The allegations read: Without admitting or denying the findings, leahy consented to the sanctions and to the entry of findings that he failed to reasonably supervise a former registered representative who, while registered through a member firm, engaged in a pattern of unauthorized trading, using margin without authorization, recommending excessive and otherwise unsuitable transactions, and charging excessive commissions in dozens of customer accounts. The findings stated that leahy, the sole principal at the firm and the only individual responsible for supervising the representative, was aware of multiple red flags of the representative's misconduct. The red flags included daily trade blotters that showed frequent in-and-out trading and commissions often exceeding five percent, numerous customer complaints alleging unauthorized trading, unauthorized use of margin, and excessive commissions, and notification from the firm's clearing firm of potential unauthorized trading by the representative. Leahy did not investigate those red flags or otherwise take reasonable action to curtail the representative's pattern of misconduct. As a result of leahy's failure to reasonably respond to those red flags, the representative's misconduct continued unabated until the new jersey bureau of securities summarily revoked the representative's registration in the state of new jersey.
