In FINRA Disciplinary Actions for September, C-I reports below on 5 cases where individuals associated with member firms were fined and suspended or barred for selling private placements - usually without their member firms' knowledge or permission.  These types of violations, unfortunately, are all-too common. Our timing is perfect, because FINRA recently proposed adoption of a new rule that would place restrictions and conditions on those involved with private placements of securities.  Click the link in this paragraph for our 10/17 RULE News story.  Here now are our summaries of the 5 cases. 1.  James Lee Carroll, while serving as a registered rep with NY-based Park Avenue Securities, engaged in a private securities transaction without providing prior written notice to Park Avenue.  In addition, from October 2008 until early February 2009, while still registered with Park Avenue, Carroll engaged in 2 outside business activities, again without providing prompt written notice to the firm. In the spring of 2008, Carroll invested approximately $100,000 of his own money in what was later determined to be a $400 million Ponzi scheme.  Carroll reinvested the interest he earned and ultimately made a $25,000 profit from his investment.  However, Carroll apparently never invested the customer funds.  It wasn't until the Ponzi scheme collapsed in January 2009 and Park Avenue's home office began investigating possible involvement by its RR's, did Carroll disclose his private securities transaction to the firm. FINRA Sanction:  $7.5K fine, 30-day suspension.   [FINRA AWC #2009016911201] 2.  Ronald Dean Clark, a registered rep with ProEquities in Florida, in December 2007, participated in a private securities transaction (not for selling compensation) involving the purchase of some $88K worth of equity securities in Golden Eagle Lodge, Ltd., a Canadian-based holding company, by 2 customers.  Clark failed to provide written notice of the securities transaction to his member firm prior to his participation in the securities transaction.  FINRA Sanction:  $5K fine, 15 day suspension.  [FINRA  AWC  #2009018098601] 3.  Audrey Dianne Cline, while serving as a registered Investment Company & Variable Products Rep with Intersecurities, Inc. in Nebraska, she allegedly participated in private securities transactions contrary to her firm's policies and without notifying her firm in advance.  Between April 2008 and December 2008, through Cline's recommendations, several investors (including a firm customer) purchased $370K in promissory notes.  The investors eventually lost all their investment.  Cline did not give notice to and recieve pproval to participate in these private securities transactions outside the regular course of her employment.  FINRA Sanction:   $5K fine, 3-month suspension.  FINRA AWC #2009017656901] 4.  William Charles Davis, while serving as a registered rep with World Equity Group in Illinois, participated in private securities transactions by introducing 2 customers and 1 other individual to a principal of Mortgage Desk, Inc.  Davis did not give notice to and receive approval from the Firm before participating in these private securities transactions. The individuals agreed to invest $460K in what were purportedly high yield corporate bonds issued by Mortgage Desk - obviously, not Firm-approved investments.  In the end, they lost their entire investments.  This activity took place between January 2006 and January 2007, during which time Davis also engaged in an unapproved outside business activity by working as a loan originator for Mortgage Desk.   FINRA Sanctions:   $10K fine, 4-month suspension.  [FINRA AWC #2009018726501] 5.  Harry Friedman, a registered principal with First Montauk Securities, operated an OSJ in NYC with Joseph Schnaier, a registered rep.  The pair formed Friedman, Schnaier & Associates LLC, a company they planned to operate as a new broker-dealer.  In July 2004, they submitted a new membership application on behalf of Friedman, Schnaier & Associates to FINRA's Membership Application Program ("MAP") office. The MAP office staff advised Friedman and Schnaier that staff had concerns about a possible NASD Rule 3040 violation involving Global International's purchases and sales of securities while Friedman and Schnaier were associated with First Montauk. The consultant hired to assist Friedman and Schnaier with the MAP application process sent a letter to the MAP office staff, dated December 17, 2004, stating that Friedman and Schnaier did not understand that they had an obligation under NASD Rule 3040 to inform First Montauk in writing about the securities transactions because "Global [International] was engaged in a passive investment" in which the owners of Global International "had no active role."  FINRA Sanction:  $77.5K fine, 9-month suspension.  [FINRA AWC #2005000835801]