Exane, Inc. was fined $50,000 for failing to establish management controls and supervisory procedures to manage the financial and regulatory risks of the business. The firm’s credit limit controls were not automated nor applied on a pre-trade basis to prevent order entries that exceeded the pre-set capital thresholds for each customer. The firm also failed to establish pre-trade compliance programs and, in-turn, the firm reviewed compliance with regulatory requirements on a post trade basis. Additionally, the firm’s annual review documents did not contain a discussion of the Securities and Exchange Commission (“SEC”) market access rule. (FINRA Case #2015044347801)
TPEG Securities, LLC
The firm was censured and fined $25,000 for failing to file the necessary private placement documents. FINRA found the firm was filing private placements between three days and one year after the required filing date. It was also found that the firm’s Written Supervisory Procedures (“WSP”) were not compliant with FINRA rule 5123. Additionally, the firm failed to establish a system to reasonably supervise private placement obligations. The Firm also failed to designate an individual with supervisory responsibility. (FINRA Case #2017053051001)
Marie Bernadette Kincheloe
Marie Kincheloe was barred from association with any FINRA member as she failed to submit the proper documents requested by FINRA regarding an investigation of a Form U5. Marie was under investigation for allegations that she involved an unregistered person in activities that require registration. When asked to provide proper documentation for FINRA’s investigation, Kincheloe refused.
Dee Dee Brooks
Dee Dee Brooks was barred from association with any FINRA member for engaging in private securities transactions without obtaining prior approval from her firm. Brooks solicited investors, many who were Firm customers, to buy into a purported real estate investment fund and a company representing itself as a structured cash flow investment. The solicited investors invested $906,497 in promissory notes for the real estate investment fund which later filed for bankruptcy. Additionally, Brooks sold $866,985 in company purchase agreements to investors, many who were Firm customers. The investment company eventually ceased operation, owing $300 million in unpaid investor payments.
Donald George Padilla
Donald Padilla was suspended for five months and fined $10,000 for communicating with customers about business related activities via unapproved email accounts. Padilla sent communications including account funding confirmations, portfolio recommendations, fee summaries and trade confirmations using unapproved email accounts. Padilla hid the communications during a firm’s branch audit and failed to comply with recordkeeping obligations. Padilla also inaccurately completed the firm annual compliance questionnaire where he indicated that he only communicated via his firm email for client-related correspondence.
Michael Nicholas Catoggio
Michael Catoggio was fined $5,000, suspended for two months and required to requalify as a General Securities Principal for failing to comply and implement an Anti-Money Laundering Compliance Program reasonably designed to detect and report money laundering. Catoggio was designated as the Anti-Money Laundering Compliance Officer of his member firm and failed to implement a program to identify red flags related to the deposit and liquidation of low-priced securities. Catoggio also failed to provide proper training for designees related to red flag detection. Additionally, Catoggio failed to establish and maintain a WSP designed to achieve compliance with the Securities Act of 1933 and to develop a system to avoid becoming a participant in the unregistered sale of securities. The firm’s WSP failed to implement guidance regarding due diligence the firm conducts on securities deposits to evaluate whether securities deposited are freely tradeable. The firm and Catoggio failed to comply with the clearing agreement by solely relying on the clearing firm in order to determine if securities deposited and sold by customers were freely traded.