Proceeding No. 2006004122402
Extended Hearing Panel Decision in Department of Enforcement v. Hedge Fund Capital Partners LLC and Howard G. Jahre
January 26, 2011
Respondents violated Rules 8210 and 2110 by providing false and misleading information to FINRA in connection with an investigation of the Respondent Firm; Rule 2110 and IM-1000-1 by willfully filing misleading Forms U4; and Article III, Section 3(b) of FINRA Bylaws and Rule 2110 by employing a statutorily disqualified person. In addition, the Respondents committed numerous other violations as follows: (1) both Respondents violated Rule 2110 by allowing a hedge fund to improperly pay rent with soft dollars; (2) both Respondents violated Rules 2211(d)(1) and 2110 by distributing misleading and exaggerated sales materials; (3) Respondent Firm violated Rules 2211(d)(1) and 2110 by distributing unbalanced sales materials; (4) Respondent Firm violated Rules 2211(b)(2)(A) and 2110 by failing to retain institutional sales materials; (5) both Respondents violated Rules 1031 and 2110 by allowing unregistered employees to act in registered capacities; (6) both Respondents violated Rules 1031 and 2110 by allowing a registered person to park her license at the Respondent Firm; (7) Respondent Firm violated Exchange Act Section 17(a)(1) and Rule 17a-4 thereunder, and Rules 3110 and 2110 by failing to retain e-mail and instant messages; and (8) both Respondents violated Rules 3010(a), 3010(b), and 2110 by failing to supervise e-mail and instant message retention, annual compliance meetings, and the registration of associated persons. For these violations, Respondent HedgeCap was expelled and Respondent Jahre was barred from associating with any FINRA member firm in any capacity. The Respondents were also ordered to pay costs.
This decision has been appealed.
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