Proceeding Number 2009016317701

Amended Hearing Panel Decision in Department of Enforcement v. The Dratel Group, Inc. and William M. Dratel

September 19, 2013

For violations of FINRA and NASD rules, and the Securities Exchange Act of 1934, as described below, Respondent William M. Dratel is suspended for 25 business days. He and The Dratel Group, Inc. are fined $31,000 jointly and severally, and are assessed costs. Dratel is fined an additional $5,000, and the firm is fined an additional $2,500. Respondents’ willful rule violations subject them to statutory disqualifications.

 

Respondent William M. Dratel violated FINRA Rules 1122 and 2010 when he willfully failed to make timely amendments to his Form U4 to disclose material judgments and liens that had been filed against him. Dratel and The Dratel Group, Inc. violated Rules 1122 and 2010 when they willfully failed to make timely amendments to the firm’s Form BD to disclose a material judgment that had been filed against the firm. For these violations, Dratel is suspended from associating with any FINRA member firm in any capacity for 15 business days, and Respondents are fined $5,000 jointly and severally.

 

Respondents violated NASD Rules 3110(a) and (j), and FINRA Rule 2010, and the firm violated Section 17(a) of the Securities Exchange Act of 1934 (“Exchange Act”) and Rules 17a-3 and 17a-4 thereunder, when they willfully failed to create and preserve order memoranda. For these violations, Dratel is suspended from associating with any FINRA member firm in any capacity for five business days, and Respondents are fined $10,000 jointly and severally.

 

Respondents violated Exchange Act Section 17(a) and Rule 17a-4(b)(2), NASD Rule 3110(a), and FINRA Rule 2010 when they failed to preserve e-mail communications. For these violations, Respondents are fined $1,000 jointly and severally.

 

Respondents violated NASD Rules 2330 and 2110, and FINRA Rules 2150 and 2010 when they compensated customers for losses. For these violations, Respondents are fined $10,000 jointly and severally.

 

Respondents violated MSRB Rules G-2 and G-3 when they executed 23 municipal securities transactions without (i) being registered with the MSRB, and (ii) having a registered municipal securities principal to supervise municipal securities activities. The firm violated MSRB Rule G-14 when it failed to report transactions in municipal securities to MSRB. For these violations, Respondents are fined $2,500 jointly and severally.

 

The firm violated FINRA Rules 6720, 6730, and 2010 when it executed 38 customer transactions in corporate debt securities without completing a TRACE participation agreement and failed to report the transactions to TRACE. For these violations, the firm is fined $2,500.

 

Respondents violated Exchange Act Section 17(a) and Rule 17a-3, NASD Rule 3110, and FINRA Rule 2010 when they maintained inaccurate ledger and trial balances. For these violations, they are fined $2,500 jointly and severally.

 

Dratel violated FINRA Rules 3012 and 2010 when he failed to establish and enforce supervisory control systems, and violated FINRA Rules 3130 and 2010 when he failed to certify compliance and supervisor processes. For these violations, he is suspended from associating with any FINRA member firm in any supervisory capacity for five business days and fined $5,000.

 

This decision has been appealed.

View Decision (PDF 224 KB)