The Financial Industry Regulatory Authority (FINRA) barred a former Morgan Stanley representative for concealing the customers behind around $190 million in Venezuelan bond trades.
John Batista Bocchino hid the customers’ trades from Morgan Stanley by creating hundreds of documents containing false information, including new account forms and trade tickets, FINRA said Thursday.
He used the documents to open accounts in the names of other financial institutions.
“Unbeknownst to these financial institutions, Bocchino executed approximately 300 Venezuelan bond trades in the accounts opened in their names,” FINRA said.
Morgan Stanley had restricted trading in Venezuelan bonds due to regulatory and anti-money laundering concerns as well as risks to its reputation.
Because he hid the real customers behind the accounts and trades from Morgan Stanley, the firm couldn’t “conduct appropriate suitability and anti-money laundering reviews of the activity,” FINRA said.
“In fact, several of the underlying customers presented regulatory concerns, at least three were not customers of Morgan Stanley and were not approved to trade through the firm, and one previously had its account frozen by the firm,” according to FINRA.
Bocchino’s sales assistant at Morgan Stanley, Rafael Barela Jacinto, was suspended for a year and fined $10,000 for creating firm documents containing false information, FINRA said.
FINRA is an independent Wall Street regulator overseen by the SEC.
The Bocchino “order accepting settlement” is here (pdf).
Richard L. Cassin is the publisher and editor of the FCPA Blog.