Barred broker a “Bad Boy” for life

February 16, 2012 | Last updated on February 16, 2012
3 min read

On Wall Street, “bad boys” get themselves into trouble everyday, quickly becoming a “defendant” or “respondent”, and then cutting their losses by walking away with a mere “ding” on their record.

Or so they believe.

Despite the commonplace occurrence of sanctions, fines and suspensions, you might want to consider for a second just how damaging a troublemaker label can be before being tempted to bend the rules.

Take, for example, the case of Charles DaCruz. In September 2011, DaCruz filed an application for a Mortgage Loan Originator license, and was surprised when he was denied by the New York State Banking Department.

His past had come back to haunt him. In connection with a 2004 NASD regulatory complaint against him for alleged misconduct from 1998 to 1999, DaCruz had received a $67,000 fine.

He had also been barred in all capacities after attempting to appeal the NASD’s initial decision to suspend him. He had testified on his own behalf, and accidentally, worsened his fate through his appeal.

And now, twelve years after his original offenses, he was again being punished. The NY Banking Department took into account that although his bad behaviour had occurred when he was young, it was tagged at the time as shocking and “voluminous”.

“Despite the misconduct occurring years ago, the NAC’s decision was issued in 2007, thereby indicating that despite the passage of time, petitioner’s misconduct was deemed to be so serious that petitioner’s original one-year suspension was increased to a complete bar,” noted the NY Banking Department.

He had engaged in violations over an extended period of time, had obtained a sizable monetary benefit, and had willingly accepted sales incentives and provided baseless predictions to his customers. The New Jersey Bureau of Securities had also flagged his case and revoked DaCruz’s registration as an agent with any NASD broker-dealer in an effort to protect the public interest.

These infractions, along with additional problems, led the NY Banking Department to seriously consider his past. He attempted to put his best foot forward and move on, but DaCruz was painted as a danger to future customers nonetheless.

Bill Singer, Wall Street blogger, urges Wall Street staffers to consider that “one of the most erroneous myths of Wall Street regulation and prosecution is that being barred from the industry is the end of it.” The impact of a bar stretches over the long term and beyond the confines of the securities industry.

DaCruz did appeal to the New York Supreme Court in order to obtain his license, but his efforts were for naught. The court also believed that time alone had not wiped his slate clean, and that it was “rational for the NY Banking Department to determine that [his] conduct amounted to a lack of character and general fitness for an MLO license.”

In Singer’s opinion, the case could have gone either way. He warns, though, that before you consider stirring up trouble, remember that “a second chance at redemption for some is a troubling opportunity for mayhem for others.” Officials will always err on the side of protecting the public.

DaCruz may have been a “over zealous puffery of a kid in his late 20s”, but he still had to pay for his mistakes in more ways than he could have imagined.

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