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Fort Lauderdale Securities Law Blog

Kelly Marvin Barnett - Unauthorized Discretion, Unit Investment Trusts - Boca Raton, Florida FINRA Abribration Attorney

Unauthorized Discretion, Unsuitable Investment - Unit Investment Trust - South Florida, including Deerfield Beach, Boca Raton and Lake Worth FINRA Arbitration Attorney.

Kelly Marvin Barnett (CRD #4127608, Sarasota, Florida):

Peter David Holler - Selling Away - Promissory Notes - South Florida FINRA Arbitration Attorney

Selling Away, Outside Business Activity and Promisssory Notes - Boca Raton, Florida FINRA Arbitration Attorney

Peter David Holler (CRD #838897, Bristol, Tennessee):

Brian John Hussey, Jr. - Unsuitable Trade Recommendations and Unauthorized Discretion

Unsuitable Trade Recommendations and Unauthorized Discretion - South Florida, including Boca Raton and West Palm Beach, FINRA Arbitration Attorney.

Brian John Hussey Jr. (CRD #4640067, Zephyrhills, Florida)

Direct or Derivative Claim- South Florida Commerical State and Federal Court Litigation Attorney

As a Shareholder of a Corporation or Member of a Limited Liability Company, is Your Claim Direct or Derivative.

Frequently Asked Questions About Exempt Securities Offerings

Frequently Asked Questions About Exempt Securities Offerings, Including Alleged Private Placements - South Florida Exempt Offering and Private Placement Litigation Attorney 

Do anti-fraud provisions apply?

Capitol Securities Management, Inc. - Suitability of Short Term Trading of Unit Investment Trusts

Capitol Securities Management, Inc. - Suitability of Short Term Trading of Unit Investment Trusts

 

Integrated Trading and Investments, Inc. - Failure to Properly Maintain and Supervise Email Communications

Failure to Properly Maintain and Supervise Email Communications:

Integrated Trading and Investments, Inc. (CRD #47730, Huntington Beach, California)

FINRA recently announced that on or about May 21, 2018 Integrated Trading and Investments, Inc. executed an Acceptance, Waiver and Consent in which the firm was censured and fined $5,000. A lower fine was imposed after considering, among other things, the firm's revenue and financial resources. Without admitting or denying the findings, the firm consented to the sanctions and to the entry of findings that it failed to maintain and preserve certain business-related emails in a non-erasable, non-rewritable format, also known as WORM (write once, read many) format. The findings stated that the firm allowed its registered representatives to use personal email accounts to conduct their securities business and preserved business-related emails using electronic storage media (ESM). Until July 2013, the firm's representatives were required to forward their business-related emails from their personal email accounts to the personal email address of the firm's President/Chief Compliance Officer (CCO) for storage. These emails, along with any other business-related emails sent from or received by the CCO's personal email address were not stored in WORM format. Beginning in July 2013, the firm's representatives were required to forward business-related emails conducted in their personal email accounts to firm email addresses for storage. The firm's representatives did not always follow this requirement. As a result, certain of their business-related emails were not maintained and preserved in WORM format. The findings also stated that the firm did not use an automated system for the review and preservation of all business-related emails. Instead, it relied on an "honor system" for registered representatives to manually forward business-related emails, including those with customers, from their personal email accounts to the firm's CCO (until July 2013) and to business email addresses assigned by the firm (beginning in July 2013). As a result, the firm's compliance with its review and preservation obligations depended on its representatives' compliance with this requirement. The firm, however, had no supervisory system or procedures to ensure that its representatives complied with this requirement. The findings also included that because of this deficiency in the firm's system, business-related emails sent from or received by the personal email accounts of the firm's representatives that were not forwarded escaped supervisory review. For example, business-related emails using personal email accounts were not forwarded by three registered representatives between April 2012 and July 2013, and by another representative between August 2013 and January 2014. The firm was unable to evidence any review of these emails. FINRA found that between January 2012 and July 2013, the firm did not require the review by another registered principal of emails sent or received by the firm's CCO and did not otherwise establish a reasonable system for the review of his emails. As a result, the CCO's emails were not reviewed by another registered principal. FINRA also found that the firm failed to implement and maintain a reasonably

Cambridge Investment Research, Inc. - Leveraged, Inverse and Inverse-Leveraged ETFs

Leveraged, Inverse and Inverse-Leveraged ETFs

Cambridge Investment Research, Inc. (CRD #39543, Fairfield, Iowa)

FINRA recently announced that on May 3, 2018 Cambridge Investment Research, Inc. executed an Acceptance, Waiver and Consent in which the firm was censured and fined $150,000. Without admitting or denying the findings, the firm consented to the sanctions and to the entry of findings that it failed to establish, maintain and enforce a reasonably-designed supervisory system and procedures regarding redemptions of variable annuities and leveraged, inverse and inverse-leveraged ETFs (non-traditional ETFs). The findings stated that on approximately 100 occasions, the firm's customers redeemed variable annuities and transferred the proceeds to an advisory account. The firm's associated persons were involved with and recommended some of those transactions. The firm did not systematically supervise or record those redemptions or have written procedures for doing so, nor did the firm ascertain which of those transactions were recommended by the firm's associated persons and were thus subject to FINRA's suitability requirements. The firm's supervisory system and WSPs were not reasonably designed to comply with applicable supervision and recordkeeping requirements with respect to redemptions of variable annuities, and the firm did not record those transactions. The findings also stated that 84 firm registered representatives traded non-traditional ETFs in retail customer accounts. These registered representatives executed 4,773 transactions totaling approximately $127 million. The firm established WSPs for non-traditional ETFs that required registered representatives who wanted to trade non-traditional ETFs to complete a 45-minute training session and sign a "Leveraged/Inverse ETF Rep/Advisor Attestation Form." The attestation form required representatives to make several representations before executing a nontraditional ETF transaction. The firm failed to enforce its WSPs regarding non-traditional ETFs in several respects. First, the firm allowed representatives to execute non-traditional ETF trades before signing the attestation form. All 84 representatives who executed nontraditional ETF transactions executed at least one such transaction before signing the attestation form. Second, the firm allowed customers to purchase non-traditional ETFs before submitting the required disclosure form. The findings also included that the firm did not establish an adequate supervisory system to effectively monitor holding periods for non-traditional ETFs. The firm's procedures required the compliance department to review customer accounts that held non-traditional ETF positions and identify any accounts that were holding these positions for more than 10 days and, if necessary, follow up with the responsible registered representative. The firm, however, failed to enforce these procedures. The firm's failure to adequately monitor customers' non-traditional holding periods resulted in customers holding non-traditional ETF positions for lengthy periods of time. There were numerous non-traditional ETF positions that were sold by the firm's customers that were held for longer than seven days. (FINRA Case #2016048934301)

Legend Equities Corporation - Mutual Fund Abuse FINRA Arbitration Attorney

Legend Equities Corporation - Mutual Fund Abuse FINRA Arbitration Attorney:

Legend Equities Corporation (CRD #30999, Palm Beach Gardens, Florida) recently submitted an Acceptance, Waiver and Consent in which the firm was censured and required to provide FINRA with a plan to remediate eligible customers who qualified for, but did not receive, the applicable mutual fund sales-charge waiver. As part of this settlement, the firm agrees to pay restitution to eligible customers, which is estimated to total $2,300,188 (the amount eligible customers were overcharged, inclusive of interest). The firm will also ensure that retirement andcharitable waivers are appropriately applied to all future transactions. Without admitting or denying the findings, the firm consented to the sanctions and to the entry of findings that it disadvantaged certain retirement plan and charitable organization customers thatwere eligible to purchase Class A shares in certain mutual funds without a front-end sales charge.

Mid Atlantic Capital Corporation - Private Securities Transactions - West Palm Beach, Florida FINRA Arbitration Attorney

Mid Atlantic Capital Corporation - Private Securities Transactions - West Palm Beach, Florida FINRA Arbitration Attorney:

Mid Atlantic Capital Corporation (CRD #10674, Pittsburgh, Pennsylvania) recently submitted an AWC in which the firm was censured and fined $100,000 by FINRA. Without admitting or denying the findings, the firm consented to the sanctions and to the entry of findings that it failed to adequately supervise the private securities transactions of two registered representatives.

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