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
IPO Purchases in Personal Brokerage Accounts – Smoking Gun for FINRA Examiners
[Photo: Smoking Gun, by Charles Knowles / Flickr]
by Howard Haykin
A partner of a broker-dealer agreed to pay a $25K fine, serve a 45-day suspension, and pay over $28K in disgorgement to settle FINRA charges that, while associated with his member firm, he purchased shares in 52 IPOs in two brokerage accounts held at another firm.
FINRA FINDINGS. From July 2013 through September 2015, this individual purchased shares in 52 initial public offerings (“IPOs") in 2 personal brokerage accounts held at Merrill Lynch, Pierce, Fenner & Smith. The sale of these IPOs generated around $28,000 in profits. [Not a grand amount.]
By virtue of the foregoing, this individual violated: (i) FINRA Rule 5130 (Restrictions on the Purchase and Sale of Initial Equity Public Offerings); and, FINRA Rule 2010 (Standards of Commercial Honor and Principles of Trade).
FINANCIALISH TAKE AWAYS. FINRA points out that both personal brokerage accounts were fully disclosed to the member firm – which means that the firm probably was receiving duplicate trade confirmations and monthly statements. Which begets the question:
Why did compliance personnel at the firm not bother to review the documents for inappropriate transactions? Or, if they had, why did firm personnel disregard the fact that the associated person was participating in IPOs?
It takes little imagination to view these duplicate confirms and statements as the “smoking gun” in this case. FINRA field examiners probably looked at how the firm monitors personal brokerage accounts of its associated persons - and viola, they come across numerous (obvious and violative) IPO transactions.
So I ask: What’s the purpose of collecting duplicate copies of confirmations and monthly statements of outside personal brokerage accounts if no one is going to look at them?
That said, here's the one silver lining in this case: FINRA could have sanctioned the firm for failure to supervise - but didn't.
This case was reported in FINRA Disciplinary Actions for January 2018.
For details on this case, go to ... FINRA Disciplinary Actions Online, and refer to Case #2017054294701.