U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 20551 / May 1, 2008
SECURITIES AND EXCHANGE COMMISSION v. CHANIN CAPITAL LLC, Civil Action No. 1:08-CV-00728-JDB (D.D.C. filed April 28, 2008)
FORMER BROKER-DEALER AND COMPLIANCE OFFICER FINED FOR VIOLATING SECURITIES EXCHANGE ACT PROVISION DESIGNED TO PREVENT USE OF MATERIAL NONPUBLIC INFORMATION
On April 28, 2008, the Commission filed a complaint in the U.S. District Court for the District of Columbia seeking judgment against Chanin Capital LLC (Chanin), a former broker-dealer, based on charges that it violated Section 15(f) of the Securities Exchange Act of 1934 (“Exchange Act”), which requires that every registered broker-dealer establish, maintain, and enforce written policies and procedures reasonably designed to prevent the misuse of material nonpublic information by its employees and associated persons. Chanin, without admitting or denying the allegations in the Commission’s complaint, has consented to the entry of the proposed final judgment against it, which orders it to pay a $75,000 penalty.
The complaint alleges that, between January 1999 and September 2003, Chanin had certain written policies and procedures designed to prevent the misuse of material nonpublic information, but failed to enforce them. In September 2003, and again in 2004, Chanin revised its written policies and procedures. While its adherence to its own policies improved after September 2003, Chanin continued to lack policies and procedures reasonably designed to address the continued maintenance and enforcement of its new compliance program. Chanin ceased functioning as a broker-dealer on or about October 31, 2006, and de-registered as a broker-dealer effective April 1, 2007.
In a related administrative proceeding, A. Carlos Martinez (Martinez), Chanin’s compliance officer during the period, consented to the entry of a Commission Order against him, without admitting or denying any of the findings in the Order except as to the jurisdiction of the Commission over him. The Commission’s Order finds that Martinez, who was responsible for implementing and enforcing Chanin’s compliance and insider trading policies, willfully aided and abetted and caused Chanin’s failure to implement, maintain or enforce its own written policies and procedures prior to September 15, 2003, and its failure to adequately implement, maintain or enforce its policies and procedures after September 15, 2003. The Commission’s Order censures Martinez, orders him to pay $25,000 pursuant to Section 21B of the Exchange Act, and orders him to cease and desist from causing any violations and any future violations of Section 15(f). See In the Matter of A. Carlos Martinez, Administrative Proceeding File No. 3-13032, Securities Exchange Act of 1934 Rel. No. 34-57755.