH WERE FALSE AND DECEPTIVE AND OPERATED AS FRAUD AND DECEIT IN VIOLATION OF NFA COMPLIANCE RULES 2-2(a) AND 2-29(a)(1). THE COMPLAINT ADDITIONALLY ALLEGES THAT BURT, STERK, PADRO, CHARLES MASTROPAOLO, HAVASS, AND PELISSIER USED HIGH PRESSURE SALES TACTICS IN VIOLATION OF NFA COMPLIANCE RULE 2-29(a)(2). FSC IS ALSO CHARGED WITH THIS VIOLATION. THE COMPLAINT FURTHER ALLEGES THAT PELISSIER INDUCED A CUSTOMER TO FALSIFY INFORMATION AND THAT FSC FAILED TO ESTABLISH ADEQUATE PROCEDURES TO SUPERVISE ASSOCIATED PERSONS ("AP") IN PROVIDING RISK DISCLOSURE. BY REASON OF THE FOREGOING ACTS AND OMISSIONS, FSC AND PELISSIER ARE CHARGED WITH VIOLATING NFA COMPLIANCE RULE 2-30(a) AND FSC IS FURTHER CHARGED WITH VIOLATING NFA COMPLIANCE RULE 2-30(h). FIELD AND HOFFECKER ARE CHARGED WITH BEING THE CAUSE OF FSC'S VIOLATION OF NFA COMPLIANCE RULE 2-30(h). THE COMPLAINT ALSO ALLEGES THAT FSC FAILED TO MAINTAIN CURRENT AND COMPLETE FINANCIAL BOOKS AND RECORDS IN VIOLATION OF NFA COMPLIANCE RULE 2-10; THAT FSC FAILED TO MAINTAIN THE MINIMUM FINANCIAL REQUIREMENTS OF AN INTRODUCING BROKER AND FAILED TO FILE TIMELY TELEGRAPHIC NOTICE WITH NFA AS SOON AS IT KNEW, OR SHOULD HAVE KNOWN, OF ITS NET CAPITAL DEFICIENCY IN VIOLATION OF NFA FINANCIAL REQUIREMENTS SECTION 9; THAT FIELD AND FSC WILLFULLY SUBMITTED MATERIALLY FALSE OR MISLEADING INFORMATION TO NFA IN VIOLATION OF NFA COMPLIANCE RULE 2-2(f); THAT BURT FAILED TO CORRECT A DEFICIENCY OR INACCURACY IN HIS FORM 8-R IN VIOLATION OF NFA REGISTRATION RULE 210; AND THAT FSC FAILED TO REVIEW DISCRETIONARY TRADES IN VIOLATION OF NFA COMPLIANCE RULES 2-8(b) AND (c). FIELD AND HOFFECKER ARE CHARGED WITH HAVING BEEN THE CAUSE OF FSC'S VIOLATIONS OF NFA COMPLIANCE RULES 2-8(b) and (c). THE COMPLAINT ADDITIONALLY ALLEGES THAT FSC FAILED TO APPROVE DISCRETIONARY AUTHORITY FOR OPTION ACCOUNTS; FAILED TO IDENTIFY, APPROVE, INITIAL AND DATE ALL ORDERS FOR DISCRETIONARY OPTION ACCOUNTS, AND FAILED TO FREQUENTLY REVIEW DISCRETIONARY ACCOUNTS IN VIOLATION OF NFA COMPLIANCE RULES 2-20(b), (c) AND (d). FIELD AND HOFFECKER ARE CHARGED WITH HAVING BEEN THE CAUSE OF FSC'S VIOLATIONS OF NFA COMPLIANCE RULE 2-20. THE COMPLAINT FURTHER ALLEGES THAT FSC PERMITTED A PERSON TO ACT IN A CAPACITY REQUIRING REGISTRATION WITHOUT THE BENEFIT OF PROPER REGISTRATION IN VIOLATION OF NFA BYLAW 301(b). FIELD IS CHARGED WITH HAVING BEEN THE CAUSE OF SUCH VIOLATION. FINALLY, THE COMPLAINT ALLEGES THAT FSC, BURT, AND PADRO FAILED TO OBSERVE HIGH STANDARDS OF COMMERCIAL HONOR AND JUST AND EQUITABLE PRINCIPLES OF TRADE IN VIOLATION OF NFA COMPLIANCE RULE 2-4, AND THAT FSC FAILED TO DILIGENTLY SUPERVISE ITS EMPLOYEES AND AGENTS IN THE CONDUCT OF THEIR COMMODITY FUTURES ACTIVITIES IN VIOLATION OF NFA COMPLIANCE RULE 2-9. FIELD AND HOFFECKER ARE CHARGED WITH HAVING BEEN THE CAUSE OF FSC'S ALLEGED VIOLATIONS OF NFA COMPLIANCE RULES 2-4 AND 2-9. Decision:
ON JUNE 17, 1992, NFA'S WESTERN COMMITTEE ISSUED A DECISION IN WHICH IT ACCEPTED FIRST SIERRA'S AND FIELD'S SETTLEMENT OFFER. THE DECISION ORDERS FIRST SIERRA TO WITHDRAW FROM NFA MEMBERSHIP AND TO NEVER REAPPLY. THE DECISION ALSO ORDERS FIELD TO WITHDRAW FROM NFA ASSOCIATE MEMBERSHIP AND NOT REAPPLY FOR THREE YEARS. THE DECISION STATES THAT NEITHER THE DECISION, NOR THE COMPLAINTS, NOR THE FACTUAL MATTERS PERTAINING TO THE THREE CASES, NOR INFORMATION KNOWN TO OR IN THE POSSESSION OF NFA STAFF ON THE DATE OF THIS DECISION, SHALL SERVE AS THE SOLE BASIS FOR DENYING ANY FUTURE NFA MEMBERSHIP OR ASSOCIATE STATUS TO FIELD.
Source: National Futures Association
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