Former securities representative suspended and fined for allegedly engaging in outside business activity without notice or authorization
FINRA Rule 2010
FINRA Rule 3270
Securities principal barred for alleged misrepresentations and fabrications
The principal was hired by a company to register its subsidiary as a broker-dealer with the SEC and to apply for FINRA membership.
Having begun the registration process she never completed it and the subsidiary was never approved as a FINRA member nor registered as a broker-dealer.
The principal falsely represented to the company that:
- She had completed a Form NMA for the subsidiary;
- The subsidiary was a FINRA member; and
- It was fully registered with the SEC as broker-dealer.
The principal also fabricated documents that purportedly showed the subsidiary’s status as a broker-dealer and FINRA member.
She provided these documents to the controller and external auditors of the subsidiary on at least three occasions.
FINRA Rule 2010
Pershing censured and fined for alleged problems with indicator errors in RTRS and TRACE
For 23,000 municipal securities transactions the firm did not include the non-transaction based compensation (NTBC) indicator in the MSRB’s Real-time transaction reporting system (RTRS).
For 155,000 securities transaction it failed to report the no remuneration (NR) indicator to the Trade Reporting and Compliance Engine (TRACE).
The firm’s supervisory system was not reasonably designed to ensure that these indicators were correctly appended to it TRACE and RTRS reports.
FINRA Rule 2010
FINRA Rule 6710
FINRA Rule 6730
MSRB Rule G-27
Colorado Financial censured and fined for alleged AML program failures
The firm’s procedures were not reasonably designed to detect and report suspicious transactions including manipulative activity. The procedures did not identify:
- The frequency of the monitoring required
- What constituted a “sufficient amount” of activity to review
- What activity was considered suspicious or unusual
- Any specific reports or monitoring parameters for the identification of suspicious activity
The firm relied exclusively on a daily manual review of its trade blotter to identify suspicious transactions. As a result the firm failed to detect or investigate red flags of suspicious trading a low-priced, thinly traded security.
FINRA Rule 2010
FINRA Rule 3310
FINRA Regulatory Notice 19-18
NASD Notice to Members 02-21
Carolina Financial Securities censured and fined for allegedly failing to terminate a contingency offering after a material change to its terms
The firm served as the placement agent for a contingency offering. The private placement memorandum stated that the funds raised would be used to purchase a holding company and its assets.
The firm did not raise the required $1m minimum contingency and this was subsequently amended to $900,000 because the entity and its assets could be purchased at a lower price.
The reduction in minimum contingency constituted a change to a material term of the offering which required the termination of the offering and the return of funds to investors.
Instead the investor funds held in an escrow account were released to the issuer.
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
Product representative suspended and fined for allegedly falsely certifying that she had personally completed the continuing education required to hold an insurance license
Another person had completed 15 hours of insurance continuing education on her behalf.
FINRA Rule 2010
Product representative suspended and fined for allegedly falsely certifying that he had personally completed the continuing education required to hold an insurance license
Another person had completed 15 hours of insurance continuing education on his behalf.
FINRA Rule 2010
Products representative suspended and fined for alleged exam misconduct
The representative solicited and received information on the content of the exam from group messaging platform users who had previously taken it.
FINRA Rule 2010
Dalmore Group censured and fined for alleged wide-ranging compliance failures
The firm failed to:
- establish and maintain a supervisory system designed to ensure compliance with suitability and best interest obligations in connection with the sale of private placements
- The firm’s WSPs did not reference Reg BI until eight months after it took effect and provided only general information on the obligations rather than offering guidance tailored to the firm’s business
- establish and maintain a supervisory system designed to prevent the misuse of material, non-public information
- fingerprint non-registered associated persons
- report or timely report outside business activity
- all the activity the firm ought to have reported had been disclosed to the firm
- state a date by which a private placement offering’s minimum raise contingency had to be met
- the firm also approved investments for closure before the contingency was met
- provide timely, complete, and accurate responses to requests for documents and information
Finally the firm violated FINRA standards for communications with the public by:
- failing to prominently disclose key risks
- publishing unwarranted and promissory statements and prohibited quantified projections of performance
- publishing financial forecasts that lacked a:
- sound basis for their evaluation
- clear explanation of key assumptions underpinning them
- description of the key risks that would imipede their achievement
The firm has agreed to the imposition of an undertaking requiring it to certify in writing the remediation of the issues identified.
FINRA Rule 1122
FINRA Rule 2010
FINRA Rule 3110
FINRA Rule 8210
SEC Reg BI
SEA 1934 Rule 10b-9
SEA 1934 Rule 15l-1
SEA 1934 Rule 17f-2
Wedbush Securities censured and fined for allegedly failing to reasonably supervise recommendations to purchase complex structured products
The firm’s representative recommended variable rate structured products (VRSPs) to customers whose low or moderate risk tolerance did not make these a suitable investment.
The recommendations made also resulted in unsuitable concentration levels. The firm did not have “any exception report or other supervisory process concerning concentration in structured products” and failed to conduct supervisory reviews to evaluate the recommendations and concentration level suitability.
A restitutionary payment of $77,736.33 has been imposed.
FINRA Rule 2010
FINRA Rule 3110
Former securities representative suspended and fined for allegedly engaging in outside business activity without notice or authorization
FINRA Rule 2010
FINRA Rule 3270
TradeUP Securities censured and fined for allegedly failing to report its short interest positions
The firm’s supervisory system was not reasonably designed to ensure the timeliness and accuracy of its short interest reporting submissions.
FINRA Rule 2010
FINRA Rule 3110
Former registered representative barred for allegedly refusing to appear for on-the-record testimony
FINRA Rule 2010
FINRA Rule 8210
Wedbush Securities censured and fined for alleged regulation NMS failings
The firm’s regualtion NMS rule 606 reports excluded orders, contained inaccurate order percentages and failed to include required information concerning its execution venues.
The firm failed to notify customers of information available to them under the rule.
In addition the firm’s regulation NMS rule 605 reports did not report statistical information on the covered orders it had received.
The firm’s supervisory system was not reasonably designed to ensure compliance with regulation NMS Rule 605 and 606 obligations.
FINRA Rule 3010
FINRA Rule 3110
Former securities representative suspended and fined for allegedly participating in private securities offerings without authorization from his firm
The representative assisted customers with a private placement offering and received referral fees for this work.
FINRA Rule 2010
FINRA Rule 3280
Former securities representative suspended and fined for allegedly engaging in an outside business activity without notice or authorization
FINRA Rule 2010
FINRA Rule 3270
Former securities representative barred for allegedly failing to provide information and documents or appear for on-the-record testimony
FINRA Rule 2010
FINRA Rule 8210
Former securities representative barred for allegedly failing to provide information and documents
FINRA Rule 2010
FINRA Rule 8210
Former associated person barred for allegedly failing to produce information and documents
FINRA Rule 2010
FINRA Rule 8210
| Unless otherwise noted all respondents accepted and consented to FINRA’s findings without admitting or denying them. |