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FINRA Fines Santander Securities LLC $6.4 Million For Supervisory Failures

FINRA mandated that Santander Securities LLC pay about $4.3 million in restitution to a number of clients who were solicited to buy Puerto Rican Municipal Bonds. Further, the firm will pay restitution of $121,000 and make offers of rescission to buy back the securities sold to particular customers impacted by the firm's failure to supervise employee trading. FINRA additionally fined the firm $2 million for supervisory failures pertaining to sales of the bonds and Puerto Rican closed-end funds and for failing to supervise employee trading in its Puerto Rican branch office. Brad Bennett, FINRA's Executive Vice President and Chief of Enforcement, said, "This is a strong reminder to firms that they must focus on customers' exposure to market risks and suitability, particularly in those markets like Puerto Rico that present unique risks and challenges." FINRA's investigation discovered that from December 2012 to October 2013, Santander did not ensure that its proprietary product risk-classification tool accurately reflected market risks on investing [...]

By |October 13th, 2015|FINRA, Press Releases & News|
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FINRA Expels Halcyon Cabot Partners And Bars CEO And CCO

FINRA expelled New York-based Halcyon Cabot Partners, Ltd., and barred Chief Executive Officer Michael Morris and Chief Compliance Officer Ronald Heineman from the securities industry, for fraud, sales practice abuses, and widespread supervisory and anti-money laundering failures. FINRA found that Halcyon, Morris and Heineman engaged in a scheme to conceal a kickback of private placement fees. FINRA further found that Halcyon, Morris and Heineman, along with a previously barred registered representative, Craig Josephberg, agreed to conceal the discount the issuer provided to a venture capital firm when it purchased a private placement in a cancer drug development company. The scheme was effected through a bogus placement fee agreement that was entered into after the venture capital firm had already agreed to purchase the entirety of the offerings. Halcyon did not perform any work, as there was already a buyer in place, but rather returned almost all of its $1.75 million placement fee to the investor through sham consulting agreements. This fraudulent [...]

By |October 8th, 2015|FINRA, Fraud, Press Releases & News|
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FINRA Fines UBS Puerto Rico $18.5M

FINRA censured and fined UBS Financial Services Incorporated of Puerto Rico $7.5 million for supervisory failures pertaining to the suitability of transactions in Puerto Rican closed-end funds ("CEF") shares. Further, the regulatory agency ordered UBS to pay about $11 million in restitution to 165 customers who were forced to realize losses on their CEF positions. FINRA discovered that for over four years, UBS PR failed to monitor the combination of leverage and concentration levels in customer accounts to ensure that the transactions were suitable given the customers' risk objectives and profiles. UBS failed to implement a reasonably designed system to identify and prevent unsuitable transactions in light of the unique Puerto Rican economy, in which retail customers typically maintained high levels of concentration in Puerto Rican assets and often used those highly concentrated accounts as collateral for cash loans. Despite UBS PR's knowledge of these common practices, it failed to adequately monitor concentration and leverage levels to identify whether certain customers' CEF [...]

By |October 1st, 2015|FINRA, Press Releases & News|
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Investors Lose $11.7 Million In Risky Hedge Fund Through Lincoln Financial

According to a FINRA Letter of Acceptance, Waiver and Consent ("AWC"), between about October 2008 and April 2009, registered representatives in two of Lincoln Financial Advisors Corporation (“LFA”) branch offices allegedly recommended that customers invest in a hedge fund offered as a sub-account to a private placement variable annuity (the ”PPVA”). The Hedge Fund engaged in a complex options trading strategy, including trading uncovered options. LFA approved the PPVA and the Hedge Fund, after it was added as a sub-account by the PPVA sponsor, for investment by the LFA’s customers. According to the AWC, based on recommendations of the Firm’s registered representatives, 25 of the Firm’s customers invested a total of approximately $11.7 million in the Hedge Fund. In 2010, the Hedge Fund was shut down. Although the Hedge Fund allegedly engaged in a complicated options trading strategy that differed significantly from traditional investments and even other alternative investments, LFA also allegedly failed to provide adequate training or guidance to [...]

By |September 24th, 2015|FINRA, Press Releases & News|
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