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- North Korean caught secretly mining bitcoin rival
- IPO Timelines Cut by 80% After SEC's Private Filing Decision
- How the Carried Interest Break Survived the Tax Bill
- FINRA: The Neutral Corner
- Coinbasex Says Buying and Selling Temporarily Disabled Amid Price Rout
- Bitcoin plunges by more than a third in a single day
- Goldman Is Setting Up a Cryptocurrency Trading Desk
- Jefferies Lets Employees Choose When to Receive Their Bonuses
- UBS Told to Pay $903K After Losing Retaliation Verdict
- BEWARE: Long Island Iced Tea Shares Soar After Changing Name to Long Blockchain
- Gary Cohn’s Last Laugh: Cashing Out on Trump’s Tax Plan
- E*Trade Lets Customers Trade in CBOE Bitcoin Futures
- Swiss Find Serious Shortcomings at JPMorgan in 1MDB Case
- Washington-based Investment Adviser and His Business Partner Charged in Multi-Million Dollar Scheme
- FINRA Board of Governors Meeting
- Cryptocurrency Market Now Doing Same Daily Volume as the NYSE
- Jailed Barclays Trader Must Pay $400,000 From Libor Profits
- Trump Asks ‘How’s Your 401(k)?’ But Most Voters Don’t Have One
- A Bitcoin Hedge Fund’s Return: 25,004% (That Wasn’t a Typo)
- Madoff Victims Near Full Recovery of Principal With Payout
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WWW: Retail B/D Pays $498K for Selling Unsuitable UITs - FINRA
CUSO Financial Services, a general securities firm based in San Diego, CA, agreed to pay $173K in fines and restitution to settle FINRA charges that a registered rep (RR or broker) recommended and sold unsuitable unit investment trusts (UITs) to customers unit investment trusts (UITs). The firm had earlier provided $325K in restitution to customers – so the firm’s total cost in this matter totaled $498K.
ABOUT THE FIRM. CUSO, a FINRA member since 1997, conducts a general securities business through its relationships with credit unions. Currently, the Firm has about 714 registered reps and over 950 branch offices located in credit unions across the country. CUSO does not have any prior disciplinary history.
FINRA’S SPECIFIC FINDINGS. From January 2012 through August 2013, the RR solicited and sold to 50 customers 76 UITs that invested in closed-end mutual funds that employed leverage. The RR and his principals who approved the UIT transactions, failed to have a reasonable basis to recommend and approve the UIT transactions. Some of the customers were seniors, and some of these customers had low risk tolerances.
All told, the customers lost $443,000 of the $4.6 million invested.
While CUSO’s written supervisory procedures (WSPs) directed certain principals to review UIT transactions for suitability, the WSPs lacked concrete guidance to assist its brokers and principals in assessing the suitability of UITs that invest in closed-end funds and that might use leverage – e.g., no concrete guidance as to how a customer’s age, liquid net worth and asset concentration impacted the suitability determination for these riskier UITs.
This case was reported in FINRA Disciplinary Actions for March 2017.
For details on this case, go to … FINRA Disciplinary Actions Online, and refer to Case #2013039239102.