More From This User
Related Docuements
the origin of william moulton marston's wonder woman
Mayer was twenty-two in 1939 and was a geek who certainly understood superher...
From joaoxxx
N E W Y O R K S T O C K E X C H A N G E, I N C.EXCHANGE HEARING PANEL DECISION 97-54May 20, 1997
MATTHEW BRADBURY MARSTONFORMER REGISTERED REPRESENTATIVE
* * *Caused a violation of Rule 440 and SEC Regulation 240.17a-3 by causinginaccurate entries to be made to the books and records of his employer --Consent to censure, two month plenary bar, four month restriction fromentering proprietary transactions, and a requirement to take and pass theSeries 7 examination before again acting as a trader.Appearances:
For the Division of EnforcementFor the RespondentMargaret S. Fox, Esq.Matthew Bradbury MarstonDorian M. Gross, Esq.
pro se
* * *
An Exchange Hearing Panel met to consider a Stipulation of Facts and Consent to Penalty enteredinto between the Exchange's Division of Enforcement and Matthew Bradbury Marston, a formerregistered representative with Gruntal & Co. Incorporated (the "Firm"). Without admitting ordenying guilt, Marston consents to a finding by the Hearing Panel that he caused a violation of Exchange Rule 440 and SEC Regulation 240.17a-3, in that in November 1993 he causedinaccurate entries to be made to the books and records of his member organization employer withrespect to the essential details of transactions in mortgage-backed securities and with respect tothe valuation of a mortgage-backed security.For the sole purpose of settling this disciplinary proceeding, the Division of Enforcement andMarston stipulate to the following:
Background and Jurisdiction
1.
Marston was born on June 5, 1959. He became registered in the securities industry in orabout January 1983. He was employed by the Firm from May 1993 to December 1993.Since April 1995, Marston has not been employed in the securities industry.2.
The Exchange received a Form U-5 concerning Marston from the Firm, which was datedJanuary 10, 1994. The Form U-5 reported that Marston had been permitted to resign on orabout December 10, 1993.
3.
By letter dated March 29, 1994, which he received, the Exchange notified Marston that hewas the subject of an Exchange investigation. Thereafter, represented by counsel, Marstontestified during the Exchange's investigation.4.
On January 7, 1997, a Charge Memorandum was issued to Marston alleging the violativeconduct described below.5.
In a related disciplinary matter, in 1996 the Firm was found, pursuant to consent and withoutadmitting or denying guilt, to have failed to supervise certain business activities in that it didnot have written guidelines during the period 1993-1995 with respect to valuing mortgage-backed securities positions, and that it did not then also have an adequate system in place anddid not effectively apply procedures in place to ensure the accuracy of the Firm's valuation of mortgage-backed securities held in proprietary accounts. See HPD 96-32.
Causing Firm Books and Records to be Inaccurate
6.
During November 1993, Marston caused inaccurate entries to be made to the books andrecords of his member organization employer with respect to the essential details of transactions in mortgage-backed securities and with respect to the valuation of a mortgage-backed security, as set forth below:a.
In or about May 1993, Marston became employed as head trader at the Firm on anInstitutional Mortgage-Backed Securities Trading Desk (the "Desk").b.
Between August and September 1993, Marston purchased from XYZapproximately $104,194,480 face amount of a mortgage-backed security known asFHLMC 1546 SF ("1546 SF"). The total purchase cost was approximately$11,722,373.c.
During all relevant times, Marston was responsible for determining the current orfair market value on the 1546 SF which the Desk had purchased, among otherpositions. This practice is known as "marking to the market" the security.d.
In October 1993, one or more senior personnel at the Firm, including from theAccounting Department, began to inquire about the value of the 1546 SF which theDesk had purchased. The Accounting Department was involved in riskmanagement and valuation of Firm inventory positions.e.
In connection with this, one or more prices were obtained for the 1546 SF from asource outside of the Firm. In October 1993, Marston was advised that a price of 5 had been obtained for the 1546 SF, which was significantly lower than Marston'sthen current mark to the market price. Based upon that lower price, the 1546 SFposition would have been valued millions of dollars less than where Marston hadvalued it.f.
As a result of the questions with respect to and the pricing disparity concerning the1546 SF, Marston was instructed in October 1993 by the head of the Firm's Capital
3
Markets Group, who was Marston's ultimate supervisor, to sell a $20 million faceamount piece of the 1546 SF position. The purpose of the sale was to verifyMarston's mark to the market pricing of the 1546 SF and obtain a current marketprice.g.
Marston did not enter into an outright sale of the 1546 SF to ascertain a currentmark to the market price. Instead, on or about November 2, 1993, Marstonentered into an agreement with XYZ, whereby XYZ agreed to purchase a $20million face amount piece of the 1546 SF from the Firm, if Marston agreed topurchase for the Firm another mortgage-backed security from XYZ (the "Swap").The cost to the Firm to purchase this other mortgage-backed security wasapproximately twice the cost to XYZ to purchase the 1546 SF.7.
Marston believed that the validity of the sale of the 1546 SF would be questioned by theAccounting Department if it was known that the purchaser was XYZ -- the party from whomthe 1546 SF had been originally purchased by the Firm.8.
To conceal from the Accounting Department that XYZ was the contra broker with whom hehad agreed to effect the Swap, Marston arranged to run the transactions through UVW,which was a "brokers' broker". By so doing, UVW would stand between the Firm and XYZin effecting the transactions, and be reported as the contra broker on the Firm's records. TheFirm's records inaccurately reflected that UVW and not XYZ was the ultimate contra brokerto the Swap.9.
The Firm's records reflect that it received a price of 10.2422 for the November 2, 1993 saleof a $20 million piece of the 1546 SF, which Marston had effected.10.
On November 2, 1993, Marston marked to the market the remaining portion of the 1546 SFwhich was not sold, at a price of 10.875, a price higher than the price at which he was able toeffect a sale. Marston knew or should have known that his mark to the market price wasinaccurate, since it exceeded the price at which he had on the same day effected a transactionfor the Firm of the $20 million piece.
DECISION
The Hearing Panel, in accepting the Stipulation of Facts and Consent to Penalty, found Mr.Marston guilty as set forth above by unanimous vote.
PENALTY
In view of the above findings, the Hearing Panel, by unanimous vote, imposed the penaltyconsented to by Mr. Marston of a censure; a bar for two months from membership, alliedmembership, approved person status, and from employment or association in any capacity withany member or member organization; following the conclusion of such bar, for a period of fourmonths, Marston is restricted from entering any proprietary transactions for the account of anybroker-dealer by whom he is employed; and a requirement to take and pass the Series 7 (General
of 00
NYSE Decsion 97-54 BMarston
319 Reads
Info and Rating
| Category: | |
| Rating: | |
| Upload Date: | 08/27/2010 |
| Copyright: | Attribution Non-commercial |
| Tags: |
Leave a Comment