NASD Regulation Expels First Federal Securities, Inc. and Bars Its Owner and President for False Membership Information
Washington, D.C. — NASD Regulation, Inc., today announced that it expelled First Federal Securities, Inc., of Las Vegas, NV, and barred its owner and President Kellie McKinzie for intentionally providing false information in connection with the firm's application for membership with the NASD.
First Federal applied for NASD membership in January 2001. In the application, McKinzie misrepresented that she was its sole owner and that there were no other principals affiliated with the firm. The firm and McKinzie specifically did not disclose that Jeffrey Schwertfeger, an Investment Company/Variable Contracts Products Representative, who was then the subject of an NASD Regulation disciplinary proceeding alleging sales practice violations, was affiliated with First Federal. McKinzie was aware at the time she filed the application for First Federal's membership that NASD Regulation considered this fact to be material to the application.
On March 15, 2001, McKinzie falsely reaffirmed to NASD Regulation that this individual was not affiliated with First Federal and four days later, NASD Regulation approved First Federal's membership. Subsequently, NASD Regulation obtained additional facts and determined that Schwertfeger was in fact in control of the management and policies of First Federal.
NASD Regulation found that the firm and McKinzie engaged in conduct inconsistent with just and equitable principles of trade. NASD Regulation barred McKinzie and expelled First Federal from association with an NASD member. The expulsion and bar were imposed through a settlement in which the firm and owner did not admit or deny the allegations.
NASD rules require that all information filed with respect to membership be complete, accurate and not otherwise misleading. In addition, an applicant is obligated to correct any inaccurate or misleading information given during the application process. Where, as here, if a firm is admitted to membership based on misleading or inaccurate information, NASD Regulation may bring a disciplinary action to bar the responsible individual and expel the firm from membership. NASD Regulation's Los Angeles District Office investigated this case.
Further information regarding the membership application process is available at www.nasdr.com. Investors can obtain more information and the disciplinary record of any NASD-registered broker or brokerage firm by calling (800) 289-9999 or by sending an e-mail through NASD Regulation's Web Site at www.nasdr.com.
The National Association of Securities Dealers, Inc. is the largest securities industry, self-regulatory organization in the United States. It is the parent organization of NASD Regulation, Inc.; the American Stock Exchange, LLC; and NASD Dispute Resolution, Inc. For more information about the NASD and its subsidiaries, please visit the following Web sites: www.nasd.com; www.nasdr.com; www.amex.com; www.nasdadr.com.