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.

Glover engaged in private securities transactions without providing his member firm with prior written notice. Glover recommended that his customers invest in investment funds of an entity which was not approved by his firm and was exposed by federal authorities as a Ponzi scheme.

Glover did not receive any compensation and his customers lost approximately $470,000 by investing in the funds.

Hockensmith participated in transactions involving investment in a purported foreign currency exchange (FOREX) trading program and did not seek his member firm’s written authorization to participate, and the firm was unaware of and did not authorize his participation. The purported FOREX trading program was not a firm-approved product and the firm did not have a selling agreement with the purported trading program.

The firm’s written procedures advised representatives that prior to engaging in a private securities transaction, representatives must submit a written request to the compliance department describing the proposed transactions and that written authorization from the compliance department must be received before a representative could engage in such conduct. Hockensmith completed and executed his firm’s representative affirmations addressing the firm’s policies and procedures regarding selling away/private securities transactions, and the firm addressed the topic at multiple annual compliance meetings, as well as issuing compliance bulletins/notices to its representatives regarding selling away/private securities transactions.

Hockensmith borrowed $200,000 from a client without his firm’s knowledge or consent and contrary to the firm’s written procedures prohibiting representatives from borrowing from a customer. Hockensmith executed representative affirmations agreeing to his firm’s procedures manual regarding prohibited activities, which included borrowing from customers.

Hockensmith failed to respond to FINRA Rule 8210 requests for information.

Harwell engaged in private securities transactions without prior written notice to, or prior written approval from, his member firm. Harwell offered for sale and sold unregistered shares of stock to individuals for which he collected funds totaling approximately $130,950.

Harwell failed to respond to FINRA requests for information.

Bank and Bodoh and misappropriated approximately $161,000 in commissions and other payments from Bank’s member firm for their own use. Bank directed his member firm to wire money from a subsidiary to an account Bodoh controlled;  Bodah, in turn, transmitted the majority of the funds to an entity Bank controlled and kept a portion for himself. Bank entered false information concerning securities transactions on his firm’s business records, willfully causing his firm to maintain inaccurate books and records. Bank and Bodoh provided false information in response to FINRA requests for information, and provided false and misleading testimony under oath in a FINRA on-the-record interview.

Bodoh participated in private securities transactions without notifying his member firm or obtaining its approval.

Daryl Gene Bank and Gregory Dean Bodoh: Barred

• a pending Commodity Futures Trading Commission (CFTC) securities fraud action against the hedge fund manager,
  
• the fund’s theoretical and unproven performance figures,
  
• the speculative nature of the fund’s trading strategy, and
  
• the significant risks associated with an investment in the hedge fund and its general partner.