LaSalle Street Securities, LLC

LaSalle Street Securities, LLC (CRD #7191, Elmhurst, Illinois) submitted a Letter of Acceptance, Waiver, and Consent in which the firm was censured, fined $125,000, and required to disgorge $46,500 and pay $46,281.84 in restitution. The firm was also required to certify to NASD, within 90 days, that it has reviewed its procedures regarding market timing and the preservation and retention of electronic mail communications, and that it has established systems and procedures reasonably designed to achieve compliance with applicable laws, regulations, and rules relating to market timing activities and the preservation and retention of electronic mail communications. Without admitting or denying the allegations, the firm consented to the described sanctions and to the entry of findings that the firm, through a registered representative, facilitated deceptive market timing practices in the subaccounts of variable annuities for a hedge fund client by enabling the hedge fund client to use accounts to carry out frequent transfers among the sub-accounts of variable annuities without being detected, despite their attempts to enforce restrictions on market timing to protect the interest of long-term investors. NASD found that the firm continued to sell variable annuity policies to the hedge fund client after receiving written notice that the client's trading strategy was considered disruptive and contrary to the interest of long-term investors. NASD determined that the fund client was able to execute transfers in the sub-accounts that yielded profits in excess of $46,000 at the expense of long-term investors. The findings stated that the firm did not maintain adequate written supervisory procedures to address market timing and failed to implement a supervisory system designed to monitor the activity of its associated persons with regard to market timing. In addition, NASD found that the firm failed to preserve for three years, and/or to preserve in an accessible place for two years, electronic mail communications received and sent by its agents and employees that related to its business as a broker or dealer. The findings also stated that the firm lacked adequate systems or procedures for the preservation of all electronic mail communications. (NASD Case #CE2050012)

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