The following disciplinary actions were taken against both firms and individuals due to violations of FINRA rules, federal securities laws and MSRB rules.
Third500, LLC fka Healthios Capital Markets, LLC
The Firm was fined $50,000 for allowing four employees to engage in investment banking transactions without the applicable Series 79 Investment Banking registration. Third500 was aware that unqualified people were participating in investment banking activities and had advised the individuals that they would have to take the Series 79, but never followed up to ensure the individuals had taken the test. The employees participated in the following activities: soliciting emerging companies, conducting research, creating models and developing prospective client lists. It was also found that the Firm did not have adequate WSPs in place that properly identified a specific person responsible for ensuring that the Firm was in compliance with FINRA registration rules and to ensure all representatives were properly registered. FINRA Case 2016048228001
Melvin Securities, L.L.C.
The Firm was fined $15,000 for failing to timely accrue liabilities for specific invoices which resulted in an inaccurate trial balance, general ledger and net capital calculation. It was found that the firm filed several inaccurate FOCUS reports that overstated the firm’s net capital and one FOCUS report that understated the firm’s net capital. Additionally, the net capital fell below the SEC Rule 15c3-1 requirement of maintaining a $100,000 minimum. This caused the Firm to make and keep an inaccurate general ledger and trial balance as the cash reported on the records were never reconciled to reflect the actual cash balances of the firm’s bank accounts. FINRA Case 2016048230601
The individual was barred from association with any FINRA member for converting $5,000 from her member firm. Nissar submitted false claims for business expense reimbursement which resulted in the Firm paying Nissar $5,000. The barred individual was ordered to pay her ex-firm $5,000 in compensation. FINRA Case 2017055921701
James Randall Clay
The individual was barred from association with any FINRA member for taking advantage of a relationship he had with an elderly customer which enabled him to buy property from the customer under terms that were only beneficial to him. Clay created and signed a hand-written agreement that allowed him to purchase the property for $1 million dollars while also borrowing $500,000 from the customer which funded the down payment of and improvements to the property. After purchasing the property, Clay created a limited liability company to manage the rental property which resulted in him collecting rent. Clay never disclosed this outside business activity to his firm and then proceeded to lie to his firm and state that he had no involvement with the purchase of the property and that it was his sister who purchased the rental property. It was also found that Clay submitted false documents in regard to his on-the-record testimony. FINRA Case 2014039775501
Clinton Brian Galyean
Galyean was fined $10,000 and suspended for 60 days for using his personal email account to conduct securities related business and contact customers and potential customers. Upon finding out that Galyean was using his personal email, his firm asked him to present his email and password for further investigate. Although Galyean at first cooperated, he then proceeded to delete emails from the account and change his password. It was also found that the use of his personal email caused the firm to maintain inaccurate books and records and that Galyean incorrectly disclosed on his annual certification that he was not using his personal email to conduct business. FINRA Case 2017052960801
Villalta was fined $5,000 and suspended from association with any member firms for 45 days for not properly disclosing an outside business activity and for engaging in an outside business activity without providing his firm prior written notice. It was found that Villalta leased cars and brought business to a third-party company that leased vehicles, earning him $6,000 in compensation. Villalta failed to provide the accurate description on his OBA approval document, not disclosing that the business included leasing activities. It was also found that Villalta failed to disclose on his annual certification that he had new outside business activities to disclose. FINRA Case 2017053281101
These cases along with others can be accessed by clicking this link.
Please contact an ARG Analyst with any questions regarding the matters discussed.