The allegations read: Finra rule 2010, nasd rules 2110, 2310, 2510: for a period, romer recommended numerous inverse floater collateralized mortgage obligations (inverse floater cmos) transactions to several of his customers without having a reasonable understanding of the nature, risks and rewards of each transaction he recommended. Romer lacked a reasonable basis to recommend the purchase and sale of inverse floater cmos to his customers, and failed to perform a reasonable investigation or appropriate due diligence of each inverse floater cmo he recommended. Romer also failed to investigate each inverse floater cmo he recommended with respect to several key risk factors, including, but not limited to, the inverse floater cmo's mortgage pool, its structure, and its expected average life. The total amount of revenue earned by romer, in connection with these inverse floater cmo transactions, was approximately $400,000. For the period, romer used discretion to buy and sell an unknown number of inverse floater cmos on behalf of some customers, without having obtained prior written authorization from them to exercise discretion and prior written acceptance of their accounts as discretionary from his member firm. Although the firm permitted discretionary trading, romer was required by his firm's written supervisory procedures to obtain prior written approval from the firm's executive committee before engaging in any discretionary trading activities. Romer did not have any prior experience selling inverse floater cmos to retail customers, had very little knowledge about the characteristics and risks of the product, had no training that provided him with specific, objective criteria or guidelines to use in conducting an analysis of each inverse floater cmo, and failed to obtain proper training prior to engaging in sales activities of the product.
