Rafael Barela Jacinto, of New York, New York, a stockbroker formerly registered with Morgan Stanley Smith Barney, has been fined $10,000.00 and suspended for one year from associating with any Financial Industry Regulatory Authority (FINRA) member in any capacity pursuant to an Office of Hearing Officers Decision & Order of Offer of Settlement containing findings that he falsified firm documentation in order to facilitate unauthorized transactions. Department of Enforcement v. Rafael Barela Jacinto, No. 2012032019101 (June 1, 2017).
According to the Order, from June of 2009 to March of 2012, during the period in which Jacinto was a sales assistant for one of Morgan Stanley’s leading producers, John Batista Bocchino (a stockbroker who FINRA barred in all capacities on June 1, 2017), he facilitated a scheme wherein bogus information was placed into Morgan Stanley’s systems and communicated to the firm’s trading desk in order for Bocchino to effect one hundred and ninety million dollars’ worth of unauthorized Venezuelan bond transactions.
Apparently, five brokerage firms and financial entities were used by Bocchino as nominee account holders in order to effect an estimated three hundred trades – a scheme that enabled Bocchino to bypass restrictions that Morgan Stanley imposed within its procedures and policies to restrict trading of Venezuelan bonds. Nominee account documentation provided to the firm via Jacinto reportedly conveyed that these institutions would conduct trades on a proprietary basis.
The Order stated that once the nominee accounts were set up, Jacinto helped effect trades that the affected financial and brokerage firms never authorized. Evidently, the names of the customers who had actually sold the bonds were concealed from Morgan Stanley. Further, three of the thirteen customers, which included a London based investment management entity, DMB, an Argentinean investment institution, AS, and a Venezuelan based banking institution, did not maintain Morgan Stanley accounts and were not permitted to utilize the firm to effect trades.
The Order revealed that the firm’s reports and blotters, statements from customers, confirmations of customer orders, trading tickets, among other customer account information was falsified via Jacinto or someone who Jacinto directed. Consequently, the firm did not have sufficient information to determine whether transactions were suitable, and the customers were thus never subject to the firm’s oversight to determine the validity of the transactions. FINRA found that Jacinto’s conduct was violative of FINRA Rules 2010 and 4511.
FINRA Public Disclosure reveals that Jacinto later became associated with UBS Financial Services, Inc., but was fired on September 19, 2016, based upon allegations of his wrongdoing identified in the FINRA disciplinary action against him.
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