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.
July 2010
Investscape, Inc. and Richard Michael Lim (Principal)
AWC/2008011737101/July 2010

Acting through Lim, the Firm failed to

  • preserve emails in nonrewritable, non-erasable format;

  • failed to provide FINRA with notifications of its use of electronic storage media;

  • provide FINRA with a letter from a third party describing the third party’s undertakings regarding the firm's electronic storage media as specified by Securities and Exchange Commission (SEC) Rule 17a-4; and

  • evidence the review of all incoming and outgoing email communications with customers.

  • inspect branch offices even though it had been previously warned in a Letter of Caution that branch offices needed to be inspected on a regular basis.

The firm's written procedures failed to identify locations that regularly conducted the business of effecting securities transactions by soliciting new accounts as branch offices, and failed to address the firm's requirement to conduct internal inspections of these offices.

Investscape, Inc.: Censured, Fined $7,000; and Fined $17,500, jointly and severally with Lim

Richard Michael Lim: Fined $17,500, jointly and severally with Investscape and Suspended 1 year in Supervisory capacity only 

Bill Singer's Comment
That's a hefty 1-year supervisory suspension imposed on top of a $17,500 joint/several fine upon the individual principal Lim.  FINRA is really honing in on electronic communications retention practices.
February 2010
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)
Bill Singer's Comment
Among the most basic tenets of in-house Compliance is to ensure that you have instituted a "tickler" system on a calendar to remind you to conduct your annual office inspections, compliance meeting, and continuing education program.  If that comment strikes you as something like "Geez...that sounds like a good idea! An annual tickler, maybe three months ahead of time...hmmm, that Singer fellow is pretty sharp," you better make sure that you haven't already blown the annual deadlines.  Moreover, you can't just sleepwalk through these obligations.  FINRA isn't going to simply take your word that you satisfied your annual obligations.  You need to maintain written records. 
Enforcement Actions