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Regulatory Sanctions

B/D's Acting President Lets His Boss Work Through a Suspension

September 26, 2017

by Howard Haykin


Robert Lefkowitz agreed to pay a $5K fine and serve a 5-month suspension as a principal to settle FINRA charges that while acting as his member firm’s President, CEO and CCO, he was aware that a statutorily disqualified person continued to associate with the firm and conduct a securities business while suspended by FINRA.


BACKGROUND.    Lefkowitz, a resident of Miami, FL, has 28 years of experience with 10 firms. Since October 2011, he’s been associated with Dakota Securities International (“DSI”), serving as a General Securities Representative. In April 2016, Lefkowitz obtained his General Securities Principal license and, in May, he began serving as the President, CEO and CCO of DSI. Lefkowitz does not have any disciplinary history.


FINRA FINDINGS.    While acting as DSI's President, CEO and CCO, Lefkowitz permitted another individual who had been suspended by FINRA to act in a capacity inconsistent with his FINRA suspension and permitted DSI to associate with the statutorily disqualified individual. Here’s how it went down:


Lefkowitz served as President, CEO, and CCO of Dakota Securities International from May 31, 2016 through August 30, 2016. He stepped up into those roles when the previous head of the firm – “BZ” (Bruce Zipper) – was to serve his 3-month suspension pursuant to a 2016 FINRA disciplinary action. Under terms of the settlement, BZ was restricted from associating with any FINRA firm in all capacities and, by virtue of this suspension, BZ was statutorily disqualified during the 3-month Suspension Period.


FINRA Rule 8311.  Effect of a Suspension, Revocation, Cancellation, Bar or Other Disqualification.   In relevant part, this rule reads that … “If a person is subject to a suspension, revocation, cancellation of registration, bar from association with a member (each a "sanction") or other disqualification, a member shall not allow such person to be associated with it in any capacity that is inconsistent with the sanction imposed or disqualified status, including a clerical or ministerial capacity. A member also shall not pay or credit to any person subject to a sanction or disqualification, during the period of the sanction or disqualification or any period thereafter, any salary, commission, profit, or any other remuneration that the person might accrue during the period of the sanction or disqualification.”


Notwithstanding his suspension, BZ continued to associate with DSI and conduct a securities business during the 3-month Suspension Period. Among other things, BZ: (i) communicated with DSI's customers about securities holdings and account statements; (ii) made securities recommendations to DSI's customers; and, (iii) engaged in clerical activities on behalf of the firm, such as by communicating with DSI's vendors.


Meanwhile, Robert Lefkowitz was aware that BZ, a statutorily disqualified person, was conducting these firm-related activities during his suspension period – and in doing so, Lefkowitz permitted another individual, who had been suspended by FINRA, to act in a capacity inconsistent with his FINRA suspension and permitted DSI to associate with the statutorily disqualified individual.


FINANCIALISH TAKE AWAY.    It seems like Lefkowitz got off easy. After all, he knowingly (and willfully) enabled his boss - the firm's suspended President, CEO and CCO - to carry out many, if not most, of his usual business functions. This was undoubtedly a clear violation of FINRA's order.


Of course, what choice did Lefkowitz really have. In all probability, BZ gave Lefkowitz a career-ending ultimatum - let me continue running the business during my suspension, or look elsewhere for employment. And so, Lefkowitz willingly took a bullet for the firm (and its leader). If anything, he deserves a bonus.


This case was reported in FINRA Disciplinary Actions for August 2017.

For details on this case, go to ...  FINRA Disciplinary Actions Online, and refer to Case #2016047565701.