Finra Suspends Tech Banking Legend Hambrecht from Wall Street
(This story was corrected to show that Bill Hambrecht had left Hambrecht & Quist before the firm was sold to Chase Manhattan.)
The Financial Industry Regulatory Authority has banned Silicon Valley investment banker William R. Hambrecht from working in the securities industry for a year as a result of his failure to disclose $22.5 million of legal judgments on his broker filings.
The octogenarian banker, who helped Apple Computer, Google and dozens of other technology firms go public over almost half a century on Wall Street, also was fined $15,000.
Hambrecht “willfully failed to amend” his Form U4 to show in a timely manner eight outstanding judgments and liens that had accumulated against him between April 2012 and August 2013, the self-regulatory agency said in a letter of acceptance, waiver and consent posted on its disciplinary website on March 28.
The U-4 is a basic document required of anyone who sells securities in the United States. Hambrecht delayed disclosure of the judgments against him by at least a year, according to the Finra document, which says the financier accepted the findings without admitting or denying the guilt.
“It’s a tough sanction, not a light slap on the wrist,” said John C. Coffee Jr., a securities law professor at Columbia (University) Law School in New York who does not personally know Hambrecht. “It’s further evidence that FINRA is not a lapdog.”
The action against the financier comes amid allegations from consumer advocates that Finra, which is financed and partially governed by the securities industry that it regulates, has been lax in protecting investors from unscrupulous Wall Street practices.
Sen. Elizabeth Warren recently grilled Finra Chairman and CEO Richard Ketchum about the high number of brokers with checkered pasts who operate in the industry.
The regulatory group has recently enhanced its BrokerCheck database to make it easier for consumers to research the regulatory history of brokers and broker-dealers, and as of June 6 will require firms to include a hyperlink to the database on the primary webpage that they intend retail investors to view.
Finra also fined W.R. Hambrecht & Co., LLC, $17,500 for failing to supervise its founder’s filings.
“The sanctions assessed against Mr. Hambrecht and the firm reflect the magnitude of the failure to report more than $22 million in unsatisfied judgments,” Finra spokeswoman Michelle Ong wrote in an email. “The integrity of BrokerCheck depends on accurate and prompt reporting by firms.”
Hambrecht built his reputation at San Francisco-based Hambrecht & Quist, which in the late 1970s and early 1980s began mining the fledgling technology fields in its backyard. Daniel H. Case 3d, the older brother of America Online Chief Executive Steve Case, was once its CEO.
The Princeton University alumnus added to his Wall Street fortunes by investing in many of the companies he worked with. He was on the board of Motorola Mobility before it was sold to Google in 2012 for about $12.5 billion. He had left Hambrecht & Quist, however, prior to its sale in 1999 to Chase Manhattan Corp (now JP Morgan Chase) for $1.35 billion.
In recent years, Hambrecht has championed crowd-sourcing and other online approaches to initial public offerings.
The sanctions against Hambrecht relate to disclosure issues involving outside activities, according to the filing.
Among his lapses was his failure to disclose a $2.4 million payment to players in the now-defunct United Football League that he co-founded. The players sued him in Nevada courts in 2013 for the loss of their salaries in their last abbreviated season of 2012.
Hambrecht and the company’s chief compliance officer did not respond to calls for comment. The firm neither admitted nor denied the findings, according to the Finra document.