Former securities principal barred for allegedly refusing to provide on-the-record testimony
FINRA Rule 2010 FINRA Rule 8210
Former securities representative barred for allegedly refusing to provide on-the-record testimony
FINRA Rule 2010 FINRA Rule 8210
Former products representative barred for allegedly refusing to produce documents and information
FINRA Rule 2010 FINRA Rule 8210
Monmouth Capital Management expelled for alleged supervisory failures, false and misleading disclosures and Regulation BI violations
The firm’s representatives excessively traded 110 accounts, some of which were ‘churned’, which resulted in substantial losses to customers. The firm failed to reasonably supervise trading by its representatives, despite asserting that it had made improvements to its systems and procedures after FINRA’s routine examination in 2020. The firm provided inaccurate and untrue information in its Form CRS disclosures, including in connection with fees charged to customers that contributed to the firm’s revenues.
Exchange Act Section 17(a)(1) Exchange Act Rule 15l-1(a)(2)(ii) Exchange Act Rule 17a-14 FINRA Rule 2010 FINRA Rule 3110 Reg BI
Former securities representative barred for allegedly refusing to produce documents and information
FINRA Rule 2010 FINRA Rule 8210
Securities representative suspended and fined for the alleged unauthorised exercise of discretionary authority over accounts
The customers gave oral or implicit authorization rather than written authorization for the transactions.
FINRA Rule 2010 FINRA Rule 3260
Hightower Securities censured and fined for allegedly failing to provide investors with information material to the offerings they were sold
GPB Automotive Portfolio was a limited partnership formed by GPB Capital to acquire and operate car dealerships. It was approved for sale by Hightower Securities’ registered representatives. As part of a legal dispute GPB Capital was accused of falsifying financial statements and defrauding investors. GPB Capital advised broker dealers that the audited financial statements for the Automotive Portfolio would be delayed “pending the completion of a forensic audit”, which was deemed prudent given the allegations the firm was facing. Hightower Securities received the letters sent by GPB Capital, but subsequently sold 16 limited partnership interests in the Automotive Portfolio without communicating these material facts to the investors.
The firm did not have an adequate system in place to supervise its representatives’ recommendations of alternative mutual funds. The firm:
- did not have systems and procedures required to determine whether a new mutual fund constituted a complex product for which heightened due diligence would be appropriate;
- did not provide adequate guidance or training to its representatives in connection with the risks and features of such products.
- used an electronic trade review system intended for traditional mutual funds, but this system did not adequately address the specific risks and characteristics of alternative mutual funds
As a result of these compliance failings the firm is subject to an undertaking requiring it to certify the implementation of a supervisory system designed to ensure the firm complies with FINRA Rules 2010 and 3110. Restitutionary payments of $253,177 have also been ordered.
FINRA Rule 2010 FINRA Rule 3110
| Unless otherwise noted all respondents accepted and consented to FINRA’s findings without admitting or denying them. |