Robert Alan Vollbrecht, president of Workman Securities in Jordan, MN, was sanctioned by FINRA for numerous supervisory failures, including those pertaining to the firm's sale of private offerings.  Last week we reported that FINRA had also sanctioned the broker-dealer for these same supervisory failures, among other issues;  the firm was ordered to pay $700K in partial restitution. 

    President's Supervisory Responsibilities.   Mr. Vollbrecht, as principal responsible for approving sales of private offerings, Vollbrecht was required to:

• implement adequate supervisory pols and procedures relating to the sale of private placement offerings;
• take affirmative steps to ensure that information in offering documents sold through his firm was accurate;
• assign qualified personnel to conduct due diligence of a particular offering, and to supervise that due diligence process.
• perform all necessary and appropriate due diligence to ensure that his firm and its field sales force understood any product sold through a private offering through the firm, and any associated risks.

    President's Supervisory Failures.   FINRA found, however, that Vollbrecht failed to fulfill these obligations, in that he allegedly:

• did not conduct meaningful due diligence for these offerings prior to approving them for sale to his firm’s customers;
• allowed the firm’s reps to continue selling these offerings after various red flags were identified;
• failed to maintain a supervisory system reasonably designed to achieve compliance with applicable securities laws and regulations with respect to the offerings, acting on his firm’s behalf.

    President's Other Supervisory Failures.  Vollbrecht allegedly failed to implement heightened supervision.  An RR who was the subject of a pending FINRA investigation and was the subject of numerous customer complaint, was nominally placed on heightened supervision; Vollbrecht was the RR's supervisor.   The RR was not subjected to any degree of heightened supervision, as Vollbrecht scrutinized this RR's transactions in the same manner that he reviewed transactions of other RR's under his supervision.   This failure allegedly enabled the RR to conduct questionable variable annuity transactions with customers. 

Vollbrecht also allegedly failed to reasonably supervise another RR who was inexperienced in the securities business.  He ignored red flags - visible irregularities on firm new account and annuity application forms prepared by this RR - in that he approved an unusually large variable annuity transaction without scrutinizing V/A documents that the RR had prepared.  Vollbrecht also conducted minimal investigation after after learning of a non-registered individual’s involvement in the subject account. 

Vollbrecht was fined $10,000 and barred from serving in any principal capacity.  This is FINRA Case #2009018818402.   [April 2011, Disc. Actions]