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SEC Imposes Sanctions on Hutton Branch

October 30, 1987|Associated Press

BOSTON — The Securities and Exchange Commission said Thursday that it had imposed sanctions against an E. F. Hutton branch and a former manager for evading reporting requirements for large cash transactions.

The New York-based brokerage firm consented to the findings and reached a settlement with the SEC without admitting or denying the allegations.

According to the SEC investigation, between 1982 and 1983 E. F. Hutton requirements for reporting currency transactions were avoided at its Providence, R.I., branch by a practice called "structuring," according to David Butler, the SEC's Boston branch chief for enforcement.

Structuring involves breaking down cash amounts of more than $10,000 into bank checks or cash in lesser amounts for deposit into customer accounts. The purpose is to avoid complying with a federal law requiring banks and brokerages to report cash transactions exceeding $10,000 in one day, Butler said.

A total of $1.2 million was involved, Butler said.

Manager Accused

In its settlement with the SEC, E. F. Hutton agreed to change its policy on such transactions and to make an internal audit of its entire operation.

John A. Pliakas, 48, branch manager from 1973 to December, 1983, was accused of providing inadequate supervision.

He agreed to a 30-day suspension from working as a dealer and, following that, to a 90-day suspension from his work as a supervisor. Before he can resume his management post, he also must pass a manager's exam administered by the licensing body for brokers.

Pliakas now works in Boston as an E. F. Hutton regional sales manager.

There were 17 such structured transactions at the branch between May, 1982, and January, 1983, the SEC said. Twice, cash amounting to more than $10,000 was deposited into two separate accounts held by individuals who were closely related, the SEC said.

A former broker, Brian Lareau, was cited for permitting two customers to engage in the structuring practice. He worked at the brokerage from 1980 until September, 1985, when he left the company.

Placing the Blame

The SEC placed most of the blame on Stephen Fusco, who died of cancer in December, 1985. Fusco was an E. F. Hutton broker in Providence from March, 1977, to 1984.

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