This is FINRA Disciplinary Case of the California-based Principal who assumed too roles and responsibilities (7) and committed too many violations of FINRA rules (7).  To understand this FINRA Case, one first needs to run through the various roles and responsibilities this individual took on.

From 2004 through December 2009, Yaman Huseyin Sencan wore 7 hats. He was registered with FINRA as a General Securities Principal (1), General Securities Rep (2), and Equity Trader Limited Rep (3) through member firm Mercator Associates, LLC.  Sencan was President (4) of the Firm during this entire period, and from July 2008 until he left the Firm, he also was its CCO (5) and AMLCO (6). Furthermore, Sencan was 100% owner (7) of the Firm from 2004 until April 2009, when his ownership interest was reduced to 33%.

Since leaving the firm on 12/31/09, he has not been heard from since - i.e., not associated with another FINRA member.

Overview of FINRA's Findings. It is alleged by FINRA that Sencan failed to reasonably supervise the activities of Firm personnel engaged in:  the charging of excessive commissions (1) sharing commissions with a non-member (2), and misusing funds on deposit with the Firm (3).  He also failed to ensure that the Firm enforced various aspects of its AML Compliance Procedures ("AMLCP"), particularly with respect to customer identification (4), wire transfers (5) and AML training (6).  Further, Sencan made material representations in an agreement to purchase Medium Term Notes ("MTN") (7).  This conduct, if you can believe it, violated only four (4) rules - NASD Conduct Rules 3010,3011 and 2110 and FINRA Rule 2010. Supervising the Head Trader. Mercator Associates, acting through its head trader:   (i) improperly shared some $4 million in commissions with one of the firm’s hedge fund clients;  and, (ii) charged excessive commissions totaling over $580,000 in transactions.  During this time, Sencan was the head trader’s direct supervisor and was aware that the firm had entered into a commission sharing arrangement with the hedge fund client. He also was responsible for reviewing that arrangement and the head trader’s trading activities. As Mercator's CCO, Sencan further was responsible for periodically reviewing emails firm personnel sent and received.  However, Sencan failed to periodically review the head trader’s electronic correspondence, or take other steps to supervise his activities. Supervising the FinOp. Mercator, acting through its FinOp, misused at least $61,000 in funds on deposit with the firm.  Of course, Sencan was the FinOp’s direct supervisor but failed to monitor the firm’s financial records, perform periodic reviews of the FinOp's e-correspondence or take other steps to supervise the FINOP’s activities. Dealing As Mercator's AMLCO. As the AMLCO, Sencan was responsible for ensuring that the firm’s AML compliance procedures (AMLCP) were enforced.  He failed to do so, in the following ways:

• The Customer Identification Program ("CIP") portion of the firm’s AMLCP required the firm, prior to opening an account, to obtain identifying information such as the customer’s passport number and country of origin.  The firm, acting through Sencan, failed to do so for some of its customers - some of whom resided outside of the United States.
• The firm’s AMLCP required the firm to maintain transmittal orders for wire transfers of more than $3,000, and those orders had to contain at least the name and address of the transmitter and recipient, the amount of the transmittal order, the identity of the recipient’s financial institution and the recipient’s account number.  On numerous occasions, funds in excess of $3,000 were wired out a customer's account, but Sencan failed to ensure that the required information was retained.
• The firm, acting through Sencan, failed to provide AML training to its registered personnel.

Dealings with Medium-Term Notes ("MTNs"). Sencan attempted to find transactional business for the firm in medium-term notes (MTNs).  As part of an effort to purchase MTNs for resale to its clients, the firm entered into an agreement with a Switzerland-based entity - which Sencan signed on the firm’s behalf.  The agreement called for the entity to provide the firm with the opportunity to purchase $100 million (face value) in specified MTNs. However, FINRA found that clauses in the agreement contained material misrepresentations about Mercator's ability to purchase MTNs:

• first clause represented that the firm was the actual legal and beneficial owner of cash funds in excess of $100 million on deposit at a major bank.
• second clause was a representation that these funds were free and clear of liens, had been legally earned and could immediately be utilized for the purchase of financial instruments
• neither of these clauses was true.

FINRA Sanctions. Sencan was:   (i) fined $20,000;  (ii) barred from serving in any principal capacity; (iii) suspended 6 months from serving in any capacity.  For further details, go to:  [FINRA AWC #2009016323801].   [Disciplinary Actions for October 2011.]