FINRA sanctioned a producing Sales Manager at a Chicago broker-dealer for churning, exercising unauthorized discretion, among other things;  firm's CEO was fined and suspended over his supervision.  Here's What Went Wrong:

    Sales Manager Murphy.  Ordered to pay $592K in disgorgement, barred from industry.  This individual allegedly exercised discretion in clients’ accounts without the customers’ or his member firm’s prior authorization.  He also was further found to have:  (i) engaged in churning and excessive and unsuitable trading in customers’ accounts in light of their financial situation and investment objectives;  (ii) effected uncovered trades in a customer’s account beyond the levels the customer authorized or Murphy’s firm approved;  (iii) created and distributed inaccurate, misleading and unbalanced written communications, including reports and sales lit, to a customer.

    CEO and President Birkelbach.  Fined $25K, suspended as General Securities Principal and Options Principal for 6 months.  This individual failed to supervise Murphy’s handling of customer accounts at his member firm, and failed to properly review and prevent misleading documents from being sent out from his firm.   [FINRA August Disciplinary Actions]