Signal Securities Inc., Ivan Jerry Singleton, and Richard E. Bennett
SECURITIES EXCHANGE ACT OF 1934
Release No. 43350 / September 26, 2000
ADMINISTRATIVE PROCEEDING
File No. 3-10304
| In the Matter of
Signal Securities, Inc.,
Respondents. |
ORDER INSTITUTING PROCEEDINGS, MAKING FINDINGS, AND IMPOSING REMEDIAL SANCTIONS |
I.
The Securities and Exchange Commission (Commission) deems it appropriate in the public interest and for the protection of investors that public administrative proceedings be, and hereby are, instituted pursuant to Sections 15(b) and 19(h) of the Securities Exchange Act of 1934 (Exchange Act) against Signal Securities, Inc. (Signal or the Firm), Ivan Jerry Singleton (Singleton), and Richard E. Bennett (Bennett).
In anticipation of the institution of these proceedings, Signal, Singleton and Bennett have submitted an Offer of Settlement (Offer) to the Commission, which the Commission has determined to accept.
Solely for the purpose of these proceedings and any other proceedings brought by or on behalf of the Commission, or in which the Commission is a party, and without admitting or denying the findings contained herein, except those contained in paragraph II.A. and the jurisdiction of the Commission over Respondents and the subject matter of these proceedings, Signal, Singleton, and Bennett consent to the issuance of this Order Instituting Proceedings, Making Findings and Imposing Remedial Sanctions, and to the entry of the findings set forth below.1
II.
On the basis of this Order and the Offer submitted by Signal, Singleton, and Bennett, the Commission finds that:
A. THE RESPONDENTS
Signal, with its main office in Fort Worth, Texas, has been registered with the Commission as a broker-dealer since 1984. Signal employed between 130-165 independent contractor registered representatives in Texas and other states during the relevant period. Singleton is Signal's chairman and president and holds 98% of the Firm's stock. Singleton was the person responsible for reviewing and approving Signal's supervisory policies. Signal's compliance department was responsible for recommending policy changes and implementing the Firm's policies and procedures. Bennett has been Signal's compliance officer since the summer of 1996. Bennett became senior vice president of Signal in August 1998, and he was appointed its executive vice president in early 1999.
B. INTRODUCTION
This matter arises from the failure of Signal, Singleton, and Bennett reasonably to supervise Peter Joseph Cammarano (Cammarano), a former Signal registered representative in an off-site office in Houston, Texas, with a view toward preventing violations of Section 17(a) of the Securities Act of 1933 (Securities Act) and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. Cammarano was associated with Signal from June 1994 until October 26, 1998, when he confessed to stealing funds from his customers. Both prior to and during his association with Signal, Cammarano induced about 30 investors, around 20 of whom were Signal customers for part of the period, to liquidate their retirement accounts or other investments and to open or continue accounts with his private company, Cammarano & Associates, Inc. (CAI), which he operated as an unregistered broker-dealer. Cammarano misappropriated over $2 million of customer funds invested with CAI and its predecessor.
Signal lacked adequate supervisory and compliance procedures and failed adequately to implement procedures that were in place. In particular, Signal's policies and procedures failed adequately to provide for heightened supervision of representatives with a history of compliance-related concerns, inspections of off-site offices that were not registered with the National Association of Securities Dealers, Inc. (NASD), and monitoring of the outside business activities of its registered representatives. As a result of these deficiencies, Signal failed to heighten its supervision of Cammarano, failed to inspect his office in the more than four years he was associated with the Firm, and failed adequately to monitor his outside business activities.
As president, Singleton failed to ensure that Signal and its supervisors had reasonable procedures and implemented those procedures. In addition, Bennett, who was Cammarano's supervisor for the last ten months of Cammarano's scheme, was on notice from a licensing inquiry by the Pennsylvania Securities Commission that Cammarano had a disciplinary history. Despite Cammarano's history, however, Bennett failed adequately to respond and investigate when a Cammarano customer expressed concerns about Cammarano's handling of his account.
As a result, Signal, Singleton, and Bennett failed adequately to supervise Cammarano.
C. CAMMARANO'S FRAUDULENT CONDUCT
During the period from October 1991 through late October 1998, Cammarano misappropriated over $2 million from about 30 customers of his outside business, including approximately 20 clients who were Signal customers for part of that period. From his June 1994 hiring by Signal through his October 1998 termination from the Firm, Cammarano operated his Signal securities business, as well as his 401(k) and payroll services businesses, from an off-site office under the name of CAI. Cammarano misrepresented to some investors that CAI was a registered broker-dealer, and he persuaded them to open or continue accounts with him at CAI. Cammarano directly received customer funds, payable to Cammarano and/or CAI, for the purpose of purchasing securities and other investments in those accounts.
Instead of using his customers' funds to purchase securities, Cammarano used some of the money to operate CAI. In order to perpetuate and conceal his scheme, Cammarano provided his customers with fabricated CAI confirmations and account statements reflecting non-existent securities transactions and accounts. On October 26, 1998, Cammarano contacted Signal and confessed to Bennett that he had been stealing from his clients. After Cammarano's confession, the Commission obtained a temporary restraining order and asset freeze against Cammarano and CAI based on the conduct described herein. On January 19, 1999, Cammarano and CAI were permanently enjoined from future violations of the antifraud and broker-dealer registration provisions of the federal securities laws. SEC v. Peter Joseph Cammarano and Cammarano & Associates, Inc., Case No. H-98-3707 (S.D. Tex.). The Commission subsequently barred Cammarano from the securities industry. Peter Joseph Cammarano, Exchange Act Release No. 41,332 (April 26, 1999).2
D.FAILURE TO SUPERVISE BY SIGNAL, SINGLETON AND BENNETT
1. Failure by Signal and Singleton to Establish Reasonable Procedures
a. Failure to Provide for Heightened Supervision of Registered Representatives with Known Disciplinary Histories
Signal's written supervisory procedures were inadequate because they failed to provide for heightened supervision of registered representatives who had a history of sales practice or compliance-related complaints or concerns. When Singleton hired Cammarano in June 1994, he was aware that Cammarano had been terminated from his prior firm and that Cammarano had a past customer arbitration and financial judgments. Soon thereafter, the NASD cautioned Cammarano in writing against failing to provide his prior firm with proper prior written notice concerning certain transactions and warned him that processing customer transactions through his company account might subject him to securities law violations.
Despite the NASD letter of caution and Cammarano's use at his prior firm of his company account to facilitate customer transactions, Singleton and Signal did nothing to heighten supervision of Cammarano. Singleton, who was Cammarano's direct supervisor for the three years from December 1994 to December 1997, was aware that the NASD had cautioned Cammarano, but his only response to the NASD letter was to telephone Cammarano and tell him checks should only be written to Signal, its clearing firm, or mutual fund companies. Singleton did nothing to monitor whether Cammarano was complying with the NASD letter of caution and his instructions. For example, Signal never inspected Cammarano's office to check for compliance with its procedures and the NASD cautionary letter.
Furthermore, in 1996 Signal again failed to heighten its supervision of Cammarano even after the Pennsylvania State Securities Commission, in response to Cammarano's state licensing application, requested that Signal affirm it was aware of Cammarano's history and represent, among other things, that it would exercise diligent supervision of all Cammarano's activities. In order to avoid delays, Bennett caused Signal to withdraw Cammarano's application at Cammarano's suggestion and to transfer the Pennsylvania customer to Cammarano's assistant, who had no disciplinary history and became licensed in Pennsylvania without any delay. Despite the issues relating to Cammarano highlighted by the Pennsylvania State Securities Commission's licensing inquiry, Signal again failed to identify and treat Cammarano as a representative requiring heightened supervision.
Signal also lacked adequate procedures to advise supervisory personnel and other appropriate persons of disciplinary and financial problems concerning its representatives.3 This deficiency contributed to Signal's failure to identify Cammarano as a representative who required heightened supervision.
b. Failure to Provide for Examinations of Off-Site Offices
During the period of Cammarano's association, the vast majority of Signal's 130-165 registered representatives were located off-site in one or two person offices, which numbered as many as 75-100. Even though most of Signal's representatives were located in off-site offices that were not registered as branches with the NASD, until August 1998 Signal had no procedures requiring any inspection of these employees and their offices or any audit of their customer files. Furthermore, unless a complaint or other concerns prompted an inspection, Signal's basis for selecting off-site offices for inspection prior to August 1998 was arbitrary-the Firm inspected off-site offices if a principal was in the area and had time to perform an inspection. Signal did not inspect Cammarano's office during the more than four years that Cammarano was associated with the Firm. Such on-site examinations would have enabled Cammarano's supervisors to review customer and other files he maintained and they might have been able to observe and review records and activities related to his unlawful outside business activities. Accordingly, Signal's procedures were inadequate to detect and prevent Cammarano's violations.
c. Failure to Provide for Monitoring and Review of Outside Business Activities of Registered Representatives
Signal's procedures failed to provide for adequate review and follow up of the limited information it gathered concerning the outside activities of its representatives. Singleton and Bennett were aware that Cammarano operated other business activities from the same office in which he conducted brokerage activity through Signal, from which he earned limited income. Although Signal representatives were required to disclose their outside business activities, the Firm had no procedures for reviewing, analyzing, or following up on the information representatives provided concerning their outside activities. The limited information Signal gathered provided little assistance in monitoring the outside business activities of representatives since no one was required to review the disclosure forms for compliance purposes. In view of Cammarano's history and his earlier use of his company account for securities transactions, it would have been advisable for Signal, Singleton, and Bennett to make further inquiry about his outside business activities.
Had Signal requested and reviewed basic information about Cammarano's outside businesses, it might well have realized that his legitimate earnings were insufficient to cover the expenses for his office and CAI personnel.
d. Failure to Provide for Adequate Delineation of Supervisory Responsibilities and a System of Follow-up and Review
Signal's written supervisory procedures failed to clearly assign supervisory responsibilities and the specific functions each supervisor was to perform. Signal divided responsibility for supervision of individual representatives between the direct supervisor, the compliance department, and the other principals at the Firm. The procedures designating supervisory responsibility were ineffective, however, because they failed adequately to assign specific supervisory duties among the parties. Further, Signal's written supervisory procedures were also ineffective because they failed adequately to provide for a system of follow-up and review to ensure supervision was being diligently exercised.4 Accordingly, Signal failed to detect and prevent the violations that were committed by Cammarano.
2. Bennett's Failure Adequately to Investigate and Respond to a Customer's Concerns
Bennett became Cammarano's direct supervisor in December 1997. Bennett handled the Pennsylvania State Securities Commission's response to Cammarano's license application and, thus, had been notified that Cammarano had a disciplinary history. In view of Cammarano's history, Bennett failed adequately to investigate and respond when one of Cammarano's customers contacted Signal on August 25, 1998, and expressed concerns about trades being done by Cammarano in his account. In a telephone conversation, the customer advised Bennett that he had purchased a stock a year and a half earlier, that he had not received a confirmation of the trade, and that he had not received account statements, except for some that Cammarano had sent him. The customer told Bennett that he had instructed Cammarano to transfer his stock to another brokerage firm about five weeks earlier, but that he had received a confirmation for an August 25, 1998, purchase of the stock rather than transfer information for the shares he purchased in 1997. The customer informed Bennett that he had not authorized the August 25, 1998, order and agreed to send Bennett a copy of the statements he had earlier received from Cammarano.
In response to the customer's concerns, Bennett called Cammarano, who denied that the customer had ever asked him to buy the stock before the August 25 purchase and said that he would contact the customer. Cammarano told Bennett that he had copied the customer's Signal statements from the file and mailed them to him. In addition to speaking to Cammarano, Bennett reviewed the customer's account, verified that Signal had the correct address, and noted that the file contained no indication that the customer had purchased the stock in 1997. When the customer failed to send the statements he had received from Cammarano, Bennett took no further action.
In light of Cammarano's disciplinary history, Bennett failed adequately to follow up on the information that Cammarano's customer provided concerning the disputed trade and the statements Cammarano sent to the customer. Instead, Bennett essentially relied on Cammarano's representations without further investigation. Specifically, Bennett failed to contact the customer again to request additional information concerning the situation, to determine whether and how the customer and Cammarano had resolved the matter, to reiterate his request that the customer send him the statements Cammarano had sent to the customer, or to heighten his scrutiny of Cammarano.5 If Bennett had pursued the matter more diligently, he might have discovered that Cammarano had sent the customer fabricated statements for his fictitious CAI account that showed the purported stock position. This information might have led to the discovery in August 1998 that Cammarano had been misappropriating funds from his clients. Instead, Cammarano was able to steal additional funds in September and October 1998, much of which he used to make payments to customers who were complaining to him.
III.
LEGAL DISCUSSION
Section 15(b)(4) of the Exchange Act provides for the imposition of a sanction against a broker or dealer who "has failed reasonably to supervise, with a view to preventing violations of such statutes, rules, and regulations, another person who commits such a violation, if such other person is subject to his supervision." See Smith Barney, Harris Upham & Co., Inc., Exchange Act Release No. 21813, 32 SEC Docket 999, 1004 (March 5, 1985). Section 15(b)(6) parallels Section 15(b)(4) and provides for the imposition of sanctions against persons associated with a broker or dealer. These sections also provide an affirmative defense for supervisors who can show that (1) there have been established procedures, and a system for applying such procedures, which would reasonably be expected to prevent and detect, insofar as practicable, any such violation by such other person, and (2) such person has reasonably discharged the duties and obligations incumbent upon him by reason of such procedures and system without reasonable cause to believe that such procedures and system were not being complied with.
Supervision is an essential function of the broker-dealer. "It is critical for investor protection that a broker establish and enforce effective procedures to supervise its employees." Donald T. Sheldon, Exchange Act Release No. 31475, 52 SEC Docket 3826, 3855 (November 18, 1992), aff'd 45 F.3d 1515 (11th Cir. 1995). Establishment of policies and procedures alone is not sufficient to discharge supervisory responsibility. It also is necessary to implement measures to monitor compliance with those policies and procedures. Thomson & McKinnon, Exchange Act Release No. 8310, 43 S.E.C. 785, 788 (May 8, 1968) ("Although it was registrant's stated policy . . . it failed to establish an adequate system of internal control to insure compliance with such policy.").
A. SIGNAL'S FAILURE TO SUPERVISE
The Commission has repeatedly emphasized the need for heightened supervision when a firm employs a broker with known regulatory problems or customer complaints. See James Thornton, Exchange Act Release No. 41007, 69 SEC Docket 49, 55 (February 1, 1999) (firm failed reasonably to supervise when "supervisory policies made no provision for heightened supervision of a registered representative with a disciplinary history"); Consolidated Investment Services, 61 SEC Docket at 30 ("registered representative who has previously evidenced misconduct can be retained only if he subsequently is subjected to a commensurately higher level of supervision" (citing Dan A. Druz, Exchange Act Release No. 35203, 58 SEC Docket 1621, 1627 (January 9, 1995)). Extraordinary supervision of a registered representative with a disciplinary past is particularly appropriate when that representative operates out of a one-person office located a substantial distance away from supervisory or compliance personnel. See Houston A. Goddard, Exchange Act Release No. 32839, 54 SEC Docket 2431, 2439 (September 2, 1993).
In this matter, Cammarano had been terminated from his prior firm and had an earlier customer arbitration and financial judgments. Moreover, shortly after Signal hired Cammarano, the NASD cautioned him against the very type of activity-accepting checks from clients made out to his company-that he used to misappropriate funds from his clients while he was associated with Signal. Despite the NASD warning, the arbitration and financial judgments, Signal failed to increase its supervision of Cammarano's activities. Heightened supervision might have detected and prevented some, if not all, of his violations committed while he was associated with Signal.
The Commission also requires that broker-dealers have adequate procedures to advise supervisory personnel of disciplinary issues and financial problems concerning its representatives. See Royal Alliance Associates, Inc., Exchange Act Release No. 38174, 63 SEC Docket 1843, 1848 (January 15, 1997). As a result of Signal's failure to adopt and implement such procedures, its supervisory personnel were unaware of some of the information that indicated that Cammarano required heightened supervision.
The Commission has determined that broker-dealers that conduct business through off-site offices have not adequately discharged their supervisory obligations where there are no inspections of those offices. Consolidated Investment Services, Inc., Exchange Act Release No. 36687, 61 SEC Docket 20, 26 (Jan 5, 1996)(broker-dealer's supervision of small office run by a single registered representative inadequate without inspections); Royal Alliance Associates, Inc., Exchange Act Release No. 38174, 63 SEC Docket 1843 (January 15, 1997). In this matter, prior to August 1998, Signal did not have procedures that required inspections of its one and two person off-site offices that were not registered as branches with the NASD. The lack of inspections was particularly unreasonable given that the Firm employed most of its registered representatives in such offices. NYLife Securities, Inc., Exchange Act Release No. 40459, 68 SEC Docket 158 (September 23, 1998) (broker-dealer supervision of off-site representatives inadequate without examinations of such personnel). If Signal's procedures had included such inspections, the Firm might have detected Cammarano's violations.
Further, allowing a registered representative to engage in outside business activities involves the risk that the representative will use his outside business to carry out or conceal violations of the securities laws. Although Signal required that representatives obtain permission before engaging in outside business activities, the Firm had no procedures for reviewing, analyzing, or following up on the information representatives provided concerning their outside activities. Signal's procedures were deficient for failing to require inspections of its off-site offices that were not registered as branches with the NASD or to require independent verification of such matters as the nature and extent of outside business activities and a representative's outside sources of income. See PFS Investments, Inc., Exchange Act Release No. 40269, 67 SEC Docket 2032, 2038 (July 28, 1998); Walnut Street Securities, Inc., Exchange Act Release No. 35975, 59 SEC Docket 2479 (July 17, 1995).
Signal's supervisory procedures also were inadequate because they failed clearly to assign supervisory responsibilities among the various supervisors. Moreover, Signal failed to provide for a system of follow-up and review to ensure supervision was being diligently exercised. See Mabon, Nugent & Co., Exchange Act Release No. 19424, [1982-1983 Transfer Binder] Fed. Sec. L. Rep. (CCH) ¶ 83,311 at 85,723, 26 SEC Docket 1846, 1852 (January 13, 1983) (broker-dealers must not only adopt effective procedures for supervision, but must also "provide effective staffing, sufficient resources and a system of follow up and review to determine that any responsibility to supervise delegated to compliance officers, branch managers and other personnel is being diligently exercised.").
B. SINGLETON'S FAILURE TO SUPERVISE
The Commission has made it clear that responsibility for the supervisory function of a registered broker-dealer is incumbent upon the most senior members of management. Frederick H. Joseph, Exchange Act Release No. 32340, [1992-1993 Transfer Binder] Fed. Sec. L. Rep. (CCH) ¶ 85,200, 54 SEC Docket 283, 290 (May 20, 1993). Senior management has a duty not only to provide a meaningful supervisory structure, but also to actively monitor and enforce it. Rita H. Malm, Exchange Act Release No. 35000, 58 SEC Docket 121, 133-134 (November 23, 1994); Gary E. Bryant, Exchange Act Release No. 32357, 54 SEC Docket 431, 442 (May 24, 1993). It is incumbent upon management to ensure that branch managers, registered representatives, or any other firm employees do not ignore procedures. Bryant, 54 SEC Docket at 442; Sheldon, 52 SEC Docket at 5255.
Singleton was responsible for establishing effective supervisory procedures for Signal. As detailed above, Signal's procedures were deficient in a number of areas. Singleton should have, but failed to, ensure that Signal, its representatives and its supervisors had adequate procedures and implemented those procedures.
C. BENNETT'S FAILURE TO SUPERVISE
Under Signal's procedures, Bennett was responsible for Cammarano's supervision during the period from December 1997 through late October 1998 when he was Cammarano's direct supervisor. Bennett, as a result of his handling of a letter from the Pennsylvania State Securities Commission, was on notice that Cammarano had a disciplinary history. In light of Cammarano's history, Bennett failed adequately to investigate Cammarano's activities after receiving a call in which a customer expressed concerns about how Cammarano had been handling his account. The customer made very specific allegations about an earlier purchase of stock, which Bennett could not find in Signal's records, and about receiving statements from Cammarano's firm. After talking to the customer and reviewing the customer's account statements, Bennett essentially relied on Cammarano's explanation and Cammarano's representation that the statements he sent to the customer were copies of Signal statements and took no further action to investigate the matter. Bennett's investigation was inadequate in light of the increased supervision Bennett should have applied to Cammarano. See John H. Gutfreund, Exchange Act Release No. 31554, 51 S.E.C. 93, 108 (December 3, 1992); Charles Schwab & Co., [1983-1984 Transfer Binder] Fed. Sec. L. Rep. (CCH) ¶ 83,469 at 86,504 (December 28, 1983) (Initial Decision); PFS Investments, 67 SEC Docket at 2038. Had Bennett undertaken a more thorough review or investigation, he might well have discovered Cammarano's misappropriation of customer funds.
IV.
In view of the foregoing, the Commission deems it appropriate in the public interest and for the protection of investors to impose the sanctions that are set forth in the Offer submitted by Signal, Singleton, and Bennett.
Accordingly, IT IS ORDERED that:
A.Signal is hereby censured.
B.Signal shall, within 90 days of the issuance of this Order, pay a civil money penalty in the amount of $50,000 to the United States Treasury. Such payment shall be: 1) made by United States postal money order, certified check, bank cashier's check or bank money order; 2) made payable to the Securities and Exchange Commission; 3) hand-delivered or mailed to the Comptroller, Securities and Exchange Commission, Operations Center, 6432 General Green Way, Stop 0-3, Alexandria, Virginia 22312; and 4) submitted under a cover letter that identifies Signal as a respondent in these proceedings and states the file number of these proceedings, a copy of which cover letter and money order or check shall be sent to Harold F. Degenhardt, District Administrator, Fort Worth District Office, 801 Cherry Street, 19th Floor, Fort Worth, Texas 76102.
C. Signal shall comply with the undertakings specified in its Offer as follows:
1. Retain, within 30 days of the date of this Order, at its expense, an Independent Consultant not unacceptable to the Commission's staff. The Independent Consultant shall conduct a review of Signal's supervisory, compliance, and other policies and procedures designed to prevent and detect federal securities law violations of the nature involved in this matter. Signal shall cooperate fully with the Independent Consultant and shall provide the Independent Consultant with access to its files, books, records, and personnel as reasonably requested for the review.
2. At the conclusion of that review, which in no event shall be more than 150 days after the date of the Independent Consultant's retention, the Independent Consultant shall submit to Signal and to the Commission an Initial Report. The Initial Report shall address the adequacy of Signal's policies and procedures to detect and prevent federal securities law violations of the nature involved in this matter, and shall include the Independent Consultant's recommendations thereon.
3. Within 30 days of transmittal of the Independent Consultant's Initial Report, Signal shall in writing advise the Independent Consultant of the recommendations that it has determined to accept and the recommendations that it considers to be unduly burdensome. With respect to any recommendation that Signal deems unduly burdensome, Signal may propose an alternative policy or procedure designed to achieve the same objective or purpose.
4. With respect to any recommendation or proposal with which Signal and the Independent Consultant do not agree, Signal and the Independent Consultant shall attempt in good faith to reach an agreement. In the event the Independent Consultant and Signal are unable to agree on an alternative proposal, Signal shall abide by the recommendation of the Independent Consultant.
5. Within 90 days of transmittal of the Independent Consultant's Initial Report, Signal shall in writing advise the Independent Consultant and the Commission of the recommendations and proposals that it is adopting.
6. The Independent Consultant shall complete the aforementioned review and submit a written Final Report thereon to Signal and to the Commission's staff within 330 days after the date of this Order. The Final Report shall recite the efforts the Independent Consultant undertook to review Signal's supervisory functions, compliance mechanisms, and other policies and procedures, set forth the Independent Consultant's recommendations and Signal's proposals, and describe how Signal is implementing those recommendations and proposals.
7.Signal shall take all necessary and appropriate steps to adopt and implement all recommendations contained in the Independent Consultant's Final Report.
8. No later than one year after the date of this Order, unless extended pursuant to paragraph 9, below, Signal shall submit to the Commission's staff an Affidavit setting forth the details of its efforts to implement the recommendations contained in the Independent Consultant's Final Report and stating whether it has achieved compliance.
9. For good cause shown, and upon receipt of a timely application from the Independent Consultant or Signal, the Commission's staff may extend any of the procedural dates set forth above.
10. To ensure the independence of the Independent Consultant, Signal: (i) shall not have the authority to terminate the Independent Consultant, without the prior written approval of the Commission's staff; (ii) shall compensate the Independent Consultant, and persons engaged to assist the Independent Consultant, for services rendered pursuant to this Order at their reasonable and customary rates; (iii) shall not be in and shall not have an attorney-client relationship with the Independent Consultant and shall not seek to invoke the attorney-client or any other doctrine or privilege to prevent the Independent Consultant from transmitting any information, reports, or documents to the Commission or its staff.
11. To further ensure the independence of the Independent Consultant, for the period of the engagement and for a period of two years from completion of the engagement, the Independent Consultant shall not enter into any employment, consultant, attorney-client, auditing or other professional relationship with Signal, or any of its present or former affiliates, directors, officers, employees, or agents acting in their capacity. Any firm with which the Independent Consultant is affiliated in performance of his/her duties under this Order shall not, without prior written consent of the Fort Worth District Office of the Commission, enter into any employment, consultant, attorney-client, auditing or other professional relationship with Signal, or any of its present or former affiliates, directors, officers, employees, or agents acting in their capacity as such for the period of the engagement and for a period of two years after the engagement.
D.Singleton shall, within 90 days of the issuance of this Order, pay a civil money penalty in the amount of $15,000 to the United States Treasury. Such payment shall be: 1) made by United States postal money order, certified check, bank cashier's check or bank money order; 2) made payable to the Securities and Exchange Commission; 3) hand-delivered or mailed to the Comptroller, Securities and Exchange Commission, Operations Center, 6432 General Green Way, Stop 0-3, Alexandria, Virginia 22312; and 4) submitted under a cover letter that identifies Singleton as a respondent in these proceedings and states the file number of these proceedings, a copy of which cover letter and money order or check shall be sent to Harold F. Degenhardt, District Administrator, Fort Worth District Office, 801 Cherry Street, 19th Floor, Fort Worth, Texas 76102.
E.Singleton is hereby suspended from association with any broker or dealer in any supervisory or proprietary capacity for a period of six months.
F. Bennett shall, within 90 days of the issuance of this Order, pay a civil money penalty in the amount of $10,000 to the United States Treasury. Such payment shall be: 1) made by United States postal money order, certified check, bank cashier's check or bank money order; 2) made payable to the Securities and Exchange Commission; 3) hand-delivered or mailed to the Comptroller, Securities and Exchange Commission, Operations Center, 6432 General Green Way, Stop 0-3, Alexandria, Virginia 22312; and 4) submitted under a cover letter that identifies Singleton as a respondent in these proceedings and states the file number of these proceedings, a copy of which cover letter and money order or check shall be sent to Harold F. Degenhardt, District Administrator, Fort Worth District Office, 801 Cherry Street, 19th Floor, Fort Worth, Texas 76102.
G. Bennett is hereby suspended from association with any broker or dealer in any supervisory capacity for a period of four months.
By the Commission.
Jonathan G. Katz
Secretary
Footnotes
1 The findings herein are made pursuant to the Offer of Settlement of Signal, Singleton, and Bennett and are not binding on any other person or entity in this or any other proceeding.
2 On June 28, 1999, Cammarano pled guilty in the Southern District of Texas to one count of wire fraud based on the conduct described herein. U.S. v. Peter Joseph Cammarano, Case No. H-98-3707 (S.D. Tex.).
3 For example, Bennett does not recall being aware of the NASD cautionary letter to Cammarano, the issues surrounding Cammarano's departure from his prior firm, or Cammarano's history as reflected in his Form U-4 when he was hired by Signal.
4 For example, although Signal identified its annual compliance questionnaire as a part of its supervisory safeguards, the Firm was unable to locate Cammarano's 1996 and 1997 questionnaires. Furthermore, Signal's reliance on the annual questionnaire was misplaced since no one was specifically required to review the questionnaires.
5 In fact, Cammarano told the customer who complained to Bennett not to contact Signal again. Within a week, Cammarano paid the customer $100,700, the cash value of the disputed stock.