Brookville Capital Partners LLC fka New Castle Financial Services LLC
AWC/2008011678303/August 2010

Acting through its chief compliance officer (CCO), the firm: 

• failed to establish and implement an adequate AML program and related procedures; adequately identify, investigate and respond to red flags of suspicious activities;
• timely file a Suspicious Activity Report (SAR); and
• provide AML training for firm personnel for one year.

Acting through a registered representative, the firm

• improperly facilitated the distribution of approximately 20 million shares of various unregistered securities;
• operated an unregistered branch office, in violation of the restriction on business expansion contained in its membership agreement, and
• engaged in improper telephone solicitations (from the unregistered office) by making materially false representations and omitting material facts in connection with the offer of securities and by using misleading telemarketing scripts that a registered principal had not approved.

Acting through the registered representative and CCO, the firm failed to perform adequate searching inquiries and take necessary steps to ensure that transactions did not involve distributions of unregistered and/or restricted securities.

Acting through a registered representative and firm principal, the firm sold securities to public investors using a private placement memorandum that omitted to disclose a convicted felon’s association with the issuer, a material fact to any reasonable investor.

Acting through various FINOPs, the firm

• failed to maintain accurate financial books and records,
• filed inaccurate FOCUS reports and
• operated a securities business while under minimum net capital requirements.

Acting through the CCO and other compliance officers, the firm

• failed to forward customer funds it received in connection with contingency offerings to an escrow agent by noon of the next business days after receipt of such fund;
• adequately review and approve customer correspondence;
• timely and accurately report customer complaints;
• timely update Uniform Applications for Securities Industry Registration or Transfer (Forms U4) and Uniform Termination Notices for Securities Industry Registration (Forms U5);
• comply with the Firm Element of the Continuing Education Requirement for a year;
• conduct an annual compliance meeting; and
• establish an adequate business continuity plan, which consequently led to the loss of access to certain customer records upon termination of its relationship with a particular clearing firm.

The firm had additional supervisory deficiencies, including that

• its written supervisory procedures failed to establish adequate procedures for review of producing managers’ customer account activities,
• it failed to have written supervisory procedures for identifying producing managers that should be subject to heightened supervision, and
• failed to place certain producing managers on heightened supervision, in that, acting through various individuals, the firm failed to clearly assign each registered person to an appropriately registered representative and/or principal responsible for supervising that person’s activities, and designate principals with actual authority to carry out the supervisory responsibilities over the firm’s business.

Acting through a supervising principal, the firm failed to reasonably supervise registered representatives working out of the unregistered branch office.

Acting through firm officers, the firm failed to establish and maintain a supervisory system reasonably designed to supervise the sales activities of firm personnel conducted outside of its registered offices, and failed to establish and maintain a supervisory system for determining whether customer securities were properly registered or exempt from registration.

Acting through its CCO, the firm failed to implement adequate procedures to ensure that the firm did not telephone persons who stated they did not wish to receive calls and/or who registered on the national do-not-call registry, and failed to adequately update and maintain a do-not-call list.

Acting through various supervisors, the firm failed to perform heightened supervision over numerous individuals.

Brookville Capital Partners LLC fka New Castle Financial Services LLC : Brookville Capital Partners LLC fka New Castle Financial Services LLC : Censured; FIned $200,00; Required to retain an independent consultant to conduct a review of the adequacy of its policies, systems, procedures and training regarding AML rules and regulations; compliance with Section 5 of the Securities Act of 1933; and rules and regulations relating to private placements, financial requirements, customer complaints and supervision. In addition, the firm was required to have its associated persons complete 16 hours of AML continuing education training and to fully and promptly cooperate with FINRA in any and all investigations.

Tags: AML  SAR    Unregistered Securities  Unregistered Office  Telemarketing  Private Placement  Felony  Annual Compliance Meeting  Contingency Offering  Producing Manager  

CMG Institutional Trading, LLC and Shawn Derrick Baldwin (Principal)
2006006890801/August 2010

Acting through Baldwin, CMG Institutional Trading

• participated in securities related activities without employing a qualified municipal securities principal;
• failed to timely file quarterly lists of issuers with which it engaged in a municipal securities business;
• failed to adopt, maintain and enforce written supervisory procedures reasonably designed to ensure that the conduct of the broker and associated persons in municipal securities activities are in compliance with Municipal Securities and Rulemaking Board (MSRB) rules and that the procedures shall codify the broker’s supervisory system for ensuring compliance;
• had an inadequate Anti-Money Laundering (AML) compliance program, in that it failed to
• verify customer identification information,
• conduct independent testing of its AML program,
• designate a person to transmit contact information to FINRA and
• to provide AML training for two years;
• failed to timely create and maintain a business continuity plan and engaged in securities transactions without a qualified financial and operations principal (FINOP);
• conducted a securities business while its net capital was below the required minimum;
• failed to prepare an accurate general ledger, trial balances and books and records; and failed to file an annual audit report and a quarterly Financial and Operational Combined Uniform Single (FOCUS) report; and
• failed to file an application for approval of a material change in its business operations even though it participated in an offering as an underwriter on a firm commitment basis, and disseminated sales literature that contained numerous inaccuracies and misrepresentations.

Also, the firm permitted Baldwin to engage in its securities business even though his registration was inactive because he had failed to complete a continuing education course.

FINRA's National Adjudicatory Council (NAC) imposed these sanctions following appeal of an Office of Hearing Officers (OHO) decision:

CMG Institutional Trading, LLC: Expelled

Shawn Derrick Baldwin (Principal): Barred

Tags: Unregistered Principal  WSP  MSRB  AML  NAC  FINOP  FOCUS  Material Change Of Business  

Jason R. Locke
AWC/2009021029606/August 2010

Locke created an answer key by saving a copy of his answers to a state insurance LTC CE examination and sent the answer key to another firm employee.

Jason R. Locke : Fined $5,000; Suspended 60 days

Tags: Testing  

Jason Thomas Plunkett
AWC/2009021029605/August 2010

Plunkett requested and/or received different answer keys for a state insurance LTC CE examination from firm employees who created them and Plunkett then distributed one of the answer keys to financial advisors outside of the firm.

Jason Thomas Plunkett : Fined $5,000; Suspended 1 month

Tags: Testing  

Mathew Valente
AWC/2009021029604/August 2010

Valente requested that another wholesaler send him an answer key for a state insurance LTC CE examination, and Valente improperly distributed the answer key to other firm employees.

Mathew Valente : Fined $5,000; Suspended 10 business days

Tags: Testing  

Stephen Denton
AWC/2009021029607/August 2010

Denton improperly distributed the answer key for a state insurance long-term care continuing education (LTC CE) examination to firm employees and financial advisors outside of the firm.

Stephen Denton : Fined $5,000; Suspended 1 month

Tags: Testing  

Eric Spencer Cott (Supervisor)
AWC/2009021029701/July 2010

Cott allowed another individual to improperly assist him in completing a Florida long-term care (LTC) continuing education (CE) requirement by taking the majority of an LTC CE exam for him. Cott obtained the Florida LTC CE requirement and then sold a universal life insurance policy with LTC benefits to a client.

Eric Spencer Cott (Supervisor): Fined $5,000; Suspended 1 month

Tags: Testing  

Daniel Walsh
AWC/2009021029602/May 2010

Walsh took an online state continuing education (CE) examination for financial advisors working for another FINRA member firm. The financial advisors provided their driver’s license and social security numbers to Walsh, who used the information to log onto the examination Web site and take the exam for them. Walsh assisted other financial advisors to take the CE examination by sitting with them in their offices and providing assistance to complete the examination. Walsh possessed and distributed an answer key to a financial advisor and permitted the answer key to be distributed to other financial advisors. Walsh did not report his conduct to his member firm.

Daniel Walsh: Censured; Fined $5,000; Suspended 90 days

Tags: Testing  

Valores Finamex International, Inc. and Vincent Anthony Buchanan (Principal)
AWC/2009016196001/April 2010

Acting through Buchanan, Valores Finamex failed to produce evidence of Buchanan’s review of a registered representative’s correspondence. The Firm’s written supervisory procedures failed to

• identify the registered representative as a producing manager,
• contain procedures reasonably designed to provide heightened supervision over the activities of each producing manager who is responsible for generating 20 percent or more of the revenue of the business units supervised by the producing manager’s supervisor, and 
• assign a qualified supervisor to supervise the registered representative.

The Firm permitted Buchanan to conduct a securities business while he was “Continuing Education Inactive.”  Also, the Firm failed to

• send an annual privacy notice to its customers;
• provide an explanation to its customers of their right to opt out of disclosure of nonpublic personal information to nonaffiliated third parties; and
• establish policies and procedures that address and review administrative, technical and physical safeguards for the protection of customer records and information involved in the outsourcing of compliance and operations functions to nonaffiliated third parties.

The Firm effected Trade Reporting and Compliance Engine-eligible securities trades and failed to report, or properly report, those transactions.

Valores Finamex International, Inc.: Censured; Fined $27,500 ($10,000 of which was jointly and severally with Buchanan).

Vincent Anthony Buchanan: Fined $10,000 jointly and severally with Valores Finamex; Suspended in Principal capacity only for 20 business days. 

Tags: Producing Manager  WSP  Supervision  Correspondence  

Alvarez & Marsal Securities, LLC
AWC/2008011639901/February 2010

Acting through a registered principal, the Firm it failed to

• conduct inspections of its main office,
  
• reduce inspections and reviews to a written report, and
  
• conduct annual compliance meetings.
  

For one year, the firm failed to

• document that it had administered a continuing education program in accordance with its evaluation of its training needs and written training plan for its covered registered personnel, and
  
• conduct a needs analysis and prepare a written training plan or administer a continuing education program for its covered registered personnel.
  

Alvarez & Marsal Securities, LLC : Censured; Fined $15,000 ($5,000 joint/several with unnamed party)

Tags: Inspections  Annual Compliance Meeting  Continuing Education