Ayre Investments, a small Massachusetts broker-dealer, and an indirect owner who functioned in several supervisory roles - including CCO and FinOp - were sanctioned for numerous rule violations and supervisory failures that, in large part, were due to a deficient written supervisory policies manual. Ayre Investments ("AI") became a FINRA member in January 1999, is a small full service broker-dealer  that employed about 10 RRs, and was 100% owned by Ayretrade Financial, which in turn is owned by Principal Timothy Tilton Ayre and his father, who's AI's President.  Respondent Timothy Ayre first became registered in 1990 as a General Securities Rep, and by the time of the violations had obtained other registrations and was responsible for many supervisory roles at the firm - CCO, FinOp, Muni Securities Principal, and General Securities Principal. FINRA Allegations - First Wave. From at least 3/17/07 through at least 10/25/09, the firm, acting through Ayre, failed to establish and maintain a supervisory system and establish, maintain and enforce WSPs to supervise the activities of each registered person that were reasonably designed to achieve compliance with the applicable rules and regulations in the following areas:  

• CRD Pre-Registration Checks
• Exception Report Maintenance and Review
• Supervisory Branch Office Inspections
• Approval of Transactions by a Registered Securities Principal
• Annual Compliance Meeting
• FinOp Review of Checks Received and Disbursements Blotter
• Rule 3012 Annual Report to Senior Management
• Review and Retention of Correspondence
• Regulation S-P
• Outsourcing Arrangements

Generic WSP Template. The firm's WSPs were purchased from a 3rd-party vendor and were intended to meet the needs of any broker-dealer, regardless of the firm's size or business.  AI, acting through Ayre, failed to tailor the template WSPs to address the particular business activities of the firm.  With respect to the areas identified above, the firm's WSPs failed to describe with reasonable specificity the identity of the person who would perform the relevant supervisory reviews and how and when those reviews would be conducted. Further, with respect to me maintenance of electronic communications, AI completely failed to establish, maintain and enforce any supervisory system and/or WSPs that were reasonably designed to ensure that all business-related e-mails were retained. Failed to Comply with AWC. On 1/5/09, Firm and Ayre accepted terms of an AWC Letter.  Among the sanctions, an officer of Firm was required, within 90 days, to certify to FINRA in writing that the firm had completed its review and that it had established systems and procedures reasonably designed to achieve compliance with NASD rules and the federal securities laws and regulations. From April 2009 to present, Firm and Ayre failed to file an ordered certification with FINRA regarding AI's WSPs. Failures over Options Trading. From March 2007 through October 2009, Firm had only one Registered Options Principal, who was required to review and approve all of Firm's options trades.  However, for more than half of the year, the ROP resided in Florida and did not work in Firm's Agawam, MA office - and Firm's WSPs did not address or explain how the ROP would accomplish and document such contemporaneous reviews and approvals of all options trades placed by Firm customers. During the period, Firm executed about 450 options transactions, none of which was approved by the ROP. Failures to Retain Electronic Communications. From at least 9/22/09 through at least 8/15/10, Firm failed to maintain and preserve all of its business-related electronic communications.  During this time, Firm permitted its RR's to use e-mail to conduct business - but didn't have a system for e-mail  surveillance or archiving.  Each RR maintained e-communications on his or her personal computer or arranged for the retention of e-communications in some other fashion.  Thus, throughout the relevant time period, Firm relied on the reps to forward or copy their business-related e-mails to Firm's home office for retention. Of course, not all of the reps' business-related e-mails were sent to the home office, and thus not retained.  As a result, Firm failed to maintain and preserve at least 10,000 business-related e-communications sent to or received by 2 particular RR's. Imposed Sanctions. The firm accepted a $10K fine and agreed to revise its supervisory systems and WSPs, and agreed to certify in writing to FINRA, within 90 days, that its has in place systems and procedures to achieve compliance with those rules, laws and regulations.  Timothy Ayre accepted a $10K fine and 2-month suspension as principal.  FINRA imposed a lower fine against the firm after it considered, among other things, the firm’s revenues and financial resources. For further details, go to:  [FINRA AWC #2009016252601] and [FINRA Disciplinary Actions for Sept. 2011].