A registered principal in Plano, Texas was recently busted for selling millions of shares of a thinly traded penny stock. The principal was found to have done zero due diligence despite numerous red flags regarding the stock that netted commissions in excess of $481,000. Patrick Francis Harte Jr., formerly of Barron Moore in Texas, sold more than $9.3 million worth of shares of a penny stock to his firm's customers. FINRA found that the circumstances surrounding the stock and the firm's customers presented numerous red flags of a possible unlawful stock distribution. Harte did not do his due diligence prior to selling the stock. Additionally, Harte did not determine if a registration statement was in effect with respect to the shares or if there was an applicable exemption. Instead he relied on transfer agents and clearing firms to determine the tradability of the stock. FINRA also found that Harte failed to undertake adequate efforts to ensure that a registered rep also selling the stock ascertained whether customers' unregistered shares could be sold in compliance with Section 5 with the Securities Act of 1933. Harte apparently didn't consider the determination of free-trading status of shares to be within his responsiblities. Finally, Harte was on notice of inconsistencies between customers' trading experiences and activity in their firm accounts yet took no action. For his lack of oversight and research, FINRA barred Harte from the industry. [FINRA Case #2006004666601]