Former securities representative barred for allegedly refusing to appear for on-the-record testimony
FINRA Rule 2010
FINRA Rule 8210
CUNA Brokerage Services censured and fined for inadvertently deleting retail customer records
The records were deleted as part of a transition of the business from providing services to retail customers.
They contained information on the firm’s recommendations to customers connected with the rollovers of their employer-sponsored retirement plans into individual retirement accounts.
FINRA Rule 2010
FINRA Rule 4511
SEA 1934 Rule 17a-4
Drexel Hamilton censured and fined and four of its employees for alleged compliance issues connected with a municipal bond offering
Between January 2016 and August 2018 the firm participated in a number of offerings for new issues municipal bonds as a co-manager or member of the selling group.
The firm submitted orders from broker-dealer counterparties as those from bona fide retail customers, including spurious zip codes to facilitate the allocation of bonds to the firm.
It also split counterparty orders into multiple, smaller orders to evade the limit set out in the retail period eligibility criteria. This fudge generated significant commissions for the firm.
In addition the firm failed to establish and maintain a supervisory system, including WSPs, that would ensure compliance with the retail period eligibility criteria.
The employees participated in these violations and one of them, a principal, failed to reasonably supervise the activities of the securities representatives in question. The principal failed to “reasonably respond to red flags that gave him actual notice of potential misconduct” connected with purported retail orders.
MSRB Rule G-11
MSRB Rule G-17
MSRB Rule G-27
SA 1933 Rule 17(a)
Securities representative suspended and fined for allegedly falsifying customer signatures
The representative reused 14 customer signatures, with their permission, on more than 100 forms.
FINRA Rule 2010
FINRA Rule 4511
Securities representative suspended and fined for allegedly permitting his business partner to falsify customer signatures
The business partner signed 53 documents on behalf of nine customers. All the transactions were authorized and none of the customers complained.
FINRA Rule 2010
FINRA Rule 4511
MML Investors Services censured and fined for alleged problems with its consolidated reports
The firm used an online platform provided by a third-party vendor to provide consolidated reports to customers.
The reporting system automatically aggregated account information, but permitted manual entries by the firm’s registered representatives.
The firm trained its supervisors and provided resources in connection with consolidated report reviews, but it did not require supervisors to check that the representatives were complying with the procedures governing manual entries.
No alert mechanism was in place to warn supervisors that registered representatives made account information available to customers prior to supervisory reviews.
One of the firm’s representatives exploited these supervisory system weaknesses to enter false brokerage account information for three customers. Instead of creating draft reports for supervisory review the representative provided each of the customers with falsified account information related to a fictitious account for their viewing directly on the system.
The firm failed to detect that the representative was using falsified data and fictitious accounts.
The firm compensated the customers for damages related to the representative’s actions.
FINRA Rule 2010
FINRA Rule 3110
Former securities representative barred for allegedly refusing to produce information and documents
FINRA Rule 2010
FINRA Rule 8210
National Financial Services censured and fined for alleged misreporting connected to Regulation NMS including failing to disclose material aspects of its relationships with venues
In its Rule 606 reports the firm:
- misclassified customer market and limit orders;
- did not include the required information on the tier and pricing applying to it for venues with tiered pricing schedules;
- did not provide additional required information necessary to determine the fees and rebates incurred by the firm on certain venues; and
- listed an incorrect execution venue name following its acquisition by another broker-dealer.
In addition the firm erroneously excluded immediate-or-cancel mid-point peg orders from its Rule 605 reports.
FINRA Rule 2010
SEA 1934 Rule 606
SEA 1934 Rule 605
SEC Regulation NMS Rule 606
SEC Regulation NMS Rule 605
Torch Securities fined for allegedly failing to complete annual independent AML testing
The firm’s compliance officer was also suspended and fined for backdating documents to purportedly demonstrate his timely disclosure of outside business activities to the firm.
FINRA Rule 2010
FINRA Rule 3310
Former securities representative barred for allegedly refusing to appear for on-the-record testimony
FINRA Rule 2010
FINRA Rule 8210
Former securities representative suspended and fined for alleged exercise of discretionary authority without authorization
The representative also used an unapproved channel to communicate with customers about securities-related business.
FINRA Rule 2010
FINRA Rule 3260
FINRA Rule 4511
Paulson censured and fined for alleged supervisory system failures connected with the disclosure of outside business activity
One of the firm’s registered representatives notified the firm in writing of proposed outside business activities that were investment-related.
The firm failed to evaluate the activities to determine whether they:
- should be restricted or prohibited;
- should be treated as outside business activities with the transactions recorded and maintained; and
- would interfere or compromise the representatives responsibilities to the firm or its customers.
FINRA Rule 2010
FINRA Rule 3110
FINRA Rule 3270.01
| Unless otherwise noted all respondents accepted and consented to FINRA’s findings without admitting or denying them. |