William H. Jennings II, of New York, New York, a securities principal with Jefferies LLC, was fined $30,00.00 and suspended in a principal capacity for three months, and had his principal license revoked after consenting to findings that he failed to supervise representatives who made misrepresentations to firm customers. Letter of Acceptance, Waiver and Consent, No. 20160486934-01 (Apr. 25, 2016).
According to the AWC, in 2011, Jennings co-led a group of fixed income specialists in the firm’s trading activities, where he and other supervisors were responsible for trading, sales, and other supervision pertaining to the firm’s mortgage-backed securities business. From 2012 through March 2014, Jennings, along with the staff he was in control of, were investigated by FINRA for misrepresentations made to customers pertaining to securities transactions.
The AWC stated that Jennings did not prevent false statements or otherwise appropriately address false statements made to a firm client concerning a mortgage-backed security transaction. Of the four instances, two involved a sales representative communicating (or intending to communicate) statements that the representative and Jennings knew were untrue.
Apparently, in two circumstances, the firm was an intermediary in a securities transaction (one which was ultimately effected), whereby the firm would be purchasing bonds from a client at one price and subsequently selling the bonds to another customer at an elevated price. The AWC stated that the firm’s misrepresentations concerned the firm’s cost basis associated with the purchase of the bonds. The AWC stated that when customers inquired about such, Jennings responded by communicating inaccurate information regarding the firm’s profitability associated with the transactions.
The AWC further stated that in a third case, a firm trader (which Jennings was responsible for supervising) communicated the wrong price information pertaining to a securities transaction with the goal of getting the customer to purchase the securities for more than the actual price.
FINRA noted a fourth case, where a firm representative misrepresented to a client that another client had placed an order to sell such client’s bonds, when the bonds were allegedly already in the firm’s inventory. The customer, according to the AWC, ended up moving forward with the transaction. Jennings, according to
FINRA, either knew or should have known that misrepresentations were made, and did nothing to take corrective action.
The AWC further stated that Jennings failed to comply with his obligations, noted in his firm’s compliance manual, to report the traders’ misconduct upon being notified of such. Jennings apparently never notified any of the firm’s compliance personnel about the aforementioned incidents. FINRA found that Jennings’ failure to appropriately supervise his staff, specifically in order to prevent false communications from being made, was violative of FINRA Rule 2010 and NASD Rule 3010.
Public disclosure records show that Jennings was permitted to resign on January 27, 2014. Apparently, the individual that Jennings was responsible for supervising was indicted and convicted in March 2014 for some of the aforementioned misrepresentations. Apparently, Jennings resigned after learning that the United States Attorney’s Office for the District of Connecticut was unwilling to enter into a non-prosecution arrangement if he remained employed with the firm.
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