BofA Securities censured and fined for alleged inaccurate TRACE reporting
The firm failed to timely report transactions in TRACE-eligible securities and inaccurately reported some transactions without the required .B modifier.
In addition the firm failed to establish and maintain a supervisory system reasonably designed to ensure compliance with its TRACE reporting obligations. The firm’s system for reviewing late TRACE reports was singled out as inadequate in preventing further untimely reports.
FINRA Rule 2010
FINRA Rule 3110
FINRA Rule 6730
Former securities representative barred for allegedly failing to produce requested documents
FINRA Rule 2010
FINRA Rule 8210
International Assets Advisory censured and fined for allegedly failing to report transactions to TRACE and RTRS
The firm failed to report off-setting trades, which were step-out transactions for an investment adviser customer, in connection with 290 back-to-back principal transactions in TRACE-eligible securities.
In addition the firm failed to report the customer side of step-out transaction for an investment adviser customer in connection with 270 back-to-back principal transactions in municipal securities.
FINRA Rule 2010
FINRA Rule 6730
MSRB Notice 2005-22
MSRB Rule G-14
Frazer Lanier Company censured and fined for alleged compliance failings connected to employee political contributions
The firm had no system in place to aggregate employee political contributions or track these during a primary or general election.
Employees were not required to provide documentary support to evidence their political contributions.
As a direct result of these failings the firm failed to detect that a $500 political contribution by an employee made from a joint checking account, and reported as two separate $250 contributions, exceeded the de-minimis exception.
In addition the firm did not have a reasonably designed supervisory system in place to monitor PAC-related activity.
The firm has agreed to the imposition of an undertaking requiring it to certify in writing the remediation of the issues identified.
MSRB Rule G-27
MSRB Rule G-37
CIM Securities censured and fined for alleged compliance failings connected with private placement offerings
The firm sold an offering for which no exemption from registration was available and which therefore constituted an unregistered distribution of securities.
The firm also failed to:
- reasonably respond to red flags suggesting that a covered person had lied about his identity;
- establish and maintain WSPs reasonably designed to ensure compliance with Reg BI in connection with the sale of private placements.
In addition the firm distributed investor material that did not sufficiently disclose the specific risks of investing in the private placement in question in order to make the make this communication fair and balanced. The executive summary, investor deck as well as cover email made misleading, unwarranted and promissory claims about the company’s existing profitability, competitiveness and the liquidity of the investment.
Finally the firm failed to meet the filing requirements for five private placement offerings.
FINRA Rule 2010
FINRA Rule 2210
FINRA Rule 3110
FINRA Rule 5123
FINRA Regulatory Notice 10-22
SEC Reg BI
SEA 1934 Rule 15l-1
Securities Act 1933 Section 5
Vorpahl Wing Securities censured and fined for alleged compliance failings connected to net capital requirements
As a result of inaccurate computations the firm overstated its net capital between January 2022 and March 2023, which meant that it conducted its securities business despite its net capital falling below the minimum required amounts
The firm also:
- filed untimely notices regarding its net capital;
- failed to make and preserve related to net capital; and
- failed to establish and maintain a supervisory system that would ensure compliance with net capital and financial reporting rules.
The firm has agreed to the imposition of an undertaking requiring it to certify in writing the remediation of the issues identified.
FINRA Rule 2010
FINRA Rule 3110
FINRA Rule 4110
FINRA Rule 4511
SEA 1934 Rule 15c3-1
SEA 1934 Rule 17a-3
SEA 1934 Rule 17a-5
SEA 1934 Rule 17a-11
Hovde Group censured and fined for allegedly failing to put in place a supervisory system reasonably designed to review the securities transactions in its associated person’s outside brokerage accounts
The firm has agreed to the imposition of an undertaking requiring it to certify in writing the remediation of the issues identified.
FINRA Rule 2010
FINRA Rule 3110
IRC Securities censured and fined for allegedly failing to evaluate a registered representatives outside business activity
FINRA Rule 2010
FINRA Rule 3270.01
Fidelity Brokerage Services censured and fined for allegedly failing to effectively supervise stock plan services (SPS) account data and funds
The firm’s WSPs prohibited access to SPS account data by associated persons unless this was required in order to permit them to carry out their duties. The firm also used a workflow management tool to log, track and oversee any changes made.
But it failed to monitor for or prevent associated persons from accessing or changing data without logging the changes made. In effect certain employees had a unmonitored back door to the data store.
An associated person responsible for the day-to-day maintenance of SPS account data, including the handling of data enquiries and resolution of data inconsistencies, was able to convert $750,000 from 37 international SPS accounts over an eight-year period.
This was accomplished by amending the international SPS account data and changing the plan participant’s name to his own or the name of a domestic SPS account he created and controlled.
The firm had a system in place to surveil the transmittal of funds from customer accounts. However, this system was not reasonably designed because outgoing money movements from international SPS accounts remained unscrutinized.
The unauthorized checks and wire transfers were not reviewed or monitored by the firm as a result of this omission. The conversion of funds was uncovered only after an international SPS client contacted the firm with questions about transfers from his account.
FINRA Rule 2010
FINRA Rule 3110
FINRA Regulatory Notice 09-64
NASD Rule 3010
NASD Rule 3012
Former securities representative suspended and fined for allegedly participating in unauthorized private securities transactions
In addition the representative solicited individuals to invest in promissory notes by disseminating communications, including emails and brochures – as well as live streams uploaded to YouTube – that did not provide a fair and balanced treatment of the risks and benefits of the investments and contained unwarranted, promissory or misleading statements concerning these.
FINRA Rule 2010
FINRA Rule 2210
FINRA Rule 3280
Investments for You censured and fined for alleged Reg BI and form CRS failings
The firm also failed to establish an adequate supervisory system to ensure compliance with its Form CRS obligations.
FINRA advised the firm on the Form CRS requirements in April 2021 and May 2022, but the firm only established the requisite system in September 2024.
The firm also failed to update its form CRS to ensure it remained accurate, and falsely responded to the Form CRS question concerning legal or disciplinary history as a result of this lapse.
Finally, the firm failed to respond to two FINRA requests for documents and information in a timely manner.
FINRA Rule 2010
FINRA Rule 3110
FINRA Rule 8210
SEA 1934 Rule 15l-1
SEA 1934 Rule 17a-14
SEC Reg BI
Newbridge Securities censured and fined for allegedly failing to reasonably supervise recommendations for margin use
Two registered representatives recommended unsuitable margin use in five customer accounts, realizing losses as a result, and paid a collective $62,685 in margin interest.
A restitutionary payment of $45,442.21 plus interest has also been ordered.
FINRA Rule 2010
FINRA Rule 3110
FINRA Regulatory Notice 12-25
| Unless otherwise noted all respondents accepted and consented to FINRA’s findings without admitting or denying them. |