BROWSE BY TOPIC
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
Supervision: Wearing Too Many Hats Proves Fatal
by Howard Haykin
The 50% owner of Liberty Partners Financial Services, who also served as the firm’s CEO, CFO, FINOP, and its designated principal for reviewing activity in customer accounts, settled FINRA charges that he failed to reasonably supervise the equity trading of registered reps at his member firm for potentially excessive trading.
He agreed to: (i) pay a $20K fine; (ii) serve a 6-month suspension in all capacities; and, (iii) immediately thereafter, serve a 12-month suspension in any principal capacity.
FINRA FINDINGS: Between January 2014 and September 2015 ("the relevant period"), the individual failed to reasonably supervise the equity trading of registered reps (“RRs”) for potentially excessive trading, and, even where his reviews identified potentially excessive trading, he failed to reasonably address that activity.
I. Liberty’s written supervisory policies (“WSPs”) pertaining to excessive trading, as developed by the individual:
- Failed to adequately describe how potentially excessive trading would be identified or handled.
- Failed to accurately reflect the practices that Liberty actually employed to supervise potentially excessive trading by its RRs.
- Failed to adequately identify procedures for processing and monitoring ‘active trading paperwork’ sent to customers whose accounts displayed potentially excessive trading.
- Failed to adequately identify how ‘closing transactions only’ restrictions on such accounts (referred to as "buy-blocks") would be processed and monitored.
- Failed to adequately identify how 'commission restrictions' on such accounts would be processed and monitored.
II. This individual failed to adequately supervise potentially excessive trading:
- Supervisory reviews of customer account activity were not performed with any regularity.
- Accounts with potentially excessive trading were at times not reviewed until months after the activity took place, if at all.
- Even where such reviews identified potentially excessive trading activity, follow-ups were ineffective. For example, after determining that a customer needed to receive active trading paperwork to confirm that the customer desired the level of activity in the account, the individual …
- failed to confirm that firm personnel actually sent active trading paperwork;
- failed to confirm that Liberty received signed paperwork back.
- never spoke with customers whose accounts appeared to be engaged in active trading with annualized turnover ratios ranging up to 104.
- Buy-block restrictions were sporadically and inconsistently imposed on some accounts as result of account reviews – and, in at least one instance, the individual removed a buy-block based solely on the RR's request.
- Commission restrictions were implemented by simply informing an RR to restrict his or her commissions, and then did nothing to ensure that the RR followed those directives.
This case was reported in FINRA Disciplinary Actions for June 2018.
For details on either case, go to ... FINRA Disciplinary Actions Online, and refer to Case #2015043246401.