John L. Shockey, of Shreveport, Louisiana, a stockbroker with Merrill Lynch, Pierce, Fenner & Smith, Inc., was fined $15,000.00; disgorged of $70,070.00; and suspended for one year from associating with any Financial Industry Regulatory Authority (FINRA) member firm in any capacity after consenting to findings that he engaged in the participation of multiple unauthorized private securities transactions. Letter of Acceptance, Waiver and Consent, No. 2014040642701 (Mar. 28, 2016).
According to the AWC, from September 2013 through February 2014, Shockey actively facilitated twenty-four private securities transactions pertaining to Miami International Holdings (MIH), a company which happened to be the parent of the MIAX Options Exchange. The AWC stated that Shockey assisted twenty-four clients in the purchasing of the MIH shares.
In certain cases, according to the AWC, Shockey reportedly sold the clients shares in MIH that he personally owned. The AWC stated that his firm was not provided with the requisite written notice prior to Shockey’s engagement in the private securities transactions.
The AWC indicated that 49,000 shares of MOH that Shockey initially owned were purchased from September 2012 through November 2013, and directly from MIH. The AWC stated that Shockey sold his shares to five of Merrill Lynch’s customers as well as another thirteen individuals who were not customers of Merrill Lynch, for an estimated total of $306,250.00. Shockey reportedly raked in $70,070.00 from the sales. The MIH shares apparently did not carry an exemption from registration, nor were they registered.
The AWC further indicated that seven individuals, including two of Merrill Lynch’s customers, were referred by Shockey to MIH to purchase the MIH shares. The seven individuals reportedly purchased 52,400 shares for an estimated $327,500.00. Like the shares that Shockey personally sold, the 52,400 shares were not exempt from registration, nor were they registered.
FINRA found that Shockey violated FINRA Rule 2010 and NASD Rule 3040 as a result of engaging in the private securities transactions, as he failed to gain Merrill Lynch’s written approval beforehand. FINRA further found that Shockey violated FINRA Rule 2010 as a result of his participation in the MIH sales, as such non-exempt and unregistered securities sales in this regard violated Securities Act Section 5. Public disclosure records reveal that Merrill Lynch permitted Shockey to resign in connection with his misconduct.
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