Cossu

FACTS AND PROCEDURAL HISTORY

Cossu began working in the insurance business in 1971. In connection with this work, Cossu was a National Association of Securities Dealers (“NASD”) registered broker. As a NASD broker/dealer, Cossu knew he had an ongoing obliga- tion to report outside business activities to the company with whom he was licensed (referred to in the industry as “selling away”).

In 1995, he became a registered representative for Jefferson Pilot.1 In response to a questionnaire completed at the begin- 1 In 1997, Jefferson Pilot merged with Chubb Securities Corp., which later changed its name back to Jefferson Pilot. This opinion will consis-

IN RE: COSSU 6259

ning of his employment, he specifically denied being engaged in any such outside activities. Cossu was also aware that under NASD guidelines, he was not permitted to engage in private securities transactions without prior notice and approval from Jefferson Pilot.

In May 1997, Cossu received a fax from SafeRate Financial Services (“SafeRate”) advertising an investment that prom- ised clients a ten percent annual percentage rate with a nine- month term. In response to an inquiry by…