According to FINRA, Ricky Alan Mantei appealed a National Adjudicatory Council (NAC) decision to the SEC. The NAC affirmed findings and modified sanctions, imposing a $15,000 fine, six-month suspension, and requirement to requalify by examination.

The findings state that Mantei violated his member firm's prearranged trading prohibition and circumvented its cross-trade procedures by directing prearranged trading with intermediaries to facilitate and disguise cross trades. A cross trade involves selling securities directly from one customer to another customer at the same firm, which requires specific procedures to ensure fairness.

Mantei sold positions for three customers: two customers held structured certificates of deposit and another held a municipal bond. Rather than selling these instruments directly to other customers in compliance with the firm's cross-trade procedures or selling them to the market in bona fide transactions, Mantei engineered a scheme to disguise the cross trades.

Under his plan, Mantei arranged for external third parties to buy each selling customer's investment with the understanding that he would have the firm repurchase them shortly thereafter. After the firm repurchased the investments, Mantei then sold them to other firm customers. Each set of transactions was, in substance, a cross trade between firm customers, which was prohibited by the firm's written supervisory procedures.

Mantei's conduct violated FINRA Rule 2010 and breached his duty of fair dealing relating to the municipal bond trades in willful violation of MSRB Rule G-17. By using intermediaries to disguise what were essentially cross trades, Mantei circumvented procedures designed to ensure fair pricing and proper supervision of customer-to-customer transactions.

The sanctions—$15,000 fine, six-month suspension, and requirement to requalify by examination—are not in effect pending SEC review. The requirement to requalify reflects the serious nature of deliberately circumventing firm procedures. For investors, this case illustrates that firms have procedures governing how securities are bought and sold between customers to ensure fairness, and representatives who circumvent these procedures may disadvantage customers through improper pricing or execution.