Montecito Advisors, Inc.

Montecito Advisors, Inc. (CRD #104004, Santa Barbara, California) and Elie Michel Genadry (CRD #721443, Registered Principal, Montecito, California) submitted a Letter of Acceptance, Waiver and Consent in which they were censured and fined $27,500, jointly and severally. The firm was also required to certify to NASD that it has made a thorough review of the trading that occurred at the firm during the relevant period to detect any and all instances of its customers evading mutual fund block letter restrictions, and has disclosed all transactions that contravened such block letter restrictions to NASD. In addition, the firm was required to review its procedures regarding market timing and have systems and procedures in place that are reasonably designed to ensure that block letter restrictions are enforced. Without admitting or denying the findings, the firm and Genadry consented to the described sanctions and to the entry of findings that the firm, acting through Genadry, failed to create and maintain memoranda records that reflected all information to purchase or sell mutual fund shares where customers entered mutual fund orders directly through electronic access to the clearing firm's order entry platforms. The findings stated that the firm, acting through Genadry, failed to establish, maintain or enforce a supervisory system and written procedures that were reasonably designed to detect and prevent market timing activities that contravened applicable mutual fund prospectus terms in accounts the firm's clients owned or controlled. (NASD Case #E0220030940-01)

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