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.

Torrey Pines Securities, Inc. and NAME REDACTED (Principal)
AWC/2007011125103

Acting on the firm’s behalf, NAME REDACTED 

• failed to ensure that a firm principal completed his annual certification as the firm’s procedure required,
• did not follow up on the principal’s failure to provide information regarding both his outside business activities and the accounts for which he served as a custodian or trustee, and
• conducted an inspection of a firm branch office, and that inspection did not comport with the firm’s written procedures and did not reasonably review the activities of that office.

NAME REDACTED did not review the transmittal of funds between the principal’s customers and a third party as the firm’s written supervisory procedures required, and failed to obtain details regarding the principal’s outside business activities.

The firm failed to

• reasonably supervise the principal by failing to take steps to inquire into “red flags”  indicating his possible misconduct;
• follow up on the principal's outside business activities and excessive absences from the firm;
• timely investigate allegations that he was participating in private securities transactions away from the firm; and when the firm confirmed his selling away activities, it did not take any steps to place him on heightened supervision.

The Firm's written supervisory procedures were not reasonably designed to ensure principal review of wires from customers to third parties, so it was unaware the principal’s customers were transferring large sums to a third party and that he was executing Letters of Authorization (LOAs) on behalf of multiple customers.

Torrey Pines Securities, Inc.: Censured; Fined $17,500

NAME REDACTED: No Fine in light of financial status; Suspended from association with any FINRA member in any principal capacity, other than the capacity of municipal securities principal, for 10 business days.

Tags: Annual Compliance Certification  Trustee  Inspections