BROWSE BY TOPIC
- Bad Brokers
- Compliance Concepts
- Investor Protection
- Investments - Unsuitable
- Investments - Strategies
- Wall Street News
- Investments - Private
- Rules & Regulations
- Bad Advisors
- Boiler Rooms
- Terminations/Cost Cutting
- General News
- Donald Trump & Co.
- Big Banks
- Regulatory Sanctions
Stories of Interest
- Sarah ten Siethoff is New Associate Director of SEC Investment Management Rulemaking Office
- Catherine Keating Appointed CEO of BNY Mellon Wealth Management
- Credit Suisse to Pay $47Mn to Resolve DOJ Asia Probe
- SEC Chair Clayton Goes 'Hat in Hand' Before Congress on 2019 Budget Request
- SEC's Opening Remarks to the Elder Justice Coordinating Council
- Massachusetts Jury Convicts CA Attorney of Securities Fraud
- Deutsche Bank Says 3 Senior Investment Bankers to Leave Firm
- World’s Biggest Hedge Fund Reportedly ‘Bearish On Financial Assets’
- SEC Fines Constant Contact, Popular Email Marketer, for Overstating Subscriber Numbers
- SocGen Agrees to Pay $1.3 Billion to End Libya, Libor Probes
- Cryptocurrency Exchange Bitfinex Briefly Halts Trading After Cyber Attack
- SEC Names Valerie Szczepanik Senior Advisor for Digital Assets and Innovation
- SEC Modernizes Delivery of Fund Reports, Seeks Public Feedback on Improving Fund Disclosure
- NYSE Says SEC Plan to Limit Exchange Rebates Would Hurt Investors
- Deutsche Bank faces another challenge with Fed stress test
- Former JPMorgan Broker Files racial discrimination suit against company
- $3.3Mn Winning Bid for Lunch with Warren Buffett
- Julie Erhardt is SEC's New Acting Chief Risk Officer
- Chyhe Becker is SEC's New Acting Chief Economist, Acting Director of Economic and Risk Analysis Division
- Getting a Handle on Virtual Currencies - FINRA
We seek to provide information, insights and direction that may enable the Financial Community to effectively and efficiently operate in a regulatory risk-free environment by curating content from all over the web.
Stay Informed with the latest fanancialish news.
NEWSLETTERS & ALERTS
Broker-Dealer, CCO Tripped Up on Remote Supervision
[Photo: Falling Flat on My Face / seedbed.com]
by Howard Haykin
- In January 2013, Concorde hired JT as a General Securities Representative, even though it was understood that she had never had any customers of her own.
- Then-husband RC was, in fact, personally involved in negotiations with Concorde over the hiring of JT, and RC explicitly told Concorde that he wanted JT to “tak[e] over the business” and service his customers while he was suspended - with the expectation that Concorde would hire him upon the conclusion of his suspension.
- Concorde was further aware that RC was about to begin serving a one-year suspension for violations committed at a prior broker-dealer – that included recommending unsuitable transactions involving complex products and sending customers misleading and unapproved account summaries.
- Working out of a Concorde branch office in New Jersey, JT ostensibly worked alone (except for an administrative assistant), and was remotely supervised by principals located in Concorde’s home office in Michigan.
- From the outset, some Concorde employees questioned JT’s competence.
A NEW CCO JOINS CONCORDE:
- In April 2013, shortly after joining Concorde, the newly-hired CCO learned about RC’s suspension, and was told by Concorde’s Chief Operating Officer and another employee that, based on interactions with JT, they did not feel she was competent to handle RC’s book of business.
- In May 2013, Concorde’s 3rd-party consultant recommended that the CCO schedule a surprise inspection of JT’s branch office to determine whether it was JT or RC who was acting as the registered rep for Concorde’s customers.
- In October 2013, the CCO finally scheduled a branch inspection of JT’s branch office, to be conducted by the consultant.
- The consultant was directed to use only Concorde’s standard branch inspection checklist.
- The consultant was not instructed to assess the possibility that RC was conducting a securities business while suspended. Such an assessment might have included … (i) asking JT’s customers who was servicing their accounts; and, (ii) reviewing emails, customer contact notes, or other documents to determine who was acting as the registered rep to Concorde’s customers.
WHAT CONCORDE AND THE CCO MISSED:
- During his one-year suspension, RC sent or received more than 1,700 emails through his business email address – many of which contained explicit securities recommendations to Concorde customers, and all of which were acquired and retained by Concorde through its email vendor.
- Numerous Concorde employees received emails from RC’s business email address during his suspension and mistakenly assumed that it was JT that was sending the emails.
- The CCO, herself, received at least 5 emails from RC’s business email address during his suspension, but failed to take reasonable steps to determine whether RC was acting in a registered capacity during his suspension.
- Concorde ignored other red flags regarding RC’s activities - such as when it was notified that its clearing broker had rejected a check from a customer that was made out to Concorde’s clearing firm and RC; no one investigated why a customer would have written RC’s name on the check.
- Throughout the year, Concorde customers were unaware that RC had been suspended and, instead, believed that RC continued to be their broker, while JT was his assistant.
[For further details on the above case, click on … FINRA Case #2018060577602.]