Enforcement Actions
Financial Industry Regulatory Authority (FINRA)
NOTE: Stipulations of Fact and Consent to Penalty (SFC); Offers of Settlement (OS); and Letters of Acceptance Waiver, and Consent (AWC) are entered into by Respondents without admitting or denying the allegations, but consent is given to the described sanctions & to the entry of findings. Additionally, for AWCs, if FINRA has reason to believe a violation has occurred and the member or associated person does not dispute the violation, FINRA may prepare and request that the member or associated person execute a letter accepting a finding of violation, consenting to the imposition of sanctions, and agreeing to waive such member's or associated person's right to a hearing before a hearing panel, and any right of appeal to the National Adjudicatory Council, the SEC, and the courts, or to otherwise challenge the validity of the letter, if the letter is accepted. The letter shall describe the act or practice engaged in or omitted, the rule, regulation, or statutory provision violated, and the sanction or sanctions to be imposed.
January 2012
Park Avenue Securities LLC
AWC/2009016911203/January 2012
The Firm conducted an inadequate investigation ofits representativesí involvement in a Ponzi scheme and of allegations two registered representatives made. The firm became aware that two of its registered representatives had participated in unapproved private securities transactions by facilitating investments in the Ponzi scheme for themselves and others, some of whom were firm customers, without notifying the firm or obtaining its permission. The firm initiated an investigation regarding their conduct and to determine whether any other registered representatives were involved in the Ponzi scheme. The firm sent a questionnaire to its registered representatives in two states soliciting information about any involvement in the Ponzi scheme. Notwithstanding the allegation two registered representatives made that one of the firmís insurance supervisors knew about their involvement with the Ponzi scheme, the firm permitted him to be one of the people collecting responses to the firmís questionnaire. 

The firm failed to fully investigate the extent of the insurance supervisorís involvement with the Ponzi scheme despite evidence discovered later that should have led the firm to conclude that he was involved. 

Counsel for the two registered representatives informed the firm that a member of the firmís supervisory staff had suggested that the registered representatives destroy documents and provide misleading information in connection with the firmís internal investigation. Under the circumstances, the firm took inadequate steps to investigate these allegations. 

The firm had an inadequate system for reviewing electronic communications. The firmís computer system allowed compliance staff in branch offices, in certain circumstances, to review their own email as well as the email of their supervisors.
Park Avenue Securities LLC: Censured; Fined $175,000
Tags:  Email    Ponzi     |    In: Private Securities Transactions
Enforcement Actions
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