as it did not adequately monitor for and/or investigate facts and circumstances present in certain customer accounts that constituted ďred flagsĒ in its written AML compliance program.
Neither Hurry, nor anyone else at her firm, took steps to monitor for disciplinary background or multiple account red flags or for transactions triggering the journal transfer, penny stock or wire transfer redflags.
Acting through Hurry, failed to implement its written AML compliance program by failing to file SAR-SF forms to report suspicious activity. The Firm failed to document red-flag investigations in accordance with its written AMLcompliance program and procedures because the firmís chief compliance officer (CCO) failed to create, or cause Hurry to create, a record of questionable backgroundreviews. The firmís AML procedures pertaining to the disciplinary background red flag were not sufficiently specific to provide any meaningful guidance as to where and how the firm would look for customers with questionable backgrounds.
The Firm utilized a means of interstate commerce in connection with its sales of unregistered stock, and the transactions were not exempt from registration.In addition, acting through Hurry, the Firm failed to designate and specifically identify to FINRA at least one principal to establish, maintain and enforce a system of supervisory control policies and procedures.
Acting through Hurry, the Firm also failed to establish, maintain and enforce written supervisory control policies and procedures concerning producing managers, designation of a principal to review theircustomer account activity, the limited size and resources exception, testing, updating and annual certification of firm written supervisory procedures (WSPs), and addressing the designated principalís annual report to senior management. Acting throughHurry, the Firm did not submit an annual report to firm management detailing the firmís system of supervisory controls, the summary of test results and significant exceptions, and any additional or amended supervisory procedures in response to the test results. Hurry failed to establish a supervisory system and WSPs reasonably designed to achieve compliance with applicable securities laws and regulations, and failed to enforce its WSPs. In addition,Hurry failed to prepare a report pertaining to its home-office inspection.
The Firm and Hurry filed SARs that contained inaccurate orincomplete information, and filed SARs that failed to provide adequate informationfor determining that the reported activity was suspicious. The firm and Hurry failed toestablish and implement policies and procedures reasonably expected to detect and cause the reporting of transactions required under 31 U.S.C. 5318(g) and the implementingregulations thereunder.Furthermore, the firm did not complete its 3013 report as required under IM-3013 for twoyears. The firmís WSPs and records of branch- and home-office inspections were inadequate; and the firm did not enforce its WSPís pertaining to letters of authorization (LOA)
Scottsdale Capital Advisors: Censured; Fined $125,000 (includes $18,000 disgorgement of commissions earned from violative sales)
Justine Hurry: Fined $7,500; Suspended 40 business days in Principal capacities other than FINOP