Legal Matters

The Financial Industry Regulatory Authority (“FINRA”) has barred Dee Dee Brooks, of Sarasota, Florida, based on findings that, while acting as an agent of Signator Investors, Inc., Brooks engaged in private securities transactions without any notice to or approval from her firm. According to FINRA’s findings, From July 2016 to December 2017, Brooks solicited investors to purchase more than $1.77 million in securities in the Woodbridge Group of Companies, LLC, a purported real estate investment fund, and Future Income Payments, LLC, a company claiming to be a “structured cash flow investment company.” FINRA found that Brooks, through a company she worked with as an outside business, convinced nine investors, most of whom were Signator customers, to invest $906,497 in Woodbridge promissory notes. Likewise, Brooks sold $866,895 in FIP purchase agreements to seven investors, six of whom were Signator customers. FINRA found that Brooks did not give notice to Signator of these transactions nor obtain Signator’s approval. In December 2017, the [...]

The Financial Industry Regulatory Authority (“FINRA”) has censured and fined Apex Clearing Corporation for violations of Securities and Exchange Commission Rules. According to FINRA’s findings, Apex failed to establish procedures reasonably designed to assure that introduced customers received the initial margin interest rate disclosures and failed to establish, maintain, and enforce a supervisory system, including written supervisory procedures, reasonably designed to achieve compliance with Securities and Exchange Commission Rule 10b-16(a)(1). Securities and Exchange Commission Rule 10b-16(a)(1) requires that the initial disclosure include a "written statement or statements disclosing . . . the annual rate or rates of interest that can be imposed." The initial disclosure is designed to ensure that a customer, before account opening, understands the terms and conditions under which margin interest charges will be made, and to enable the customer to compare the various credit terms available According to FINRA’s findings, Apex did not have procedures to assure that introduced customers received margin interest disclosures at the [...]

The Financial Industry Regulatory Authority (“FINRA”) has barred Joseph Stone Capital, LLC representative Erik Pica following findings that Pica took a 76-year-old customer’s $200,000, and used the money to purchase a house for himself. According to FINRA’s findings, in 2019, Pica suggested to the customer that he should invest in pre-initial public offering (pre-IPO) shares of a technology company. Pica directed the customer to transfer the $200,000 investment amount from the IRA Account to Pica’s personal bank account “to make the funds available to invest.” The customer acted as instructed. FINRA states that five months later, the customer asked Pica what happened to his $200,000 check, and Pica replied that he placed the amount back into the IRA account, and then changed his excuse claiming that he had not cashed the check. Without the customer’s knowledge, Pica deposited the funds into the bank account of a company he controlled, transferred the funds to his personal bank account, and used the [...]

Recent Financial Industry Regulatory Authority ("FINRA") findings reveal that Two Sigma Securities, LLC failed to comply with the Locate Requirement of Rule 203(b)(1) of Regulation SHO pursuant to the Securities Exchange Act of 1934. While not in any formal arrangement to borrow securities, Two Sigma Securities, LLC effected short sale transactions from March 21, 2014 to May 5, 2016. On July 11, 2016, the firm reported itself to FINRA after discovering two system issues affecting its calculation of available securities to comply with the “locate requirement” under Rule 203(b)(1): the market-making aggregation unit’s overall net position was miscalculated, because the short and long positions of the legacy market-making strategy of its aggregation unit were omitted. Trade strategies failed to distinguish between threshold and non-threshold securities which resulted in the reapplication of locates “from earlier short sales to subsequent intra-day short sales in threshold securities.” In short, Two Sigma Securities, LLC failed to reasonably supervise for Locate Compliance. The firm’s supervisory [...]