The following disciplinary actions were taken against both firms and individuals due to violations of FINRA rules, federal securities laws and MSRB rules.
Seven Points Capital, LLC (New York, New York)
The Firm was fined $40,000 for failing to implement an adequate AML program. It was found that the Firm stated it would use exception reports provided by their clearing firm to monitor potential suspicious activity when in fact it was not using these reports and instead conducting a manual review of the daily blotters. This manual review was found to be insufficient do to the large volume of low-priced securities being traded, and not designed to successfully detect suspicious activity. The findings also stated that the Firm failed to identify red flags that resulted from customer’s account activity.
(FINRA Case #2014039400901)
EBH Securities, Inc. (Indianapolis, Indiana)
The Firm was fined $7,500, as it failed to make notice of falling below the net capital requirement and for conducting business while below the net capital requirements. The firm fell below its required net capital amount in the beginning and middle of the month several times due to a business practice which consisted of lending funds to its affiliate that was in the business of providing short term funds to people with pending personal injury claims who needed immediate monetary funds. The Firm fell below net capital nine times and also fell below its net capital warning level an additional nine times. The firm failed to notify the SEC and FINRA, as the firm claimed it did not know the minimum net capital requirement needed to be met on a daily basis, not just a monthly basis. It was also found that the Firm had inaccurate FOCUS reports and net capital computations. (FINRA Case #2017052414401)
Daniel Noah Winger (Bonney Lake, Washington)
The individual was barred from association with any FINRA member due to converting an elderly customers funds for personal use. The customer gave Winger checks totaling $100,000 for her use, including paying commissions and taxes. Instead of depositing the checks into the customer’s account, Winger signed the checks and used the funds for himself.
(FINRA Case #2018059559101)
Pamela Shuttleworth (Washington, District of Columbia)
The individual was barred because of failing to provide on the record testimony regarding an investigation into a former associated person at the member firm in which Shuttleworth was employed by. Shuttleworth also had a supervisory responsibility to review broker emails at the firm, including the associated person who was being investigated.
(FINRA Case #2017053619901)
Ethan De Naray (Minnetonka, Minnesota)
The Individual was suspended for one month and fined $5,000 for effecting discretionary transactions without prior written consent from the customer and the member firm in which he was employed by. De Naray marked order tickets unsolicited when they were solicited, which resulted in an inaccuracy of the books and records. (FINRA Case #2017053586401)
Robert Edward White (East Hampton, New York)
The individual was fined $10,000 and suspended for four months for accepting $58,000 in monetary gifts from a customer. The Firm had a policy stating that registered representatives could not accept gifts or monetary gifts exceeding $100 per customer per year. White also attested on his annual certification that he was aware of the policies in place, but continued to ignore the policy in place.
(FINRA Case #2017054089101)
These cases along with others can be accessed by accessing this link.
Please contact an ARG Analyst with any questions regarding the matters discussed.