Michael Frederick Siegel

Michael Siegel (defendant) was a registered representative with a National Association of Securities Dealers (NASD) (plaintiff) member firm. Siegel agreed to help raise development and operations capital for the start-up World Environmental Technologies, Inc. (World-ET) in exchange for cash and stock. Siegel’s clients Linda and Huntington Downer (the Downers) and Dorothy and Barry Landry (the Landrys) invested in World-ET and lost their investments. The Downers had invested with Siegel for several years and relied on him for financial guidance. Siegel told the Downers that World-ET was a new company in which he would be investing and that he was very excited about the product World-ET would be distributing. Siegel gave the Downers a subscription agreement and questionnaire for a World-ET subsidiary. The documents, which Siegel had not reviewed, were inconsistent and failed to provide interest rates or repayment terms. The Downers invested. Siegel was told that the opportunity was no longer available and the Downers could get a refund or invest in World-ET. Siegel told the Downers he would invest in the parent company if given the choice. Siegel advised the Landrys that he and the Downers were investing three times the minimum investment and touted the product World-ET would distribute. Siegel gave the Landrys offering documents that he had not reviewed. One document contained conflicting repayment terms, and none included interest-rate or maturity-date information. NASD filed a complaint alleging that Siegel’s unsuitable recommendations violated NASD conduct rules. A hearing panel imposed disciplinary sanctions. NASD’s adjudicatory council affirmed. Siegel sought Securities and Exchange Commission review.