Products representative suspended and fined for allegedly failing to disclose a felony charge on Form U4
FINRA By-Laws Article 5, Section 2 FINRA Rule 1122 FINRA Rule 2010
Products representative charged with allegedly making unsuitable recommendations to customers
The representative also falsified the customers’ risk tolerance, annual income and other relevant information that would have precluded them from investing in the high risk illiquid alternative investments.
(This is a complaint and not an AWC)
FINRA Rule 2010 FINRA Rule 2111 FINRA Rule 4511
RBC Capital Markets censured and fined for alleged reporting failures
The firm overreported the number of shares associated with short interest positions. In addition, the firm’s system was not reasonably designed to comply with the short interest reporting obligations, lacking testing capabilities and relying on manual processes that were not adequately monitored.
FINRA Rule 2010 FINRA Rule 3110
Merrill Lynch & Co. censured and fined for alleged AML system failures
Following its merger with Bank of America, the firm applied an incorrect monetary threshold, one applicable to banks rather than broker-dealers, when determining whether to file a suspicious activity report (SAR). This resulted in a failure to file approximately 1,500 SARs between 2009 and 2019 when the problem was uncovered.
FINRA Rule 2010 FINRA Rule 3310 NASD Rule 3011
Securities and investment banking principal charged with alleged unethical conduct, bad faith and the misuse of customer funds
A private placement offering for shares in a pre-IPO private company at a maximum price-per-share of $9.75 was offered to customers who invested $4.055m in the offering. Because there was no confirmed source for the share, no shares were purchased at this price by the fund, primarily because all available shares had already been purchased by another of the firm’s funds. Only a limited number of shares were sourced 10 months later at an average price of $20.22.
During this time the securities principal actively misled the firm and its customers into believing that the shares had been purchased and hid the problems with the offering while receiving a share of commissions from the fund. His misconduct was ultimately uncovered and the investors were informed. Although the investors realised a profit, this was far lower than it would have been had the shares been purchased at the price and in the volume stipulated in the offering.
(This is a complaint and not an AWC)
FINRA Rule 2010
Former products representative barred for allegedly refusing to produce documents and information
FINRA 2010 FINRA 8210
Former securities representative barred for allegedly participating in a private securities transaction without notifying his firm
Two elderly investors provided collateral to guarantee a $2.5m loan on behalf of a company that the representative had also invested money in. The investors were assured that the risk of investment loss was minimal. The company defaulted on its loan and closed. The investors were required to repay the entire loan with interest.
FINRA Rule 2010 FINRA Rule 3280
Former securities representative suspended and fined for allegedly maintaining an outside investment account without his firm’s approval
FINRA Rule 2010 FINRA Rule 3210
Former securities representative suspended and fined for allegedly making unsuitable recommendations to customers
In addition the representative borrowed money from a customer and also used his personal phone to communicate with the firm’s customers via text messages. The text messages in question were not captured by the firm as a result.
Exchange Act Rule 17a-3 Exchange Act Rule 17a-4 FINRA Rule 2010 FINRA Rule 2111 FINRA Rule 3240 FINRA Rule 4511
Former products representative barred for allegedly refusing to produce documents and information
FINRA 2010 FINRA 8210
Securities representative suspended and fined for allegedly falsifying customer signatures on account transfer forms
Customer signature pages were reused with prior permission on 10 account transfer authorization forms.
Rule 2010 Rule 4511
Former securities representative suspended and fined for allegedly receiving compensation for a disclosed outside business activity
The firm’s policy permitted representatives to act for immediate family members, but prohibited collecting compensation for such work if the family members were also the firm’s customers. The representative acted on behalf of his parents and indicated that he would not receive any compensation for his work, but then proceeded to collect money by way of transfers and a cheque.
FINRA Rule 2010 FINRA Rule 3270
Former products representative barred for allegedly refusing to produce documents and information
FINRA 2010 FINRA 8210
Securities representative suspended and fined for allegedly instructing an intern to complete his continuing education courses
FINRA Rule 2010
Former securities representative suspended and fined for allegedly recommending transactions that increased his own compensation to the detriment of the customers involved
Recommendations to purchase and sell resulted in unwarranted commissions and fees that could have been avoided. Unsuitable short-term trades were made in connection with securities that were typically intended to be held long-term to the detriment of the customer.
FINRA Rule 2010 FINRA Rule 2111
| Unless otherwise noted all respondents accepted and consented to FINRA’s findings without admitting or denying them. |