[ by Howard Haykin ] W.J. Bonfanti, Inc. (nka WJB Capital Group, Inc.) was expelled by FINRA several months after the firm closed down its operations and several years after the firm started experiencing serious financial difficulties.  WJB, along with its CEO and CFO/FinOp had been charged by FINRA with misstating its financial records and engaging in securities transactions while it was below its required net capital. The Firm's CEO Craig Rothfeld was barred from the securities industry, while CFO/FinOp Gregory Maleski was barred from acting in a principal capacity. Background Info:  Broker-Dealer, Executives The WJB Capital Group, Inc. was founded in 1993 and conducted its business as W.J. Bonfanti, Inc. until 2008, when the firm began experiencing financial problems in 2009.  It is a privately held institutional broker-dealer that offered agency equity and options execution, a corporate access platform, general market and specialized sector research, and commission management solutions.  At the time it ceased operations, in early January 2012, it had about 100 associated persons and had trading desks in New York, Boston, Denver and San Francisco. On 1/26/12, pursuant to Rule 17a-l 1 promulgated under the Securities Exchange Act of 1934, WJB notified regulators that it had suffered a net capital deficiency of nearly $12 million for the calendar year ended 12/31/11.  Its FOCUS Report for December 2011, the firm disclosed that this deficiency was due, in part, to an $8 million reserve that it had established with respect to certain unidentified contingencies. The firm currently maintains its FINRA membership. WJB's CEO Craig Rothfeld initially registered with FINRA in 1994 and worked for  several broker-dealers until 2002, when he was hired by WJB.  Rothfeld is not currently registered, was terminated by the firm in January 2012. WJB's CFO and FinOp Gregory Maleski also was hired by WJB in 2002;  although he first  registered with FINRA in 2005.  Malcski was terminated by the firm in January 2012 and currently is not registered. FINRA Findings and Allegations. From 2009, when WJB Capital began to experience financial difficulties, through 2011, Rothfeld and Maleski allegedly misstated WJB's financial position on the firm's balance sheet.  Throughout 2011, the firm was essentially insolvent. Examples of erroneous accounting postings:

• Rothfeld and Maleski converted $9.8mn in compensation previously paid to 28 employees into forgivable loans. The firm used this accounting adjustment to get out of paying its appropriate P/R taxes.  Had the transactions been correctly recorded, WJB's existing losses would have increased  substantially.

• CEO and CFO misclassified certain items as allowable for net capital purposes throughout 2011, essentially hiding the fact that WJB failed to maintain minimum net capital at various times of the year.
  • e.g., firm misclassified receivables related to "non-deal road-shows" - that were not allowable assets under the net capital rule - which caused the firm's net capital calculations on its FOCUS report to be overstated by at least $1 million over a 2-year period.
  • e.g., firm misclassified a $1.5mn loan it received from its clearing firm as an allowable asset for net capital.
  • e.g., at times during the 2-year period, WJB's FOCUS reports and net capital calculations were overstated by as much as $4.4mn per month.

• Firm and CEO and CFO were charged with the related violation of having failed to reasonably supervise the firm's financial and accounting functions.

FINRA Charges and Agreed Upon Sanctions. WJB Capital Group, Rothfeld and Maleski agreed to be expelled or barred from the industry to settle FINRA charges. FINRA Staff Credits. Investigation by:  Howard Kneller and Steven Korostoff, and supervised by Susan Light.  FINRA Enforcement was assisted by FINRA Dept of Risk Oversight and Operational Regulation, which referred the matter to Enforcement after its exam team discovered questionable accounting entries in WJB's 2009 FOCUS reports. For further details, go to:  [FINRA News Release, 8/15/12] and [FINRA AWC #s 20110265470 and 20110290013].