Legal Matters

BNP Paribas Securities Corporation was recently fined for failing to create or maintain a risk management system of controls or procedures to handle the financial risks of its market access business activity. Specifically, FINRA found that the firm made multiple supervisory failures, provided market access through its Global Execution Services (GES) Desk, and maintained unreasonable credit and erroneous order controls. For members of an exchange or alternative trading system, market access refers to the available access to trading in securities on the trading system. In October 2013, the Firm was aware internally of potential gaps in its controls for financial risk management designed for the GES Desk. Despite this awareness, over 165,000 GES Desk customer equities orders were routed to exchanges and/or ATSs by BNP Paribas, which represented about 7% of the GES Desk’s total customer equities order flow (2,276,885 orders) from January 1, 2015 to September 18, 2019. Generally, BNP Paribas set the single-order quantity limit and single-order notional [...]

Moors & Cabot, Inc. has been fined by the Financial Industry Regulatory Authority ("FINRA") for failing to provide written disclosure to customers of around $7.5 million of compensation from earnings of about 11,500 trades in preferred securities. While acting in a principal capacity, Moors & Cabot, Inc. purchased preferred shares from one of its customers and sold the same shares to a different customer at the same time. The customers who bought the shares paid a higher price than Moors paid for them from the customer who sold them. There were no automatic recordings of the time of order entries and instead had the firm’s representatives phone the trading desk to report the trades. Also, the firm’s daily supervisory report did not allow it to review the accuracy of order receipt times for the principal trades.  Moors also never transmitted order receipt times, account types or share quantities to the Order Audit Trail System (OATS). In addition, two submitted trade [...]

According to the Consumer Financial Protection Bureau’s (CFPB) Consumer Complaint Database, the popular investing and trading platform Robinhood Markets, Inc. (“Robinhood”) received fifty-nine (59) consumer complaints so far in 2020, as of the date of writing. Customer complaints against Robinhood in the CFPB database include locked accounts, withdrawal delays, customer service responsiveness, among other issues. Customer complaints on locked accounts, withdrawal delays, and customer service are nothing new for Robinhood. In the first half of 2020, U.S. consumer protection agencies received more than 400 complaints about the platform, which is about four times that of Robinhood’s main competitors like Schwab and Fidelity. And the problems only continued into October 2020, as Bloomberg reported customer complaints of fraudulent withdrawals and the announcement of criminal targeting of 2,000 Robinhood accounts. Robinhood is also the subject of multiple lawsuits and regulatory investigations in 2020. In March 2020, Robinhood suffered widespread system outages, which caused significant harm to investors and the filing of a [...]

Concorde Investment Services, LLC  and its Chief Compliance Officer, Kimberlee Elizabeth Levy, were recently censured and fined by the Financial Industry Regulatory Authority (FINRA) for failing to reasonably supervise a former representative who allowed her husband to conduct business transactions and trades with Concorde’s customers while he was serving a FINRA-imposed one-year suspension. While aware that her husband was still under his suspension period, Concorde’s representative assisted her husband in communicating with several of the firm’s customers, who were not accredited investors, allowed him to make securities recommendations and placed trades on behalf of the customers while not being authorized to do so. At the time, most of Concorde’s customers were not aware of his suspension and believed that he was still acting as their licensed broker. When Levy joined Concorde, she was approached by the firm’s chief operating officer and one other employee who notified her of the suspension and expressed concerns regarding the representative handling “her husband’s book [...]