JAMES C SNOW is currently employed as a Broker and/or Investment Adviser at WILSON-DAVIS & CO., INC. located at 236 SOUTH MAIN, SALT LAKE CITY, UT, 84101.
JAMES C SNOW has worked at WILSON-DAVIS & CO., INC. since November 26, 1996
Disclosure History
JAMES C SNOW has 1 Disclosure Event(s).
Date: December 16, 2016 Category: Regulatory Initiated By: FINRA Allegations: Snow was named a respondent in a FINRA complaint alleging that he and his firm disregarded many critical supervisory obligations and this failure to supervise resulted in the firm committing willful violations of federal securities regulations, failing to act in accordance with an order of a FINRA disciplinary Hearing Panel and having a patently deficient system of supervision as it relates to key aspects of its business. The complaint alleges that Snow, the firm's president and Chief Compliance Officer (CCO), failed to establish and maintain reasonable supervisory systems and Written Supervisory Procedures (WSPs) in connection with the use of the market maker exemption, the locate requirements, and overall compliance with Reg SHO. Snow failed to ensure appropriate supervisors were assigned to supervise each registered representative and registered principal. As a result, Snow failed to implement a reasonable supervisory system to supervise the registered representatives and principals at the firm. Snow failed to enforce the firm's procedures regarding heightened supervision. Snow failed to review the circumstances and document the decision of whether or not to impose heightened supervision on an equity trader at the firm and the firm's primary owner after a disciplinary complaint was filed against them. Snow further acted in knowing violation of the FINRA Hearing Panel order when permitting the equity trader to remain employed and perform his normal duties between the issuance of the Hearing Panel decision and also without heightened supervision. Even after a heightened supervision plan was established for the equity trader, Snow failed to ensure that the equity trader was, in fact, subject to heightened supervision as required by the Hearing Panel's order. Snow also failed to reasonably supervise instant message communications for the firm's registered representatives. The complaint also alleges that as a result of Snow's failure to detect and investigate potentially suspicious trading activity, he failed to detect and investigate trading activity when presented with red flags indicative of suspicious trading activity in a little-known, highly illiquid penny stock. Snow failed to establish and implement adequate AML policies and procedures to detect, investigate and report, where appropriate, suspicious trading activity. Snow never took any investigative steps to assess whether filing a SAR with regard to the activity in the little-known penny stock was warranted as a result of the failure to establish and implement adequate AML policies and procedures. Snow failed to conduct adequate AML training. The complaint further alleges that despite the firm not acting as a bona-fide market maker, the firm's former representative placed the orders to sell shares of the four stocks short and neither he nor anyone else at the firm made any effort to borrow, arrange to borrow, or locate the securities. He was able to participate in this activity, including trading in one of these four stocks that almost led to the firm's demise, because of the firm's lack of an adequate supervisory system, lack of adequate supervisory procedures and lack of adequate supervision concerning market making and short sales. The firm's former representative was caught when the market moved against him, leaving the firm with a naked short position of over 1 million shares. The firm was only able to cover the short position in the particular stock by obtaining substantial financial assistance in the form of a $4 million loan. The firm did not have reasonable supervisory systems, including written supervisory policies and procedures. Again, Snow was responsible for establishing and maintaining adequate supervisory systems and procedures. Resolution: Decision Regulator Statement: Extended Hearing Panel decision rendered February 27, 2018, wherein Snow was fined $140,000, suspended from association with any FINRA member in all capacities for one year and ordered to requalify by examination before serving in any registered capacity in the securities industry. FINRA also ordered respondent to, jointly and severally, pay $13,443.39 in costs. The sanctions were based on findings that Snow and his firm disregarded many critical supervisory obligations and this failure to supervise resulted in the firm willfully violated Rule 203(b)(1) of Regulation SHO through its short-selling activity. The findings stated that the firm made at least 122 short sales in connection with its former registered representative's speculative trading strategy in four low-priced securities and the firm failed to comply with the borrow requirement in connection with each of these short sales. The findings also stated that the firm and Snow, its president and CCO, failed to establish and maintain reasonable supervisory systems and WSPs in connection with the firm's use of the market maker exemption to the borrow requirement of Regulation SHO. The firm lacked reasonable supervisory systems, including WSPs. Snow was responsible for establishing and maintaining adequate supervisory systems and procedures, including systems and procedures relating to the firm's Regulation SHO compliance and the bona-fide market maker exemption. Snow did not do so. In addition, the firm and Snow failed to adequately consider a broker for heightened supervision after a complaint was filed against the firm, a principal and the broker, and document any decisions made in that regard. Alike, when a heightened supervision plan was finally devised, it was unreasonable and inadequate. Further, the firm, acting through Snow, failed to clearly assign each registered person to an appropriately registered representative and/or principal responsible for supervising that individual's activities. As a result, the firm and Snow failed to implement a reasonable supervisory system to supervise the registered representatives and principals at the firm. The firm and Snow also failed to reasonably supervise instant message communications for the firm's registered representatives. The firm and Snow improperly delegated the review of instant messages by its representatives to an unregistered person at the firm. The findings also included that the firm failed to establish and implement reasonable AML policies and procedures to detect, investigate, and report, where appropriate, suspicious trading activity. Snow was responsible for ensuring that the firm's AML program was adequately tailored to the risks posed by the firm's business in order to mitigate those risks. The firm and Snow failed to establish or maintain AML policies and procedures tailored to the risks posed by its penny stock business. As a result of these failures, Snow failed to detect and investigate a number of red flags indicative of potentially suspicious trading activity in the stock of a company. This enabled the suspicious activity to continue for an extended period without adequate review to assess the legitimacy of the trading. Also, Snow failed to provide adequate AML training to enable employees to detect potentially suspicious trading activity, including the risks and red flags associated with penny stock activity. Employees were not trained on specific steps to be taken in order to monitor for or detect any potentially suspicious trading activity.On March 1, 2018, respondent filed with the Office of Hearing Officers an appeal of the Extended Hearing Panel decision dated February 27, 2018. The sanctions are not in effect pending review. Broker Comment: The Hearing Panel rendered a decision on February 27, 2018. Mr. Snow strongly disputes FINRA's allegations and immediately appealed the Hearing Panel's decision (on March 1, 2018). FINRA's allegations and the Hearing Panel's decision was based on a selective view of the evidence and the relevant law, essentially ignoring any evidence (or legal precedent) that did not support FINRA's allegations. In particular, in regard to the claims of "matched trades" in a stock, the evidence demonstrating that there were no matched trades whatsoever (which FINRA eventually admitted at the hearing). The trades at issue were infrequent and generally involved long time, well known clients who are outstanding members of the Salt Lake City community. The stock at issue traded at minimal volume, primarily 500 or 1000 shares a day and the trades were reviewed by a principal of the firm on a daily basis (which evidenced in writing). The assertion that Mr. Snow (or the Firm) did not tailor its AML policies and supervision is not supported by the facts or legal precedent. Mr. Snow (and the Firm) developed reasonable written procedures in regard to AML and Reg. SHO and provide adequate supervision on these topics. For these reasons, Mr. Snow believes FINRA's allegations and the Panel's decision is based upon an erroneous interpretation of both the facts and the law (and reflects a propensity to be punitive given Mr. Snow's 20 plus year in the industry without any disciplinary issues).
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