Disciplinary Proceedings: In the Matter of Brian Alexander Kaufman ("Kaufman") (November 6, 2003) OOS 2003-009

Facts – Between July 2000 and February 2001, Kaufman, a registered representative, caused a series of trades to be transacted on behalf of his client who was engaged in suspicious trading activities which included perceived undeclared short sales, uneconomical trading and up-ticked purchases in thinly traded securities. Despite knowing these facts, Kaufman appeared to execute sell orders without reasonable knowledge that the apparent long sales were in fact covered by freely tradeable shares.

Disposition – The failed settlements, uneconomic trading and market dominance in a thinly traded security by the client ought to have put Kaufman on a heightened state of alert for possible market abuses. Kaufman should have not continued to execute sales for his clients without ensuring that the accounts were long or without credible evidence that his clients held freely tradeable shares in other accounts to cover those sales. In failing to identify these red flags Kaufman failed to act as a "gatekeeper" and engaged in conduct which was inconsistent with just and equitable principles of trade and detrimental to the public interest.

Requirements Considered – CDNX Rules F.1.01(1), F.2.01(2) and E.1.01. Comparable UMIR Provision

-

Rule 2.1 and Policy 2.1

Sanction - $10,000 fine and costs of $4,000, disgorgement of $1,363.82 in gains; strict supervision for 6 months; successful completion of the Conduct and Practices Handbook examination