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John Batista Bocchino, of New York, New York, has been permanently barred from associating with any Financial Industry Regulatory Authority (FINRA) member in any capacity based upon a FINRA Office of Hearing Officers Order Accepting Offer of Settlement containing findings that Bocchino effected unauthorized trades in customer accounts and caused an assistant of his to furnish falsified customer account information and documentation. Department v. Enforcement v. Bocchino, et al., No. 2012032019101 (June 1, 2017).

According to the Order, between May of 2011 and March of 2012, at a time when Bocchino was associated with Morgan Stanley, he effected trades of Venezuelan bonds by using a scheme to get around his firm’s restrictions on his sales of the bonds. The Order indicated that Bocchino was one of the firm’s New York Branch elite producers. Particularly, in 2011 and 2012, he made over $4,500,000.00 in revenue, wherein his compensation was primarily driven by trading sovereign and government bonds issued by Venezuela among other countries in South America.

The Order stated that a system was created through Venezuela’s Central Bank to allow for currency conversion of Venezuelan’s local currency, bolivar, to the United States dollar. The firm’s system, SITME, issued bonds to banks of Venezuela in United States dollar denominations. The Order stated that bonds were purchased in bolivars by those wishing to convert the bolivars to dollars, where banks in Venezuela subsequently deposited the debt instruments in brokerage firms in the United States. Finally, brokerage firms would wire funds to third party financial entities when customers sought to sell their positions.

Apparently, the reputational and regulatory risk concerning Venezuelan bonds was enough of a concern for Morgan Stanley to warrant restrictions on transactions with certain customers. The Order indicated that customers were eventually required, via buy-side confirmations, to prove that they had purchased bonds in United States dollars in order for transactions to go through. These restrictions evidently hampered Bocchino’s business production and were not lifted upon his request.

Bocchino reportedly utilized approximately five nominee accounts to effect trades in customer accounts in a manner designed to circumvent the restrictions imposed by Morgan Stanley. Hundreds of trades were apparently effected in the nominee accounts in the name of prominent brokerage and financial firms even though the institutions neither knew of Bocchino’s activities nor authorized them. Ultimately, Bocchino traded $190,000,000.00 worth of bonds issued by Venezuela despite the firm’s policies prohibiting Bocchino’s activities. FINRA found that Bocchino’s conduct was violative of FINRA Rules 2010.

Further, hundreds of bogus information and documents were reportedly utilized by Bocchino’s assistant in furtherance of the transactions. Specifically, Bocchino concealed the nominee account identities, and caused false data to be entered in the firm’s settlement desk and order systems. FINRA found Bocchino’s conduct in this regard to be violative of Rule 2010. FINRA further stated that reports, blotters, customer statements, confirmations, trade tickets, and account profiles had all been falsified by Bocchino, which caused his firm to hold records and books that were inaccurate. FINRA found Bocchino’s conduct to be violative of FINRA Rule 2010, 4511 and NASD Rule 3110 in this regard.

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