Cemtrex Inc (CETX)

[SPIN]

Carlin Equities, LLC (CRD #31295, New York, New York) submitted a Letter of Acceptance, Waiver and Consent in which the firm was censured, fined $77,000 and required to revise its written supervisory procedures regarding NASD membership and registration rules 1021 and 1031, NASD Marketplace Rule 2320 (crossing customer orders), NASD Marketplace Rule 6130 (short sale indicator reporting), NASD Conduct Rule 3370 (affirmative determination), NASD Marketplace Rule 6541 (order handling), NASD Conduct Rule 2320 (three quote rule), NASD Marketplace Rule 4632 (third-party trade reporting), SEC Rule 200, NASD Conduct Rule 3110 and NASD Marketplace Rule 6130 (short sales), NASD Marketplace Rule 6955 (OATS), SEC Rules 17a-3 and 17a-4 (books and records), SEC Rule 605 (disclosure of order execution information) and Chinese Walls. Without admitting or denying the findings, the firm consented to the described sanctions and to the entry of findings that it accepted or effected customer short sale orders in securities and for each order, failed to make/annotate an affirmative determination that the firm would receive delivery of the securities on the customer's behalf or that the firm could borrow the securities on the customer's behalf for delivery by settlement date. The findings stated that the firm reported through the NASDAQ Market Center or the Trade Reporting & Comparison Service (TRACS) a last sale report of a transaction in NASDAQ National Market securities it was not required to report; failed to report last sale reports of transactions in NASDAQ securities; incorrectly designated a last sale report of a transaction in a NASDAQ security as ".PRP"; failed to report the correct symbol indicating whether a transaction was a buy, sell, sell short, sell short exempt or cross for a transaction in an eligible security ; reported last sale reports of transactions in OTC equity securities it was not required to report; failed to report last sale reports of transactions in OTC equity securities; and failed to make available reports on the covered orders in national market system securities that it received for execution from any person. The findings also stated that the firm failed to report to the NASDAQ Market Center the correct symbol indicating whether it executed transactions in eligible securities in a principal or agency capacity; failed to submit required information to OATS; and failed to provide written notification disclosing to its customers that transactions were executed at an average price, the correct capacity in the transactions and that it was a market maker in each security. The findings also included that the firm failed to show the execution time on brokerage order memoranda, failed to document the customer name or account number of brokerage order memoranda and failed to preserve for not less than three years, the first two in an accessible place, a brokerage order memorandum.

NASD found that the firm's supervisory system did not provide for supervision reasonably designed to achieve compliance with securities laws, regulations and NASD rules concerning NASD membership and registration rules 1021 and 1031, NASD Marketplace Rule 2320 (crossing customer orders), NASD Marketplace Rule 6130 (short sale indicator reporting), NASD Conduct Rule 3370 (affirmative determination), NASD Marketplace Rule 6541 (order handling), NASD Conduct Rule 2320 (three quote rule), NASD Marketplace Rule 4632 (third-party trade reporting), SEC Rule 200, NASD Conduct Rule 3110 and NASD Marketplace Rule 6130 (short sales), NASD Marketplace Rule 6955 (OATS), SEC Rules 17a-3 and 17a-4 (books and records), SEC Rule 605 (disclosure of order execution information) and Chinese Walls. NASD also found that the firm failed to enforce its written supervisory procedures concerning NASD Rules 2320, 3350, 3370, 6955 and SEC Rules 202 and 202T. In addition, NASD determined that the firm transmitted Route or Combined Order/Route reports that contained inaccurate, incomplete or improperly formatted data to OATS. Moreover, NASD found that the firm submitted reports with respect to equity securities traded on the NASDAQ Stock Market that were not in the NASD-prescribed electronic form to OATS. The OATS system rejected the reports and notice of such rejection was made available to the firm on the OATS Web site, but the firm did not correct or replace most of the reports. (NASD Case #20042000248-01)

http://www.nasd.com/web/groups/enforcement/documents/monthly_disciplinary_actions/nasdw_018923.pdf