First New York Securities, L.L.C. (CRD # 16362, New York, New York), Larry Chachkes (CRD # 4132788, Registered Representative, New York, New York) and Joseph Eric Edelman (CRD # 2115413, Registered Representative, New York, New York) submitted a Letter of Acceptance, Waiver and Consent in which the firm, Chachkes and Edelman were censured; the firm was fined $170,000; Chachkes was fined $30,000 and Edelman was fined $50,000. The firm was also ordered to disgorge $171,504.44 of unlawful profits and required to revise its written supervisory procedures to achieve compliance with, and prevent violations of, Securities and Exchange Commission (SEC) Rule 105, and to include the supervisory steps to be taken by the responsible person in connection with SEC Rule 105 supervision.

Without admitting or denying the findings, the firm, Chachkes and Edelman consented to the described sanctions and to the entry of findings that the firm, acting through Chachkes, Edelman and others, sold securities short during the five business days before the pricing of public offerings and then engaged in covering transactions with shares from public offerings in violation of SEC Rule 105. The findings stated that the firm’s supervisory system failed to provide for adequate and reasonable supervision of the individual representatives’ activities, and its supervisory system and written procedures did not provide for supervision reasonably designed to achieve compliance with and prevent violations of SEC Rule 105. The findings also stated that the firm’s supervisory system did not include written supervisory procedures providing for a statement of the steps to be taken by the responsible person in connection with SEC Rule 105 supervision. The findings also included that the firm provided inaccurate information in response to a FINRA inquiry, which was caused by its failure to have in place adequate supervisory procedures reasonably designed to ensure that the firm provided responsive information to regulatory inquiries. FINRA found that the firm failed to make and preserve books and records, in conformity with SEC and FINRA rules; order tickets did not reflect the correct price, lacked time stamps or contained inaccurate time stamps. FINRA also found that the firm failed to preserve brokerage order memoranda for a period of not less than three years, the first two in an accessible place. (FINRA Case # 2005000796001)