Kenneth Alan Zegar, of New York, New York, a stockbroker currently registered with Jeffries LLC, has been fined $30,000.00, stripped of his securities registration, and suspended from associating with any Financial Industry Regulatory Authority (FINRA) member in any capacity based upon consenting to findings that he made misrepresentations to customers concerning fixed income securities transactions effected in their accounts. Letter of Acceptance, Waiver and Consent, No. 20160499630-01 (May 30, 2017).
According to the AWC, Zegar, while serving as Jeffries LLC managing director and trader in the firm’s mortgage-backed securities division, made misrepresentations to customers and instructed other staff members to make misrepresentations to customers concerning securities purchases. Evidently, at least one of the affected customers who purchased debt investments via Zegar had been informed by him, or another director at Zegar’s suggestion, that the firm and the bond sellers involved in the customer’s transactions were working together. Yet, the AWC stated that Zegar was cognizant that the bond investments were possessed by the firm. Additionally, at least one of the customers was reportedly misinformed by Zegar regarding the prices in which the firm obtained the debt securities.
Apparently, in two of the cases, the firm was notified by a seller that Jeffries LLC bought bonds for a customer at the price which the customer bid. Moments later, Zegar purportedly informed the customer who sought to purchase the bonds that the bid price was insufficient for buying them. The AWC stated that Zegar claimed to the customer that the securities could be bought by the firm and placed into the firm’s propriety accounts at prices that exceeded the customer’s bid. The AWC revealed that the bonds were offered via Zegar to a customer for a higher price point, ultimately allowing Zegar to be compensated a greater amount for his part in facilitating the transaction. The AWC stated that customers paid more than what Zegar initially quoted as the purchase price paid by the firm. Consequently, Zegar’s representations to customers were found by FINRA to be false.
The AWC stated that in another case, Zegar made it appear as though he involved a third party in a transaction with a customer when the transaction was merely between the customer and Jeffries LLC. Zegar apparently told the customer in this case that the seller passed on selling the securities at a particular price point. Moreover, Zegar reportedly suggested that another director misrepresent the source of securities sold to the customer. FINRA found Zegar’s conduct in these circumstances to be violative of FINRA Rule 2010.
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