Ex-Morgan Stanley Broker Barred for Hiding $190 Million in Venezuelan Bond Trades
(Updates in seventh paragraph with comment from Morgan Stanley.)
A former top producer for Morgan Stanley in New York City has agreed to an industry bar for allegedly using fictitious accounts to hide $190 million worth of Venezuelan bond trades, according to a published Thursday by the Financial Industry Regulatory Authority.
The broker, John Batista Bocchino, who generated $4.6 million in 14 months in 2011 and 2012, allegedly opened nominee accounts in the names of five “well-known financial institutions” in order to make some 300 trades, which violated firm policy, without scrutiny from Morgan Stanley’s anti-money laundering and compliance departments.
Bocchino’s top sales assistant, Rafael Barela Jacinto, also agreed to a $10,000 fine and a one-year suspension for his role, according to Finra.
The settlement resolves charges that Finra brought against Bocchino and Jacinto on September 1 accusing Bocchino of unethical conduct, false records and unauthorized activity. Morgan Stanley was not named as a party in the complaint.
A lawyer for Bocchino, David R. Chase in Fort Lauderdale, Florida, did not respond to a call for comment.
Bocchino, however, appears to have been able to hold onto the money he earned from the trades. The settlement did not include a fine or disgorgement, which Finra had sought from Bocchino in its original complaint in September. He currently runs a website providing health and fitness advice for men over 40, according to . He did not respond to a request for comment sent through social media.
A spokeswoman for Finra did not respond to a request for comment.
A Morgan Stanley spokeswoman wrote in a statement that in addition to discharging Bocchino, the firm also “reported his conduct to the relevant regulators and has been cooperating in FINRA’s investigation since its inception.”
According to the settlement, Bocchino began concealing the trades after Morgan Stanley began tightening its anti-money laundering policies in April 2011, which had a “negative impact” on his business. In April 2011, Morgan Stanley began requiring brokers to provide buy-side confirmations on Venezuelan bond trades at the time of a sale to show that bonds were bought in U.S. dollars and not being used to convert currency. In January 2012, amid growing money laundering concerns, the policy was further tightened by prohibiting Venezuelan securities transactions with any financial institution except for a few exceptions, including a reputable U.S. or European third-party broker-dealer or bank.
The 13 clients on whose behalf the trades were made included a wealth management company identified by the initials VGWMG that is headquartered in Miami, with offices in Colombia, Chile and Ecuador, according to the settlement. Others include GSI and COL, which the complaint describes as Finra members headquartered in Miami and Charlotte, NC, respectively. Each was sanctioned last year for violations involving Venezuelan bond currency conversion trades, the settlement says.
Morgan Stanley fired Bocchino in March 2012 for “engaging in securities transactions for clients within accounts other than their own,” according to brokercheck. Bocchino contended in a response on BrokerCheck that the trades were made at the instruction of his clients.
A month later, he and Jacinto registered with UBS Financial Services where he remained until his voluntary resignation on September 15 following Finra’s initial complaint, according to BrokerCheck.
A UBS spokeswoman also did not respond to a request for comment on its knowledge of Bocchino and Jacinto’s background. UBS’s comment on Bocchino’s termination record specifies that Finra’s investigation did not involve activities while at UBS.