Articles Tagged with FINRA

Cryptocurrencies The Financial Industry Regulatory Authority (FINRA) issued a regulatory notice (18-20) on July 6, 2018 titled: “FINRA Encourages Firms to Notify FINRA if They Engage in Activities Related to Digital Assets.” In summary, the notice request that firms “promptly notify FINRA” if they or their associated persons or affiliates are presently engaging or intend to engage in “any activities related to digital assets, such as cryptocurrencies and other virtual coins or tokens.”

As the notice observes, the market for digital assets like cryptocurrencies “has grown significantly” in recent years, becoming more attractive to retail investors. However, the market has seen “incidences of fraud and other securities law violations,” which raise concerns for investors. Hence FINRA reminds firms involved in digital assets to bear in mind all relevant state laws, rules and regulations. It has also requested that firms inform their Regulatory Coordinator if they or their persons or affiliates are involved in, or intend to be involved in, a number of activities including:

–“purchases, sales or executions of transactions in digital assets;

BettermentAccording to Financial Industry Regulatory Authority (FINRA) records and a June 22, 2018 report by Investment News, FINRA has issued a $400,000 fine against the online investment advice company Betterment in connection to allegations Betterment FINRA rules related to customer protection and the proper maintenance of books and records.

Betterment Securities, a FINRA member and wholly owned subsidiary of Betterment Holdings, Inc., offers brokerage services to clients of Betterment LLC, a registered investment adviser and also a subsidiary of Betterment Holdings. Betterment LLC “operates as an online wealth management service,” according to FINRA, and Betterment Securities’ customer base is composed of Betterment LLC’s clients. Created in 2010, Betterment LLC “uses software algorithms and technology to maintain its customers’ investment portfolios,” and Betterment Securities is a carrying firm that offers brokerage services to Betterment LLC’s customers; according to FINRA, it “has a primary responsibility to protect its customers’ assets.”

Despite that responsibility, according to FINRA, Betterment Securities failed to ensure its practices were in compliance with FINRA and SEC rules. For instance, between October 2013 and January 2015, it “structured its transactions on days when it was required to calculate its reserve deposits differently than on other days in order to reduce its Customer Reserve Account obligations. That is, the firm allegedly transferred client deposits to an omnibus account that “to fund its pre-settlement withdrawal program,” but on other days, when it was “required to compute its customer reserve requirement,” it did not transfer customer deposits but rather funded the program with loans from its clearing firm. In so doing, FINRA alleges, the firm “engaged in ‘window dressing'” by altering its practices to reduce its reserve requirement.

GettyImages-84178122-300x200Public records provided by the Financial Industry Regulatory Authority and accessed on May 15, 2018, indicate that more than two dozen brokers and/or investment advisers were reported as suspended from association with FINRA member firms in that month. The financial professionals enumerated below have signed letters of Acceptance, Waiver, and Consent (AWC Letters) agreeing to the sanctions; they have not admitted to or denied the conduct alleged by FINRA. Certain suspensions may affect the individual’s operation in a principal capacity, other capacities, or all capacities, and some may have lifted before or since FINRA’s report was published. Additionally, the fines documented below may not take into account all monetary penalties paid by the representatives, as they may also have been ordered to pay disgorgement and/or restitution to other parties. Visit FINRA’s disciplinary actions homepage for additional information.

Name Current/Former Employers Length of Suspension Fines paid
Napoleon Seymour Andrews  Nationwide Securities 2 months $5,000
Choosri Lao KCD Financial 2 months $5,000
Christine Alexandria Murphy Innovation Partners 1 month $5,000
Claudio Leonardo Villa JP Morgan Securities 18 months $10,000
Ellen Marie Scambia Merriman Capital 20 days (principal capacity) $5,000
Kevin C. Yang Morgan Stanley 20 days 5,000
Timothy John Beall National Planning Corporation 9 months $10,000
Omer Ozeren Ace Diversified Capital 3 months $10,000
Douglas Fairchild Bradley UBS Financial Services 45 days $10,000
Ricardo Alfredo Estrada MML Investors Services 2 months $5,000
Michael Murphy Hurtgen Girard Securities 2 months $5,000
William Bernard Lyons ACGM 3 months (principal capacity) $10,000
Michael Douglas Hanke Ameriprise Financial Services 1 month $10,000
Donald Charles Leary Jr. New Albion Partners 2 months $7,500
Michael Anthony McGregor Aegis Capital 4 months $5,000
Martin Earl Brooks United Planners’ Financial Services of America 15 days $5,000
Michael Scott Androulakis Alexander Capital 3 months $5,000
Craig Dean Blattner Cetera Advisors 15 days $5,000
Phillip Paul Tibbetts Pruco Securities 20 days $5,000
Frank Bazan BBVA Securities 7 months $20,000
Dennis Ernest Beeby Lightpath Securities 8 months $10,000
Paul Kreindler Pace Capital 2 months $15,000
Lisa C. Piazza Morgan Stanley 4 months $2,500
Mark Jude Ketner PHX Financial 2 months $5,000
Robert Mark Malbasa AllState Financial Services 3 months $5,000
William Patrick Slattery Lampert Capital Markets 5 months $12,500
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