Contracts principal suspended and fined for allegedly assisting a business partner in cheating on an exam
FINRA Rule 2010
Former securities representative suspended and fined for allegedly exercising discretion in customer accounts
FINRA Rule 2010
FINRA Rule 3260
Former securities representative barred for allegedly refusing to provide documents and information
FINRA Rule 2010
FINRA Rule 8210
Former securities principal charged with alleged unauthorized trading in customer accounts
In addition the principal also allegedly submitted two false compliance attestations in connection with a customer’s diminished capacity to make sound decisions.
Despite being aware of the customer’s diminished capacity the principal failed to report this to the firm as required.
This is a complaint and not an AWC.
FINRA Rule 2010
Products representative barred for allegedly refusing to produce information and documents
FINRA Rule 2010
FINRA Rule 8210
Network 1 Financial Securities censured and fined and its securities principal suspended for alleged AML program failings
The firm’s customer identification program (CIP) did not include reasonable measures to verify the true identities of customers being onboarded by the firm.
The firm’s AML program deficiencies included:
- procedures containing only a generic list of red flags rather than a list relevant to its business;
- no written directions on the risks of opening issuers-sourced accounts in connection with IPOs;
- AML procedures that did not address how the firm would identify, investigate or report AML red flags during:
- the account opening process;
- IPOs and aftermarket trading; and
- private placement offerings.
- No risk-based procedures for conducing ongoing customer due diligence.
As a result of these deficiencies the firm failed “to detect or reasonably investigate AML red flags across multiple areas of its investment banking business.”
In addition the firm failed to establish an adequate system for the supervision of electronic communications, including off-channel communications “such as personal text messages or messages sent through third-party applications.” The firm did not respond to red flags signalling off-channel communication use by registered persons – this despite the fact that supervisors were provided copies or were actually copied on some of the exchanges.
As a direct result of these shortcomings, the firm also failed to preserve business-related off-channel communications.
The firm has also agreed to an undertaking requiring it to retain an independent consultant tasked to carry out a comprehensive review of its compliance measures and recommend procedural and systemic changes to address any deficiencies identified.
FINRA Rule 2010
FINRA Rule 3110
FINRA Rule 3310
FINRA Rule 4511
SEA 1934 Rule 17a-4
FINRA Regulatory Notice 19-18
Tradeweb Direct censured and fined for allegedly failing to report the NTBC indicator for some of its transactions in municipal securities
MSRB Rule G-14
Robinhood censured and fined for numerous alleged compliance failings
Compliance issues at the firm included:
- inaccurate or incomplete disclosures to customers regarding collaring;
- a failure to establish reasonable ALM and CIP programs;
- a failure to reasonably supervise:
- technology used for clearing operations;
- FINRA registrations;
- trading in associated persons’ accounts;
- communications by social media influencers;
- delivery of account documents to customers.
- improper rejections of ACATS requests;
- maintenance and reporting of inaccurate or incomplete trade, order and position data;
- a failure to prevent trading during halts;
- a failure to reasonably supervise the execution of trades above or below specified price bands during times of extraordinary market volatility.
Restitutionary payments totalling $3,757,385.12 plus interest have been ordered.
And the firm has agreed to the imposition of an undertaking requiring it to certify in writing the remediation of the issues identified.
We have covered this case in more depth here.
FINRA Rule 1210
FINRA Rule 2010
FINRA Rule 2210
FINRA Rule 2360
FINRA Rule 3110
FINRA Rule 4511
FINRA Rule 4560
FINRA Rule 5260
FINRA Rule 6121
FINRA Rule 6182
FINRA Rule 6190
FINRA Rule 6380A
FINRA Rule 6622
FINRA Rule 6624
FINRA Rule 6830
FINRA Rule 6893
FINRA Rule 7230A
FINRA Rule 7330
FINRA Rule 8211
FINRA Rule 8213
FINRA Rule 11870
NASD Notice to Members 02-21
NASD Rule 1021
NASD Rule 3010
SEA 1934 Rule 17a-3
Former securities representative barred for allegedly refusing to appear for on-the-record testimony
FINRA Rule 2010
FINRA Rule 8210
Former unregistered person charged with allegedly failing to provide information and documents
The documents were requested following the disclosure by the firm that the representative had been indicted for:
- conspiracy to commit fraud;
- fraud in connection with identification documents;
- aggravated identity theft; and
- fraud in connection with access devices.
This is a complaint and not an AWC.
FINRA Rule 2010
FINRA Rule 8210
Securities representative suspended and fined for alleged excessive trading in a customer account
The representative exercised de facto control over the account and recommended trading that generated commissions and caused losses.
A restitutionary payment of $18,925 has been ordered.
FINRA Rule 2010
FINRA Rule 2111
Redbridge Securities censured and fined for alleged AML program failings
The firm, an introducing broker-dealer, failed to develop and implement a reasonable AML program. The shortcomings identified included:
- no written procedures reasonably addressing the detection and investigation of red flags;
- a failure to identify alerts and reports used to identify suspicious transactions;
- no indication on how these alerts and reports by AML analysts;
- an absence of automated methods for the identification of suspicious activity that could suggest market manipulation;
- no order-level surveillance;
- no supervision of cancelled trades.
Although the firm began to implement some order-level surveillance in September 2022 it did not reasonably investigate the activity that was flagged.
And while the firm collected physical and IP addresses from customers, its alerts or exception reports did not identify instances when customers were trading from the same physical or IP address.
The firm also did not have a reasonable system to investigate potentially suspicious activity that its surveillance did identify. Its staff were not reasonably trained to investigate activity flagged or to consider whether such activity required the filing of an SAR.
Even in instances where potential suspicious activity was identified the firm “often only restricted trading in the individual security at issue and did not investigate further trading by the same customer.”
As a result of these shortcomings the firm failed to detect or reasonably investigate potentially suspicious activity connected with customer deposits and trading in low-priced securities.
The firm also failed to establish and implement policies, procedures and internal controls that would enable it to comply with customer identification and risk profile requirements.
The firm failed to conduct reasonable independent testing of its AML program in 2019 and 2020 and did not conduct any independent testing in 2021.
Although the firm’s WSPs prohibited certain potentially manipulative transactions and practices, they did not directly address market manipulation. And the firm’s supervisory system was not reasonably designed to detect and address red flags of potentially manipulative trading.
The firm has also agreed to an undertaking requiring it to retain an independent third-party consultant tasked to carry out a comprehensive review of its compliance measures and recommend procedural and systemic changes to address any deficiencies identified.
FINRA Rule 2010
FINRA Rule 3110
FINRA Rule 3310
FINRA Regulatory Notice 19-18
FINRA Regulatory Notice 21-03
Robert W Baird & Co (as successor-in-interest to former member firm Hefren-Tillotson) censured and fined for recommendations that resulted in unnecessary customer fees
The firm’s representative recommended the opening of portfolio review accounts to 432 customers. These accounts included commission charges as well as an extra fee in exchange for services such as financial planning that the customers were already receiving in connection with their other accounts.
The firm also failed to establish an maintain a supervisory system reasonably designed to ensure compliance with the care obligations connected to account-type recommendations in Reg BI.
A restitutionary payment of $557,830.64 plus interest has been ordered.
FINRA Rule 2010
FINRA Rule 3110
SEA 1934 Rule 15l-1
SEC Reg BI
| Unless otherwise noted all respondents accepted and consented to FINRA’s findings without admitting or denying them. |
