Wyatt Finra

8/11/2019 Wyatt Finra

1/6

FINANCIAL INDUSTRYREGULATORYAUTHORITYLETTEROFACCEPTANCE,WAIVERANDCONSENT

NO.2013036670002

TO:

Department

of

EnforcementFinancial IndustryRegulatoryAuthority ("FINRA")

RE: StevenM.Wyatt,RespondentRegisteredRepresentative

CRDNo.2522129

Pursuant to FINRA Rule 9216 ofFINRA's Code of Procedure, Steven M. Wyatt ("Wyatt")submits this LetterofAcceptance,WaiverandConsent ("AWC") for thepurposeofproposingasettlement of the alleged rule violations described below. This AWC is submitted on thecondition that, if accepted, FINRA will not bring any future actions against Wyatt alleging

violations

based

onthe

same factual

findings

described

herein.

I.

ACCEPTANCEANDCONSENT

A. Wyatt hereby accepts and consents, without admitting or denying the findings, and

solely forthepurposesofthisproceedingand anyotherproceedingbroughtby or onbehalfofFINRA, or to which FINRA is a party, prior to a hearing andwithout anadjudication ofany issue of law or fact,

to the entry of the following findings byFINRA:

BACKGROUNDWyatt entered the securities industry in July 1994 as a general securitiesrepresentativewithCGM, aFINRA-regulatedbroker-dealer, and remained employedthere until December 2007, when Wyatt became associated with Morgan StanleySmithBarney ("Morgan Stanley" or the

*'Firm"), a FINRA-regulated broker-dealer,

in its Ridgeland, Mississippi branch office. Wyatt obtained his Series 7 and 63

licenses inSeptember 1994,andhisSeries3 license inAugust2003.

On July 20, 2012, the Firm reported that it teIminated Wyatt's employment forconcerns relating to his participation and solicitation of unapproved outsideinvestments.

Wyatt is not currently employed by or associatedwith a FINRA-regulated broker-dealer. FINRA retainsjurisdiction overWyatt pursuant to Article

V, Section 4 ofFINRA'sBy-Laws.

RELEVANTDISCIPLINARYHISTORY

Wyatthasnoprior formaldisciplinaryhistory in the securities industry.


2/6

OVERVIEW

BetweenOctober2009 and February 2010 (the "RelevantPeriod"), Wyatt, ageneral

securities representative associated with Morgan Stanley, engaged in a privatesecurities transaction with M1, an Indiana-based medical device company.Specifically,Wyatt invested a total of$58,750 inMl in return forwhich he receivedapproximately 43,518 sharesofcompany stock, without first providing notice to theFirm. Wyattalso introduced and recommended the purchaseofMI stock to sevenofhisFirmcustomers, threeofwhom ultimately invested inMi,withoutprovidingpriorwrittennotice toMorgan Stanley.

By failing to give the requisite notice to the Firm ofhis personal private securitiestransactions and participation in private securities transactions relating toMI,WyattviolatedNASDRule3040andFINRARule2010.

FACTSANDVIOLATIVECONDUCT

NASD Rule 3040(b) requires associated persons to provide written notice to their

member firm employer "prior to participating in any private securities transaction."The term "private securities transaction," as defined in NASD Rule 3040(e)(1),

means any security transaction outside the regular course or scope ofan associated

person's employment with a member, and applies to both sales and purchases ofsecurities.

FINRA Rule 2010 requires the observance ofhigh standards ofcommercial honorandjustand equitableprinciplesoftrade. A violationofNASD Rule 3040 is also aviolationofFINRARule2010.

A. FirmPoliciesandProcedures-PrivateSecuritiesTransactions

Morgan Stanley'sComplianceManual in effectduring theRelevantPeriod required

Firm brokers to obtain approval from their branch manager or supervisor and theFirm's Compliance Department before participating in any private securitiestransaction, including transactions in the broker's name as well as "those that youcould be expected to influenceor control outside the regular courseorscopeofyourFirm employment...." Morgan Stanley's Compliance Manual defined participation

as including "not only making the purchase, but also referring or introducing

customers to the issuer, [and ]arranging and/or participating in meetings between

customersand the issuer...."

Wyatt completed the Firm's Annual Compliance Attestation on April 6, 2009 andagain on May 21, 2010. As part of that process, Wyatt attested that he had not(i) rendered any assistance to or purchased any private placement investments,

(ii)purchased or sold securities directly from an entity or corporation, or(iii) recommended, participated inordirected any client to participate in any outsideprivatesecuritiestransactionswhileassociatedwith theFirm.

B. WyattIntroducesandRecommendsMItoFirmClients

In or around August 2009,Wyattwas introduced toMI by RZ, an individual withwhom he had aprior relationship. Wyattattended aMI roadshow presentationwith


3/6

fourofhisFirm clients,CE, RE, DDandBO,where they learnedaboutthecompanyandmetwith variousMIofficers. Wyattalso separatelydiscussedMIand its privateofferingwith threeother Firm clients, JS, RV andMW. OnAugust30,2009,Wyattsentane-mail from hispersonalYahooaccount to customerJS forwardingadditional

information provided by the company, extolling the company's productand advisingthat ''a market cap of this size could potentially bring an overwhelming rate ofreturn." In theAugust2009e-mail,Wyattalso informed JS thathewould bemaking

apersonal investment inMI.

Wyatt did not inform Morgan Stanley ofhis relationship with MI, or his plans tointroduce and recommend MI's private offering to certain of his Firm clients.Ultimately, threeofWyatt's Firm customers, JS, BO andCE, invested inMI. Wyattfailed todiscloseanyofthesecustomer investments inMI to theFirm.

C. Wyatt'sUndisclosedPersonalInvestments inMIIn October 2009 and February 2010, Wyatt invested $33,750 and $25,000

respectively in MI. Through his two investments, Wyatt acquired approximately43,518 sharesofMI stock. Wyattdid not informMorgan Stanleyofhis investmentsinMI, andmade the investments inhiswife'sname inorder to circumvent theFirm'srequirementthatheobtainpermission forhisparticipation inMl'sprivateplacement.

By personally investing inMI, and introducing and recommending the purchaseofMI to his Firm clients, without first providing written notice to Morgan Stanleybefore engaging in these private securities transactions,Wyatt violatedNASD Rule3040andFINRARule2010.

B. Wyattconsentsconsenttothe impositionofthefollowingsanctions:

a. A four-month suspension from associating with any FINRA-regulated broker-

dealer inanycapacity;and

b. A fineof$12,500 (deferred).

Wyattunderstands that ifhe is suspended from associating withanyFINRAmember.hebecomessubjecttoastatutorydisqualificationasthatterm isdefined inArticle III,Section 4 of FINRA's By-Laws, incorporating Section 3(a)(39) of the SecuritiesExchangeActof1934. Accordingly, Wyattmay not be associatedwith any FINRAmember in anycapacity, including clerical orministerial fi?nctions,during theperiod

ofthesuspension (seeFINRARules8310and 8311).

The fine shall be due and payable either immediately upon reassociation with amember firm following the four-month suspension noted above, or prior

to any

applicationor request for relieffrom anystatutorydisqualification resulting from thisoranyother

eventorproceeding,whichever isearlier.

Wyatt specifically and voluntarilywaivesany right to claim thathe is unable to pay,

noworatanytimehereafter, themonetarysanction imposed in thismatter.

Thesanctions imposedhereinshall beeffectiveonadatesetbyFINRA staff.


4/6

IL

WAIVEROFPROCEDURALRIGHTS

Wyatt specifically and voluntarily waives the following rights granted under F?NRA's

CodeofProcedure:

A. TohaveaComplaint issuedspecifying theallegationsagainstme;

B. To be notified of the Complaint and have the opportunity to answer theallegations inwriting;

C. To defend against the allegations in a disciplinary hearing before a hearingpanel, to have a written record of the hearing made and to have a writtendecision issued; and

D. To appeal any such decision to theNational AdjudicatoryCouncil ("NAC"?and then to theU.S.SecuritiesandExchangeCommission andaU.S.CourtofAppeals.

Further,Wyattspecificallyand voluntarilywaives any rightto claim biasorprejudgment

oftheGeneral Counsel, theNAC, oranymemberoftheNAC, in connectionwith suchperson'sorbody's

participation indiscussions regarding the termsandconditionsofthisAWC, or other

consideration of this AWC, including acceptance or rejection of thisAWC.

Wyatt further specificallyandvoluntarilywaivesany righttoclaim thataperson violatedthe ex parteprohibitionsofFINRARule9143 or the separationoffunctionsprohibitionsof F!NRA Rule 9144, in connection with such person's or body's participation indiscussions regarding the terms and conditions ofthis AWC, or other consideration ofthisAWC, including itsacceptanceorrejection.

III.

OTHERMATTERS

Wyattunderstandsthat:

A. Submission ofthis AWC is voluntary andwill not resolve thismatter unlessand until it has been reviewed and accepted by the NAC, a ReviewSubcommittee of the NAC, or theOffice ofDisciplinary Affairs ("ODA"),pursuanttoFINRARule9216;

B. If this AWC is not accepted, its submission will not be used as evidence toproveanyoftheallegationsagainstme; and

C. Ifaccepted:

1. thisAWCwill become partofhis permanent disciplinary record and

may be considered in any future actions brought by FINRA or anyotherregulatoragainsthim;

2. this AWCwill bemade available through FINRA's public disclosure

program in responseto public inquiriesaboutmydisciplinary record;


5/6

3. FLNRAmaymakea publicannouncementeonccrning thisagreementand thcsubjectmauerthereofinaccordunccwithFPNRARule8313;and

4. Wyattmaynot takc anyaction ormakcorpermit ?, bcmadcanypublicstaternen?.includinginrcgulatoryfilingsorothcmise,denying.directlyorindirectly,anyfindinginthisAWCorcrcatctheimpre?ionthar theAWC is without factual basis, W??att may nor take anyposition inanyproceeding broughtbyoronbehalfofFINRA.ortowhich Fn\IRA is apany, thar is in?nsisten? withanypart ofrhisAWC.Nothing in thisprovisionaffectshis (i) testimomelobligations;

or(ii)?igh?.totakelegalorfactualppsi?onsinlitigationorolhcrlegalproceedingsinwhichFIXRAisnotaparty,

D. W?att may attach a Corrective Action Statcmen? to this AWC thatis asmtemcn?ofdemonstrab!ccorrcctivc$teps taken toprevemfuturcmisconducLWyatt imdcrsmnds thathemaynotdcny thc chargesormakeanysrawmcn?rhatis inconsislenlwith thcAWC iclhisStatemcoL This S?azcmcm docsnorconstitutefactualorlcgal findingsbyFINRA,nordoesitrcnect the viewsofFlNRAoritss?aff.

Wyaltcertificsthat liebasredandunderstandsalloftheprovisionsof?hisAWCandhasbccngivenafullopportunitytoaskqucstionsaboulir, thaI.hehas agrecdroitsprovisionsvolunmrily;and thatnooffcr, threat, induocmcnl,orpr?miscofanykind.Otherltmn the?crmssetforth.hcreinandtheprospectofavoidingthcissuanceofaComplainthasbeenmadetoinducchimtosubmitiL

417ty 96 04

INWKDate(mm(dd/yyn,) SrevenAf.Wyau.,Re??ndcnt

Reviewedby:

7-18-m -9DEERrDarc(mmtdd/yyyy) /60E?CFHMM

1 C&?selforRespon?nt

--Bara??U?dinKuppc?anFreeman&?&*vcrLLC09irr??J.-2J.-??thFloor ,NcwOrt?..?TNWD?A70U? ,Tel.(504)5@9-9732

I


6/6

AcceptedbyF??IRA: Signed onbehalfoftheDirectorofODA,bydelegatedauthority

BM/8,ZOM &-

TMDate(mfn/dd/yyyy) Susan Light

SeniorVicePresident&ChiefCounselFINRADepartmentofEnforcementOneWorldFinancialCenter200 LibertyStreet, 11thFloorNewYork,NewYork 10281

Documents

Wyatt Finra