The following disciplinary actions were taken against both firms and individuals due to violations of FINRA rules, federal securities laws and MSRB rules.
Cetera Financial Specialist LLC
The Firm was fined $200,000 for failing to implement a supervisory system and establish WSPs that adequately enforced OBA guidelines to evaluate the outside business activities of representatives to see if activities interfered with responsibilities owed to the Firm and customers. It was found that the Firm repeatedly failed to review at least 200 disclosures for a period of 13 months, including a disclosure made by a representative on three separate occasions indicating that he was the power of attorney for two senior customers. The Firm stated that it had prolonged the review as it was evaluating criteria for approving fiduciary capacity for non-family members. The Firm eventually enhanced the policies of review and approval. (FINRA Case 2015045233601)
KCD Financial, Inc.
The Firm was fined $10,000 for failing to inspect registered branch offices and non-registered branch office locations in a timely manner. According to the Firm’s WSPs, non-supervisory branches were to be inspected at minimum once every three years and non-branch locations would be inspected according to the schedule in the WSPs. The Firm was also notified of these guidelines after a FINRA examination that stated it should be following Rule 3110 regarding office inspections. (FINRA Case 2017052418701)
Robert Joseph Flanagan
The individual was barred from association with FINRA members as he failed to present FINRA with appropriate documentation and information and failed to appear for an on-the-record testimony. FINRA’s investigation examined Flanagan’s failure to disclose a civil judgement on his U4 and for possible sales practice violations. The findings stated that Flanagan consciously failed to disclose the civil judgement as well as falsely attesting to his Firm that his U4 was accurate when it was not. (FINRA Case 2016050447102)
Melanie Ann Melton
The individual was barred from association with any FINRA member firms for failing to provide information and documents in a FINRA investigation. FINRA found on Melton’s former member’s U5 filing that she had failed to disclose tax liens totaling 350,000 on her U4. (FINRA Case 2016050951801)
The individual was fined $5,000 and suspended for 15 business days for engaging in an outside business activity without prior written consent from her member firm. Yan was employed as a career coach through an online career coaching company where she earned $600-800 in compensation. It was also found that Yan attested to not having any OBAs on several of her firms’ annual acknowledgments when in actuality she had engaged in outside business activity.
(FINRA Case 2017053867701)
Matthew Alan Morris
The individual was suspended for three months and fined $5,000 for cutting and pasting or tracing 16 customers signatures on over 70 forms between 2015 and 2017. Morris forged signatures to record customer information on documents and to authorize purchases of fixed and variable annuities. Although the activities were authorized, the customers were unaware of the activity and did not authorize Morris to forge their signatures. The firm inadvertently maintained inaccurate books and records because of Morris’ actions. The suspended individual also falsely attested on compliance acknowledgement forms that he had not signed a customer’s name on documents when he was doing so.
(FINRA Case 2017053810301)
These cases along with others can be accessed by visiting:
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