SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
SECURITIES EXCHANGE ACT OF 1934
Rel. No. 41816 / September 1, 1999
Admin. Proc. File No. 3-9639
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In the Matter of the Application of
RAFAEL PINCHAS
75-54 168 St.
Hillcrest, NY 11366
For Review of Disciplinary Action Taken by the
NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.
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OPINION OF THE COMMISSION
REGISTERED SECURITIES ASSOCIATION -- REVIEW OF DISCIPLINARY PROCEEDINGS
Violations of Rules of Fair Practice
Excessive trading
Unsuitable recommendations
Alleged misappropriation of customer's funds
Registered representative, during association with two separate member
firms of registered securities association, made unsuitable
recommendations to customers and engaged in excessive trading in
customers' accounts. Representative was also charged with
misappropriating funds from one customer's account. Held,
association's findings of excessive trading and unsuitability
sustained, findings of misappropriation reversed, and sanctions
imposed affirmed in part and reversed in part.
APPEARANCES
Rafael Pinchas, pro se.
Alden S. Adkins, Susan L. Beesley, and James S. Wrona, for NASD
Regulation, Inc.
Appeal filed June 29, 1998
Last brief filed November 2, 1998
SNIPPETS:
SECURITIES AND EXCHANGE COMMISSION
SECURITIES EXCHANGE ACT OF 1934
NATIONAL ASSOCIATION OF SECURITIES DEALERS,
Registered representative, during association with two separate member firms of registered
Held, association's findings of excessive trading and unsuitability sustained, findings of
Rafael Pinchas, pro se.
Rafael Pinchas appeals from a National Association of Securities
Inc. disciplinary action based on Pinchas' dealings with two customers between May 1989 and
The NASD found that Pinchas made unsuitable recommendations and engaged in excessive trading
Kuo Fen Chen Wang is hearing-disabled.
Before her involvement with Pinchas, Wang's only individual investment decision was to
Relying on these representations, on December 18, 1989, Wang gave Pinchas $48,929.39 to open
In the six months after Wang opened her Prudential account, Pinchas made 17 purchases and 13
Pinchas moved to Lieberbaum and arranged to transfer Wang's account there.
Wang's new account form at Lieberbaum stated that Wang's income was $20,000, her net worth
The gross commissions generated in Wang's Prudential and Lieberbaum accounts totaled
Phyllis Schimel opened an account with Pinchas at Prudential on July 28,
Schimel signed a new account form, which described her investment objectives as growth and
Excessive trading occurs when a securities professional has control over trading in an
De facto control can be established if a customer relies on a broker's advice because the
One such indicator of excessive trading is the turnover rate, which reflects the number of
NASD Regulation staff reviewed documents, conducted an on-the-record interview of Wang and
In the meantime, in May 1992, the American Stock Exchange, Inc., informed NASD staff that it
The NASD censured Pinchas, fined him $219,821, and barred him from association with any
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