BROWSE BY TOPIC
- Investments - Strategies
- Investments - Unsuitable
- Investor Protection
- Regulatory Sanctions
- Investments - Private
- Rules & Regulations
- Bad Advisors
- Bad Brokers
- Boiler Rooms
- Wall Street News
- Terminations/Cost Cutting
- Compliance Concepts
- General News
- Donald Trump & Co.
- Big Banks
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
Remote Branch Manager Failed to Register or Supervise
by Howard Haykin
Shortly after buying a significant ownership interest in Dakota Securities International, a Venezuelan citizen (who owned several Venezuelan entities including a broker-dealer and an investment bank) opened a branch office in Caracas, Venezuela. He hired a long-time acquaintance to work from Dakota's Miami, FL, office as Dakota's head trader and to supervise personnel and trading for the Firm's Caracas branch office (the “designated individual”).
By the time this registered rep and long-time acquaintance became associated with the Firm in April 2014, the Firm's primary business had shifted from domestic retail securities transactions to transactions involving foreign sovereign debt. The Firm's customer base also shifted from domestic retail customers to primarily foreign institutional accounts, so that over 90% of Dakota's reported bond trades in 2014 were in bonds issued by Petroleos de Venezuela S.A., the Venezuelan state-owned oil company, including numerous, complex, trades among affiliates owned and controlled by the Venezuelan citizen, with no apparent economic rationale.
FAILURE TO REGISTER AS A GSP. The designated individual was not registered with FINRA as a GSP at any time during his 8-to-9-month association with Dakota (April 2014 to December 2014) even though he was functioning as a principal. In particular, the Firm's WSPs designated him as a supervisor of Dakota's Caracas branch office and of the Firm's institutional sales and trading desk. In these roles, the designated individual was responsible for supervising 2 FINRA-registered traders located in the Firm's Caracas office and for reviewing and approving trading conducted through that branch office.
Yet, while the designated individual was previously registered with FINRA as a GSP with other FINRA member firms, that registration was only in effect until February 2009. Since more than 2 years elapsed by the time he was hired by Dakota in 2014, that license had expired - which meant the designated individual had to retake and pass the Series 24 exam before he could once again serve as a principal. Given 3 opportunities by the Firm to take the Series 24 exam, this individual either didn’t take it or he failed to pass it.
FAILURE TO SUPERVISE. Dakota's WSPs required the designated individual to perform specific reviews and surveillance measures for the Caracas branch office. For example, he was to conduct a daily review of transactions to detect potential insider trading and other violative or suspicious activity, including "high risk" trading patterns and transfers between related and affiliated accounts.
However, the designated individual failed to review any of the transactions effected through the Caracas branch office for such activity, and did not otherwise reasonably supervise that branch or the 2 FINRA-registered traders who operated out of that location. Although he reviewed bond transactions for best execution purposes only, he did not review transactions for any other supervisory purposes, and did not implement any exception reporting to detect or respond to any patterns of activity that raised potential issues. Rather, the designated individual approved transactions without taking reasonable steps to determine if they presented any indicia of any violations of securities laws or FINRA rules.
This case was reported in FINRA Disciplinary Actions for May 2019.
For further details, click on... FINRA AWC #2015047215402.