Enforcement Actions
Financial Industry Regulatory Authority (FINRA)
CASES OF NOTE
2009
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.
December 2009
Martinez-Ayme Securities and Alfredo Francisco Ayme (Principal)
AWC/2009016159201/December 2009
AWC/2009016159201/December 2009
The Firm's anti-money laundering (AML) program required the firm and Ayme to
Also, the Firm
Martinez-Ayme Securities : Censured; Fined $21,000
Alfredo Francisco Ayme: Fined $10,000; Suspended 3 months in Principal capacity only
- monitor for potentially suspicious activity and AML red flags,
- investigate potentially suspicious activity and
- report suspicious activity by filing a Form SAR-SF with the U.S. Department of the Treasury’s Financial Crimes Network.
- failed to adequately implement or enforce its AML program and to otherwise comply with their AML obligations since they did not identify and analyze numerous transactions to determine if they were in fact suspicious, which would require them to be reported on a Form SAR-SF;
- permitted suspicious activities to occur undetected and unchecked; and
- failed to file SAR-SFs as appropriate.
Also, the Firm
- acted as the placement agent for contingency securities offerings and failed to establish escrow or separate bank accounts in connection with the offerings, and investors were directed to transmit their funds directly to the issuers prior to the contingency being satisfied;
- failed to satisfy the minimum contingency for one offering by the closing date, but the offering was not terminated, investor funds were not returned and the offering period was extended; and
- raised additional funds but failed to send written reconfirmation offers to subscribers disclosing the extension of the offering prior to the closing date, thereby willfully violating Section 10(b) of the Securities Exchange Act, Rule 10b-9 thereunder and NASD Rule 2110.
Martinez-Ayme Securities : Censured; Fined $21,000
Alfredo Francisco Ayme: Fined $10,000; Suspended 3 months in Principal capacity only
Mesirow Financial, Inc.
AWC/2008012747801/December 2009
AWC/2008012747801/December 2009
Mesirow's clearing agreement with correspondent firms impermissibly allocated the detection and reporting of suspicious activity with respect to trading activities of introduced customer securities accounts to the introducing correspondent firms. The Bank Secrecy Act imposes an independent obligation to detect and report suspicious activity on all broker-dealers. Consequently, the firm’s AML program was not reasonably designed to detect and cause the reporting of suspicious trading activity in customer accounts.
Mesirow Financial, Inc.: Censured; Fined $75,000
ViewTrade Securities, Inc.
AWC/2008011725001/December 2009
AWC/2008011725001/December 2009
The Firm failed to properly implement its AML compliance program, insofar as it did not monitor corporate accounts brought to the firm from a defunct broker-dealer by registered representatives for red flags and did not identify potentially suspicious activity for further due diligence.
A registered representative at the firm sent business-related emails from a non-firm email address that were not maintained on the firm’s server in a non-rewritable, non-erasable format, but were obtained from the representative’s computer, where they could have been deleted or lost.
A registered representative at the firm sent business-related emails from a non-firm email address that were not maintained on the firm’s server in a non-rewritable, non-erasable format, but were obtained from the representative’s computer, where they could have been deleted or lost.
ViewTrade Securities, Inc.: Censured; Fined $50,000
November 2009
Wadsworth Investment Co., Inc. and William Frederick Wadsworth (Principal)
OS/2006003806202/November 2009
OS/2006003806202/November 2009
The Firm and Wadsworth
Wadsworth Investment Co., Inc.: Censured; Fined $100,000 ($77,250 jt/sev with William Wadsworth); Required to hire an independent consultant to review its policies, systems, procedures (written and otherwise) and training related to its violations of federal securities laws, FINRA and MSRB rules, and implement the consultant’s recommendations.
William Frederick Wadsworth: Fined $77,250 jt/sev with the Firm; Suspended 1 month in all capacities; Suspended 1 year in Principal capacities only.
- permitted an individual to act as an unregistered principal and permitted individuals to be registered as General Securities Representatives or Investment Company and Variable Contracts Products Representatives through the firm without being active in the firm’s securities business;
- sent written communications to customers and prospective customers containing language that failed to provide a sound basis for evaluating the claims within the communications, and that omitted material information and/or contained unwarranted statements;
- failed to record a general securities principal’s approval on mutual fund and variable annuity applications;
- completed and signed a materially inaccurate FINRA
Information Request form; and
- provided inaccurate information to FINRA staff.
- establish and , maintain a supervisory system and written supervisory procedures reasonably designed to achieve compliance with applicable securities laws and regulations;
- conduct annual reviews of any of the business in which the firm engaged
- review registered representatives’ business-related email correspondence with customers;
- establish any written procedures providing for the review of its registered representatives’ electronic correspondence;
- designate and specifically identify at least one principal to FINRA who would establish, maintain and enforce a system of supervisory control policies and procedures, a
- establish, maintain and enforce written supervisory controlpolicies and procedures
- obtain required information on new account forms, and on mutual fund and variable annuity applications.
- maintained forms of various types that were blank except for customers’ signatures;
- filed inaccurate Financial
and Operational Combined Uniform Single (FOCUS) reports setting forth
the firm’s net capital position that was accurate by failing
to maintain accurate financial books and records; and
- did not file an
application with FINRA for approval of an ownership change until after
the ownership change took place.
- implement anti-money laundering compliance procedures, including independent testing and provide training;
- enforce the Customer Identification Procedures;
- retain electronic communications; and
- failed to provide written confirmations to customers at or before the completion of securities transactions acted as an unregisteredmunicipal securities broker-dealer.
Wadsworth Investment Co., Inc.: Censured; Fined $100,000 ($77,250 jt/sev with William Wadsworth); Required to hire an independent consultant to review its policies, systems, procedures (written and otherwise) and training related to its violations of federal securities laws, FINRA and MSRB rules, and implement the consultant’s recommendations.
William Frederick Wadsworth: Fined $77,250 jt/sev with the Firm; Suspended 1 month in all capacities; Suspended 1 year in Principal capacities only.
Enforcement Actions
Tags
- 529 College Savings Plan
- AML
- Annual Compliance Certification
- Annuity
- ATM
- Away Accounts
- Bank
- Blank Forms
- Borrowing
- Broadcast
- Changes Of Address
- Checks
- CIP
- Class B Shares
- Clearing Agreement
- Communications
- Cooperation Agreement
- Corporate Credit Card
- Debit Card
- Deceased
- Disabled
- Discretion
- Elderly
- Electronic Communications
- Escrow
- Expenses
- False Professional Designation
- False Statements
- FOCUS
- Forgery
- Gifts
- Guaranteeing Against Losses
- Heightened Supervision
- Inaccurate Information To FINRA
- Increase The Number Of RRs
- Instant Messaging
- Internet
- Joint Account
- JWillfully
- Markdowns
- Markups
- Membership Agreement
- Minimum Contingency
- Mispricing
- MSRB
- Mutual Funds
- NAC
- Net Capital
- No Objections Letter
- NSF
- Orders
- OTR
- Ownership Change
- Parking
- Personal Bank Records
- Pre-arranged Trading
- Private Placement
- Private Securities Transaction
- Qualified Independent Underwriter
- Registration Of Supervisors
- Reg T
- REIT
- Retirement
- Rule 1017
- SAR
- Scripts
- Service Fee
- Sharing Commissions
- Shelf Offering
- Signature
- SIPC
- Solicited
- Statutory Underwriters
- Suitability
- Supervision
- Supervisory System
- Surrender Charge
- Surrender Charges
- Telemarketing
- Time And Price Discretion
- Timely Amend
- UIT
- Unregistered Branch Offices
- Unregistered Person
- Unregistered Principal
- Unregistered RRs
- Unregistered Securities
- Variable Annuity
- Web Sites
- Willfully
- Written Communications
- WSPs