PURSHE KAPLAN STERLING INVESTMENTS - FINRA · PDF fileDoing business as PURSHE KAPLAN STERLING...

BrokerCheck Report

PURSHE KAPLAN STERLING INVESTMENTS

Section Title

Report Summary

Firm History

CRD# 35747

1

8

Firm Profile 2 - 7

Page(s)

Firm Operations 9 - 16

Disclosure Events 17

http://www.finra.org

About BrokerCheck®

BrokerCheck offers information on all current, and many former, registered securities brokers, and all current and formerregistered securities firms. FINRA strongly encourages investors to use BrokerCheck to check the background ofsecurities brokers and brokerage firms before deciding to conduct, or continue to conduct, business with them.

· What is included in a BrokerCheck report?· BrokerCheck reports for individual brokers include information such as employment history, professional

qualifications, disciplinary actions, criminal convictions, civil judgments and arbitration awards. BrokerCheckreports for brokerage firms include information on a firm’s profile, history, and operations, as well as many of thesame disclosure events mentioned above.

· Please note that the information contained in a BrokerCheck report may include pending actions orallegations that may be contested, unresolved or unproven. In the end, these actions or allegations may beresolved in favor of the broker or brokerage firm, or concluded through a negotiated settlement with noadmission or finding of wrongdoing.

· Where did this information come from?· The information contained in BrokerCheck comes from FINRA’s Central Registration Depository, or

CRD® and is a combination of: o information FINRA and/or the Securities and Exchange Commission (SEC) require brokers and

brokerage firms to submit as part of the registration and licensing process, and o information that regulators report regarding disciplinary actions or allegations against firms or brokers.

· How current is this information?· Generally, active brokerage firms and brokers are required to update their professional and disciplinary

information in CRD within 30 days. Under most circumstances, information reported by brokerage firms, brokersand regulators is available in BrokerCheck the next business day.

· What if I want to check the background of an investment adviser firm or investment adviserrepresentative?

· To check the background of an investment adviser firm or representative, you can search for the firm orindividual in BrokerCheck. If your search is successful, click on the link provided to view the available licensingand registration information in the SEC's Investment Adviser Public Disclosure (IAPD) website athttps://www.adviserinfo.sec.gov. In the alternative, you may search the IAPD website directly or contact yourstate securities regulator at http://www.finra.org/Investors/ToolsCalculators/BrokerCheck/P455414.

· Are there other resources I can use to check the background of investment professionals?· FINRA recommends that you learn as much as possible about an investment professional before

deciding to work with them. Your state securities regulator can help you research brokers and investment adviserrepresentatives doing business in your state.

·Thank you for using FINRA BrokerCheck.

For more information aboutFINRA, visit www.finra.org.

Using this site/information meansthat you accept the FINRABrokerCheck Terms andConditions. A complete list ofTerms and Conditions can befound at

For additional information aboutthe contents of this report, pleaserefer to the User Guidance orwww.finra.org/brokercheck. Itprovides a glossary of terms and alist of frequently asked questions,as well as additional resources.

brokercheck.finra.org


https://www.AdviserInfo.sec.gov

http://www.finra.org/Investors/ToolsCalculators/BrokerCheck/P455414


http://brokercheck.finra.org/Support/Terms

PURSHE KAPLAN STERLINGINVESTMENTS

CRD# 35747

SEC# 8-46844

Main Office Location

18 CORPORATE WOODS BLVDALBANY, NY 12211Regulated by FINRA Woodbridge Office

Mailing Address

18 CORPORATE WOODS BLVDALBANY, NY 12211

Business Telephone Number

518 436-3536

Report Summary for this Firm

This report summary provides an overview of the brokerage firm. Additional information for this firm can be foundin the detailed report.

Disclosure Events

Brokerage firms are required to disclose certaincriminal matters, regulatory actions, civil judicialproceedings and financial matters in which the firm orone of its control affiliates has been involved.

Are there events disclosed about this firm? Yes

The following types of disclosures have beenreported:

Type Count

Regulatory Event 7

Arbitration 2

Firm Profile

This firm is classified as a corporation.

This firm was formed in New York on 12/16/1993.

Its fiscal year ends in March.

Firm History

Information relating to the brokerage firm's historysuch as other business names and successions(e.g., mergers, acquisitions) can be found in thedetailed report.

Firm Operations

Is this brokerage firm currently suspended with anyregulator? No

This firm conducts 13 types of businesses.

This firm is affiliated with financial or investmentinstitutions.

This firm has referral or financial arrangements withother brokers or dealers.

This firm is registered with:

• the SEC• 1 Self-Regulatory Organization• 52 U.S. states and territories

www.finra.org/brokercheck User Guidance

1©2018 FINRA. All rights reserved. Report about PURSHE KAPLAN STERLING INVESTMENTS


http://www.finra.org/brokercheck

http://www.finra.org/brokercheck_reports


This firm is classified as a corporation.

This firm was formed in New York on 12/16/1993.

CRD#

This section provides the brokerage firm's full legal name, "Doing Business As" name, business and mailingaddresses, telephone number, and any alternate name by which the firm conducts business and where such name isused.

Firm Profile

Firm Names and Locations

Its fiscal year ends in March.

PURSHE KAPLAN STERLING INVESTMENTS, INC.

SEC#

35747

8-46844

Main Office Location

Mailing Address

Business Telephone Number

Doing business as PURSHE KAPLAN STERLING INVESTMENTS

518 436-3536

Regulated by FINRA Woodbridge Office








This section provides information relating to all direct owners and executive officers of the brokerage firm.

Direct Owners and Executive Officers

Firm Profile

Position

Percentage of Ownership

Is this a public reportingcompany?

Position Start Date

Does this owner direct themanagement or policies ofthe firm?

PKS HOLDINGS, LLC

HOLDING CO.

75% or more

No

Domestic Entity

03/2003

No

Is this a domestic or foreignentity or an individual?

Legal Name & CRD# (if any):

Position



Position Start Date


EVANS, LISA MARIE

CHIEF COMPLIANCE OFFICER

Less than 5%

No

Individual

08/2007

No

4575679



Position


Position Start Date

FLOUTON, KATHERINE MARIE

CHIEF OPERATING OFFICER

Less than 5%

Individual

04/2010

4405001








Direct Owners and Executive Officers (continued)

Firm Profile




Less than 5%

No

No

Position



Position Start Date


PENDERGAST, MICHELLE MARIE

CHIEF FINANCIAL OFFICER

Less than 5%

No

Individual

11/2007

No

5441721



Position



Position Start Date


PURCELL, JOHN PETER

C.E.O.

Less than 5%

No

Individual

03/1996

Yes

1664678



SHEEHAN, PETER JOHN

1691364







Direct Owners and Executive Officers (continued)

Firm Profile

Position



Position Start Date


V.P.

Less than 5%

No

Individual

03/1996

Yes

1691364







This section provides information relating to any indirect owners of the brokerage firm.

Indirect Owners

Firm Profile

MARKOWITS, ALEXANDER CHIAM

MANAGER

MHC SECURITIES, LLC

75% or more

No

Individual

07/2015

Yes

6561516



Company through whichindirect ownership isestablished

Relationship to Direct Owner

Relationship Established




MHC SECURITIES, LLC

MEMBER

WENTWORTH MANAGEMENT SERVICES, LLC

75% or more

No

Domestic Entity

11/2017

Yes









WENTWORTH MANAGEMENT SERVICES, LLC

Domestic Entity








Indirect Owners (continued)

Firm Profile

MEMBER

PKS HOLDINGS LLC

75% or more

No

Domestic Entity

11/2017

Yes













Firm History

This section provides information relating to any successions (e.g., mergers, acquisitions) involving the firm.

No information reported.






Firm Operations

RegistrationsThis section provides information about the regulators (Securities and Exchange Commission (SEC), self-regulatoryorganizations (SROs), and U.S. states and territories) with which the brokerage firm is currently registered andlicensed, the date the license became effective, and certain information about the firm's SEC registration.

This firm is currently registered with the SEC, 1 SRO and 52 U.S. states and territories.

SEC Registration Questions

This firm is registered with the SEC as:

A broker-dealer:

A broker-dealer and government securities broker or dealer:

A government securities broker or dealer only:

This firm has ceased activity as a government securities broker or dealer:

Yes

Yes

No

No

Federal Regulator Status Date Effective

SEC Approved 04/15/1994

Self-Regulatory Organization Status Date Effective

FINRA Approved 04/15/1994






Firm Operations

Registrations (continued)

U.S. States &Territories

Status Date Effective

Alabama Approved 02/18/2003

Alaska Approved 08/11/2004

Arizona Approved 03/27/2000

Arkansas Approved 08/28/2003

California Approved 11/06/1997

Colorado Approved 10/30/1998

Connecticut Approved 02/26/1999

Delaware Approved 10/07/1996

District of Columbia Approved 03/12/2001

Florida Approved 07/15/1996

Georgia Approved 06/11/1997

Hawaii Approved 08/11/2004

Idaho Approved 06/09/2004

Illinois Approved 02/09/1999

Indiana Approved 02/05/2003

Iowa Approved 10/30/2003

Kansas Approved 08/08/1996

Kentucky Approved 01/21/2003

Louisiana Approved 07/02/2003

Maine Approved 10/17/2000

Maryland Approved 01/04/1999

Massachusetts Approved 10/24/1994

Michigan Approved 03/15/1999

Minnesota Approved 05/29/2003

Mississippi Approved 05/29/2003

Missouri Approved 05/28/2003

Montana Approved 03/07/2001

Nebraska Approved 08/17/2004

Nevada Approved 01/08/2001

New Hampshire Approved 11/18/2002

New Jersey Approved 11/16/1994

New Mexico Approved 02/04/2003

New York Approved 03/23/1994

U.S. States &Territories

Status Date Effective

North Carolina Approved 07/07/2000

North Dakota Approved 01/06/2005

Ohio Approved 03/02/2001

Oklahoma Approved 11/14/2003

Oregon Approved 06/18/2003

Pennsylvania Approved 06/19/2000

Rhode Island Approved 01/29/2003

South Carolina Approved 09/25/1998

South Dakota Approved 06/08/2004

Tennessee Approved 03/08/2001

Texas Approved 01/03/2003

Utah Approved 10/21/1998

Vermont Approved 10/06/1999

Virgin Islands Approved 07/16/2013

Virginia Approved 02/22/1998

Washington Approved 01/05/2001

West Virginia Approved 01/03/2001

Wisconsin Approved 06/02/2003

Wyoming Approved 06/24/2004






Firm Operations

Types of BusinessThis section provides the types of business, including non-securities business, the brokerage firm is engaged in orexpects to be engaged in.

Other Types of Business

This firm does not effect transactions in commodities, commodity futures, or commodity options.This firm does not engage in other non-securities business.

Non-Securities Business Description:

This firm currently conducts 13 types of businesses.

Types of Business

Broker or dealer retailing corporate equity securities over-the-counter

Broker or dealer selling corporate debt securities

Underwriter or selling group participant (corporate securities other than mutual funds)

Mutual fund retailer

U S. government securities broker

Municipal securities broker

Broker or dealer selling variable life insurance or annuities

Broker or dealer selling oil and gas interests

Put and call broker or dealer or option writer

Broker or dealer selling tax shelters or limited partnerships in primary distributions

Private placements of securities

Broker or dealer involved in a networking, kiosk or similar arrangment with a: bank, savings bank or association, orcredit union

Other - PKS IS ELIGIBLE TO PARTICIPATE IN A COMMISSION RECAPTURE PROGRAM. THROUGH THISPROGRAM, PKS MAY REBATE A PORTION OF ITS COMMISSIONS BACK TO ITS CUSTOMER EITHER AS ACASH PAYMENT, OR AS PAYMENT TO THE CREDITOR OF THE CUSTOMER.

PKS ALSO ENGAGES IN OTHER SECURITIES TRANSACTIONS THAT ARE NOT LISTED IN ITEM 12, INCLUDINGREAL ESTATE INVESTMENT TRUSTS (REITS) AND BUSINESS DEVELOPMENT COMPANIES (BDCS).






Firm Operations

Clearing Arrangements

This firm does not hold or maintain funds or securities or provide clearing services for other broker-dealer(s).

Introducing Arrangements

This firm does refer or introduce customers to other brokers and dealers.

Name: NATIONAL FINANCIAL SERVICES LLC

Business Address: 82 DEVONSHIRE ST.BOSTON, MA 02109

CRD #: 13041

Effective Date: 05/27/1999

Description: APPLICANT OPERATES AS A FULLY DISCLOSED BROKER/DEALERPURSUANT TO SEC REG 15C(3)1. IN THAT CAPACITY, APPLICANTREFERS CUSTOMERS TO ITS CLEARING BROKER/DEALER.ADDITIONALLY, BOTH APPLICANT'S AND CUSTOMERS' ACCOUNTS AREHELD AND MAINTAINED BY APPLICANT'S CLEARING BROKER/DEALER.






Firm Operations

Industry Arrangements

This firm does not have books or records maintained by a third party.

This firm does have accounts, funds, or securities maintained by a third party.

This firm does have customer accounts, funds, or securities maintained by a third party.

This firm does not have individuals who control its management or policies through agreement.

This firm does not have individuals who wholly or partly finance the firm's business.

Control Persons/Financing


Business Address: 82 DEVONSHIRE ST.BOSTON, MA 02109

CRD #: 13041


Description: APPLICANT HAS EXECUTED AN AGREEMENT WITH NATIONALFINANCIAL SERVICES, LLC ON MAY 27, 1999, WHEREBY FIBG PROVIDESCLEARING SERVICES TO PURSHE KAPLAN STERLING INVESTMENTS.FIBG DUTIES INCLUDE, BUT ARE NOT LIMITED TO, EXECUTING ANDCLEARING TRANSACTIONS AND CARRYING ACCOUNTS ON A FULLY-DISCLOSED BASIS ON BEHALF OF PURSHE KAPLAN STERLINGINVESTMENTS AND ITS CUSTOMERS.


Business Address: 82 DEVONSHIRE ST.BOSTON,, MA 02109

CRD #: 13041


Description: APPLICANT HAS EXECUTED AN AGREEMENT WITH NATIONALFINANCIAL SERVICES, LLC ON MAY 27, 1999, WHEREBY NFS PROVIDESCLEARING SERVICES TO PURSHE KAPLAN STERLING INVESTMENTS.NFS' DUTIES INCLUDE, BUT ARE NOT LIMITED TO, EXECUTING ANDCLEARING TRANSACTIONS AND CLEARING ACCOUNTS ON FULLY-DISCLOSED BASIS OF BEHALF OF PURSHE KAPLAN STERLINGINVESTMENTS AND ITS CUSTOMERS.






Firm Operations

Organization AffiliatesThis section provides information on control relationships the firm has with other firms in the securities, investmentadvisory, or banking business.

This firm is, directly or indirectly:

· in control of· controlled by· or under common control withthe following partnerships, corporations, or other organizations engaged in the securities or investmentadvisory business.

No

No

No

11/30/2017

200 VESEY ST24TH FLOORNEW YORK, NY 10281

CL GENERAL AGENCY LLC is under common control with the firm.

CL GENERAL AGENCY LLC, A GENERAL AGENT, LICENSED IN NEW YORKSTATE BY THE DEPARTMENT OF FINANCIAL SERVICES, WILL PROVIDEINSURANCE SALES AND SERVICING AND PROCURE PRODUCERAND AGENT APPOINTMENTS AND IS UNDER COMMON CONTROL WITH THEAPPLICANT VIA PKS HOLDINGS LLC.

Description:

Investment AdvisoryActivities:

Securities Activities:

Country:

Foreign Entity:

Effective Date:

Business Address:

No

Yes

No

11/30/2017


159712

CABOT LODGE SECURITIES LLC is under common control with the firm.



Country:

Foreign Entity:

Effective Date:

Business Address:

CRD #:






Firm Operations

Organization Affiliates (continued)

No

CABOT LODGE SECURITIES LLC IS AN FINRA REGISTERED BROKER-DEALER THAT IS UNDER COMMON OWNERSHIP WITH PURSHE KAPLANSTERLING INVESTMENTS THROUGH PKS HOLDINGS, LLC

Description:


Yes

No

No

11/30/2017


134922

CL WEALTH MANAGEMENT LLC is under common control with the firm.

CL WEALTH MANAGEMENT LLC IS AN SEC REGISTERED INVESTMENTADVISER THAT IS UNDER COMMONOWNERSHIP WITH PURSHE KAPLAN STERLING INVESTMENTS THROUGHPKS HOLDINGS, LLC.

Description:



Country:

Foreign Entity:

Effective Date:

Business Address:

CRD #:

No

No

No

09/20/1996

18 CORPORATE WOODS BLVD.ALBANY, NY 12211

PKS FINANCIAL SERVICES is under common control with the firm.

PURSHE KAPLAN STERLING INVESTMENTS AND PKS FINANCIAL SERIVCESARE WHOLLY OWNED BY PKS HOLDINGS, LLC.

Description:



Country:

Foreign Entity:

Effective Date:

Business Address:

125648

PKS ADVISORY SERVICES, LLC is under common control with the firm.

CRD #: 15©2018 FINRA. All rights reserved. Report about PURSHE KAPLAN STERLING INVESTMENTS





Firm Operations

Organization Affiliates (continued)

Yes

No

No

01/02/2002

18 CORPORATE WOODS BLVD.ALBANY, NY

125648

PURSHE KAPLAN STERLING INVESTMENTS AND PKS ADVISORY SERVICES,LLC ARE WHOLLY OWNED BY PKS HOLDINGS, LLC. PKS ADVISORYSERVICES IS MANAGED BY KEITH O. FLOOD.

Description:



Country:

Foreign Entity:

Effective Date:

Business Address:

CRD #:

This firm is not directly or indirectly, controlled by the following:

· bank holding company· national bank· state member bank of the Federal Reserve System· state non-member bank· savings bank or association· credit union· or foreign bank






Disclosure Events

All firms registered to sell securities or provide investment advice are required to disclose regulatory actions, criminal orcivil judicial proceedings, and certain financial matters in which the firm or one of its control affiliates has been involved.For your convenience, below is a matrix of the number and status of disclosure events involving this brokerage firm orone of its control affiliates. Further information regarding these events can be found in the subsequent pages of thisreport.

Final On AppealPending

Regulatory Event 0 7 0

Arbitration N/A 2 N/A






Disclosure Event Details

What you should know about reported disclosure events:

1. BrokerCheck provides details for any disclosure event that was reported in CRD. It also includessummary information regarding FINRA arbitration awards in cases where the brokerage firm wasnamed as a respondent.

2. Certain thresholds must be met before an event is reported to CRD, for example: o A law enforcement agency must file formal charges before a brokerage firm is required to disclose a

particular criminal event.3. Disclosure events in BrokerCheck reports come from different sources:

o Disclosure events for this brokerage firm were reported by the firm and/or regulators. When the firmand a regulator report information for the same event, both versions of the event will appear in theBrokerCheck report. The different versions will be separated by a solid line with the reporting sourcelabeled.

4. There are different statuses and dispositions for disclosure events: o A disclosure event may have a status of pending, on appeal, or final.

§ A "pending" event involves allegations that have not been proven or formally adjudicated.§ An event that is "on appeal" involves allegations that have been adjudicated but are currently

being appealed.§ A "final" event has been concluded and its resolution is not subject to change.

o A final event generally has a disposition of adjudicated, settled or otherwise resolved.§ An "adjudicated" matter includes a disposition by (1) a court of law in a criminal or civil matter,

or (2) an administrative panel in an action brought by a regulator that is contested by the partycharged with some alleged wrongdoing.

§ A "settled" matter generally involves an agreement by the parties to resolve the matter.Please note that firms may choose to settle customer disputes or regulatory matters forbusiness or other reasons.

§ A "resolved" matter usually involves no payment to the customer and no finding ofwrongdoing on the part of the individual broker. Such matters generally involve customerdisputes.

5. You may wish to contact the brokerage firm to obtain further information regarding any of thedisclosure events contained in this BrokerCheck report.

Regulatory - Final

This type of disclosure event involves (1) a final, formal proceeding initiated by a regulatory authority (e.g., a statesecurities agency, self-regulatory organization, federal regulator such as the U.S. Securities and Exchange Commission,foreign financial regulatory body) for a violation of investment-related rules or regulations; or (2) a revocation orsuspension of the authority of a brokerage firm or its control affiliate to act as an attorney, accountant or federalcontractor.

Disclosure 1 of 7

Reporting Source: Regulator

Allegations: THE ADMINISTRATOR INTENDS TO CENSURE AND FINE PURSHE KAPLANSTERLING, INC. UNDER SECTION 412(3) OF THE SECURITIES ACT, MCL451.2412(3), BECAUSE IT HAS FAILED TO SUPERVISE ITS AGENT, WHICHSUPPORTS THE IMPOSITION OF A CENSURE AND FINE UNDER THE ABOVE-CITED PROVISIONS OF THE MICHIGAN UNIFORM SECURITIES ACT (2002),2008 PA 551, MCL 451.2101 ET SEQ.

Current Status: Final






Initiated By: MICHIGAN

Principal Sanction(s)/ReliefSought:

Censure

Other Sanction(s)/ReliefSought:

$10,000 FINE

Date Initiated: 03/29/2017

Docket/Case Number: 328627

URL for Regulatory Action:

Principal Product Type: Investment Contract(s)

Other Product Type(s):

Allegations: THE ADMINISTRATOR INTENDS TO CENSURE AND FINE PURSHE KAPLANSTERLING, INC. UNDER SECTION 412(3) OF THE SECURITIES ACT, MCL451.2412(3), BECAUSE IT HAS FAILED TO SUPERVISE ITS AGENT, WHICHSUPPORTS THE IMPOSITION OF A CENSURE AND FINE UNDER THE ABOVE-CITED PROVISIONS OF THE MICHIGAN UNIFORM SECURITIES ACT (2002),2008 PA 551, MCL 451.2101 ET SEQ.

Resolution Date: 05/03/2017

Resolution:

Other Sanctions Ordered:

Sanction Details: $10,000

Does the order constitute afinal order based onviolations of any laws orregulations that prohibitfraudulent, manipulative, ordeceptive conduct?

No

Sanctions Ordered: Monetary/Fine $10,000.00

Order

iReporting Source: Firm

Initiated By: STATE OF MICHIGAN


Allegations: THE BUREAU ALLEGES THAT PKS FAILED TO SUPERVISE MR. VUNGARALAIN CONNECTION WITH THE APPLICATION OF VOLUME DISCOUNTS FOR ACUSTOMER OF THE BROKER-DEALER.








Censure


FINE



Principal Product Type: Other

Other Product Type(s): REAL ESTATE INVESTMENT TRUSTS/BUSINESS DEVELOPMENTCOMPANIES


Resolution:


Sanction Details: $10,000 FINE LEVIED AGAINST PURSHE KAPLAN STERLING INVESTMENTS,PAID ON 4/12/2017.

Sanctions Ordered: CensureMonetary/Fine $10,000.00

Consent

Disclosure 2 of 7

i


Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT FAILED TOCONDUCT ADEQUATE DUE DILIGENCE OF ITS REGISTEREDREPRESENTATIVES' OUTSIDE BUSINESS ACTIVITIES. THE FINDINGSSTATED THAT THE FIRM, IN APPROVING THE OUTSIDE BUSINESSACTIVITIES OF ITS REGISTERED REPRESENTATIVES, DID NOT OBTAIN ORREVIEW INFORMATION SUCH AS SAMPLE CLIENT ADVISORYAGREEMENTS, COMPENSATION RECEIVED FOR INVESTMENT ADVISORYSERVICES, AND OTHER INFORMATION SUFFICIENT TO DETERMINEWHETHER THESE ACTIVITIES INVOLVED PRIVATE SECURITIESTRANSACTIONS. THE FINDINGS ALSO STATED THAT THE FIRM DID NOTHAVE AN ADEQUATE SUPERVISORY SYSTEM FOR THE REVIEW OF THEPERFORMANCE REPORTS USED BY ITS REGISTERED PERSONS. THEFIRM'S WRITTEN PROCEDURES CONCERNING PERFORMANCE REPORTSDID NOT INCLUDE ANY PROVISION FOR THE SUPERVISORY REVIEW OFTHE CONTENTS OF THESE REPORTS. THE FINDINGS ALSO INCLUDEDTHAT THE FIRM DID NOT CONDUCT ANY SUPERVISORY REVIEW OF THEPERFORMANCE REPORTS USED BY ITS REGISTERED PERSONS.







Initiated By: FINRA





Principal Product Type: No Product


WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT FAILED TOCONDUCT ADEQUATE DUE DILIGENCE OF ITS REGISTEREDREPRESENTATIVES' OUTSIDE BUSINESS ACTIVITIES. THE FINDINGSSTATED THAT THE FIRM, IN APPROVING THE OUTSIDE BUSINESSACTIVITIES OF ITS REGISTERED REPRESENTATIVES, DID NOT OBTAIN ORREVIEW INFORMATION SUCH AS SAMPLE CLIENT ADVISORYAGREEMENTS, COMPENSATION RECEIVED FOR INVESTMENT ADVISORYSERVICES, AND OTHER INFORMATION SUFFICIENT TO DETERMINEWHETHER THESE ACTIVITIES INVOLVED PRIVATE SECURITIESTRANSACTIONS. THE FINDINGS ALSO STATED THAT THE FIRM DID NOTHAVE AN ADEQUATE SUPERVISORY SYSTEM FOR THE REVIEW OF THEPERFORMANCE REPORTS USED BY ITS REGISTERED PERSONS. THEFIRM'S WRITTEN PROCEDURES CONCERNING PERFORMANCE REPORTSDID NOT INCLUDE ANY PROVISION FOR THE SUPERVISORY REVIEW OFTHE CONTENTS OF THESE REPORTS. THE FINDINGS ALSO INCLUDEDTHAT THE FIRM DID NOT CONDUCT ANY SUPERVISORY REVIEW OF THEPERFORMANCE REPORTS USED BY ITS REGISTERED PERSONS.


Resolution:

Other Sanctions Ordered: UNDERTAKING: REQUIRED TO SUBMIT TO FINRA A WRITTEN PLAN OF HOWIT WILL UNDERTAKE TO CONDUCT A REVIEW OF THE ADEQUACY OF THERELEVANT POLICIES AND PROCEDURES RELATED TO THE CONDUCT INTHE AWC.

Sanction Details: THE FIRM WAS CENSURED, FINED $200,000, AND UNDERTAKES TO SUBMITTO FINRA A WRITTEN PLAN OF HOW IT WILL UNDERTAKE TO CONDUCT AREVIEW OF THE ADEQUACY OF THE RELEVANT POLICIES ANDPROCEDURES RELATED TO THE CONDUCT IN THE AWC.FINE PAID IN FULL ON MAY 2, 2016.


No


Acceptance, Waiver & Consent(AWC)


Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT FAILED TOCONDUCT ADEQUATE DUE DILIGENCE OF ITS REGISTEREDREPRESENTATIVES' OUTSIDE BUSINESS ACTIVITIES. THE FINDINGSSTATED THAT THE FIRM, IN APPROVING THE OUTSIDE BUSINESSACTIVITIES OF ITS REGISTERED REPRESENTATIVES, DID NOT OBTAIN ORREVIEW INFORMATION SUCH AS SAMPLE CLIENT ADVISORYAGREEMENTS, COMPENSATION RECEIVED FOR INVESTMENT ADVISORYSERVICES, AND OTHER INFORMATION SUFFICIENT TO DETERMINEWHETHER THESE ACTIVITIES INVOLVED PRIVATE SECURITIESTRANSACTIONS, THE FINDINGS ALSO STATED THAT THE FIRM DID NOTHAVE AN ADEQUATE SUPERVISORY SYSTEM FOR THE REVIEW OF THEPERFORMANCE REPORTS USED BY ITS REGISTERED PERSONS. THEFIRMS' WRITTEN PROCEDURES CONCERNING PERFORMANCE REPORTSDID NOT INCLUDE ANY PROVISION FOR THE SUPERVISORY REVIEW OFTHE CONTENTS OF THESE REPORTS. THE FINDINGS ALSO INCLUDEDTHAT THE FIRM DID NOT CONDUCT ANY SUPERVISORY REVIEW OF THEPERFORMANCE REPORTS USED BY ITS REGISTERED PERSONS.






https://www.finra.org/industry/disciplinary-actions/finra-disciplinary-actions-online?search=2013035788401


Initiated By: FINRA







WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT FAILED TOCONDUCT ADEQUATE DUE DILIGENCE OF ITS REGISTEREDREPRESENTATIVES' OUTSIDE BUSINESS ACTIVITIES. THE FINDINGSSTATED THAT THE FIRM, IN APPROVING THE OUTSIDE BUSINESSACTIVITIES OF ITS REGISTERED REPRESENTATIVES, DID NOT OBTAIN ORREVIEW INFORMATION SUCH AS SAMPLE CLIENT ADVISORYAGREEMENTS, COMPENSATION RECEIVED FOR INVESTMENT ADVISORYSERVICES, AND OTHER INFORMATION SUFFICIENT TO DETERMINEWHETHER THESE ACTIVITIES INVOLVED PRIVATE SECURITIESTRANSACTIONS, THE FINDINGS ALSO STATED THAT THE FIRM DID NOTHAVE AN ADEQUATE SUPERVISORY SYSTEM FOR THE REVIEW OF THEPERFORMANCE REPORTS USED BY ITS REGISTERED PERSONS. THEFIRMS' WRITTEN PROCEDURES CONCERNING PERFORMANCE REPORTSDID NOT INCLUDE ANY PROVISION FOR THE SUPERVISORY REVIEW OFTHE CONTENTS OF THESE REPORTS. THE FINDINGS ALSO INCLUDEDTHAT THE FIRM DID NOT CONDUCT ANY SUPERVISORY REVIEW OF THEPERFORMANCE REPORTS USED BY ITS REGISTERED PERSONS.


Resolution:

Other Sanctions Ordered: UNDERTAKING: REQUIRED TO SUBMIT TO FINRA A WRITTEN PLAN OF HOWIT WILL UNDERTAKE TO CONDUCT A REVIEW OF THE ADEQUACY OF THERELEVANT POLICIES AND PROCEDURES RELATED TO THE CONDUCT INTHE AWC.

Sanction Details: THE FIRM WAS CENSURED, FINED $200,000, AND UNDERTAKES TO SUBMITTO FINRA A WRITTEN PLAN OF HOW IT WILL UNDERTAKE TO CONDUCT AREVIEW OF THE ADEQUACY OF THE RELEVANT POLICIES ANDPROCEDURES RELATED TO THE CONDUCT IN THE AWC.



Disclosure 3 of 7

i








Allegations: THE FIRM WAS NAMED A RESPONDENT IN A FINRA COMPLAINT ALLEGINGTHAT ITS SUPERVISORY FAILURES PREVENTED IT FROM DETECTING ANDHALTING ITS REGISTERED REPRESENTATIVE'S FRAUDULENT CONDUCT,WHEN THE REPRESENTATIVE, THROUGH THE FIRM, REGULARLY LIED TOHIS CUSTOMER, A NATIVE AMERICAN TRIBE, REGARDING INVESTMENTSHE RECOMMENDED, AND AS A RESULT OF THESE MISREPRESENTATIONSAND OMISSIONS, THE REPRESENTATIVE WILLFULLY VIOLATED SECTION10(B) OF THE SECURITIES EXCHANGE ACT OF 1934 AND RULE 10B-5THEREUNDER AND FINRA RULES 2020 AND 2010. THE COMPLAINTALLEGES THAT IN ADDITION TO SERVING AS THE CUSTOMER'SREGISTERED REPRESENTATIVE, THE REPRESENTATIVE WAS EMPLOYEDBY THE TRIBE AS ITS TREASURY INVESTMENT MANAGER ANDPARTICIPATED IN DECISIONS REGARDING THE TRIBE'S INVESTMENTS. HEFRAUDULENTLY INDUCED THE TRIBE TO INVEST HUNDREDS OF MILLIONSOF DOLLARS IN NON-TRADED REAL ESTATE INVESTMENT TRUSTS (REITS)AND BUSINESS DEVELOPMENT COMPANIES (BDCS), WITHOUT REVEALINGHE AND THE FIRM RECEIVED COMMISSIONS ON THE SALES (USUALLYSEVEN PERCENT) OR THE AVAILABILITY OF CERTAIN VOLUME DISCOUNTS.THE FIRM'S SUPERVISORY FAILURES LED IT TO FAIL TO DETECT ANDPREVENT THE REPRESENTATIVE'S FRAUD. THE REPRESENTATIVE KNEWTHAT HIS CUSTOMER, THE TRIBE, PROHIBITED ITS EMPLOYEES, SUCH ASHIMSELF, FROM ENGAGING IN BUSINESS ACTIVITIES THAT COULDCONSTITUTE A CONFLICT OF INTEREST WITH THE TRIBE, OR THAT COULDIMPAIR AN EMPLOYEE'S ABILITY TO MAKE IMPARTIAL DECISIONS ONBEHALF OF THE TRIBE. NOTWITHSTANDING THESE PROHIBITIONS, ANDKNOWING THAT TRIBAL LEADERS RELIED UPON HIS RECOMMENDATIONSAS TREASURY INVESTMENT MANAGER, HE RECOMMENDED THE TRIBEINVEST MORE THAN $190 MILLION IN NON-TRADED REITS AND BDCS OVERTHE COURSE OF THREE YEARS, GENERATING $11.4 MILLION INCOMMISSIONS FOR THE FIRM, $9.6 MILLION OF WHICH WAS PAID TO HIM.IN ORDER TO INDUCE THE TRIBE TO MAKE THESE PURCHASES,NOTWITHSTANDING THE TRIBE'S PROHIBITIONS AGAINST CONFLICTS OFINTERESTS, THE REPRESENTATIVE FALSELY REPRESENTED TO THE TRIBETHAT HE WOULD NOT RECEIVE ANY COMMISSIONS ON PURCHASES OFTHE NON-TRADED REITS AND BDCS MADE IN THE TRIBE'S ACCOUNTSWITH THE FIRM. THE REPRESENTATIVE ALSO ALLOWED TRIBAL LEADERSTO BELIEVE THE FIRM WOULD NOT RECEIVE ANY COMMISSIONS ONTHESE TRANSACTIONS, EITHER, WHEN HE KNEW OR SHOULD HAVEKNOWN THAT THIS WAS THEIR UNDERSTANDING. THE COMPLAINT ALSOALLEGES THAT THE FIRM'S REPRESENTATIVE ALSO WILLFULLY VIOLATEDSECTION 10(B) OF THE SECURITIES EXCHANGE ACT OF 1934 AND RULE10B-5 THEREUNDER AND FINRA RULES 2020 AND 2010 WHEN HE FAILEDTO DISCLOSE TO THE TRIBE THAT THE TRIBE WAS ELIGIBLE TO RECEIVEVOLUME DISCOUNTS ON ITS NON-TRADED REIT/BDC PURCHASES BASEDUPON THE FACT THAT MULTIPLE TRUST ACCOUNTS OWNED BY THECUSTOMER PURCHASED THE SAME OFFERINGS THROUGH THE FIRM. ASA RESULT, THE TRIBE FAILED TO RECEIVE MORE THAN $3.3 MILLION INVOLUME DISCOUNTS TO WHICH IT WAS ELIGIBLE. ALL OF THESE FUNDS,INSTEAD, WENT TO THE FIRM AND HIM IN THE FORM OF COMMISSIONS TOTHE DETRIMENT OF THE CUSTOMER. THE COMPLAINT FURTHER ALLEGESTHAT AT THE TIME THE TRIBE BECAME THE FIRM'S CUSTOMER, THE FIRMFAILED TO PERFORM AN ADEQUATE REVIEW OF THE REPRESENTATIVE'SDUAL RELATIONSHIP WITH THE TRIBE TO DETERMINE WHETHER THISRELATIONSHIP HEIGHTENED THE RISK OF FRAUDULENT CONDUCT BY HIMTOWARD THE TRIBE. BECAUSE THE FIRM FAILED TO CONDUCT ANADEQUATE REVIEW OF THE RISKS INHERENT TO THE REPRESENTATIVE'SDUAL RELATIONSHIP WITH THE TRIBE, IT LIKEWISE FAILED TO ESTABLISHSUFFICIENT PROCEDURES TO MITIGATE ANY SUCH RISKS. IN ADDITION,THE COMPLAINT ALLEGES THAT THE FIRM FAILED TO HAVE ADEQUATESUPERVISORY SYSTEM AND WSPS IN PLACE TO SUPERVISE THE SALE OFNON-TRADED REITS AND BDCS TO ENSURE THE PROPER APPLICATION OFVOLUME DISCOUNTS. THE FIRM FAILED TO TAKE REASONABLE STEPS TOVERIFY THE REPRESENTATIVE'S REPRESENTATIONS THAT THE TRIBE DIDNOT WANT TO TAKE ADVANTAGE OF THE ADDITIONAL VOLUMEDISCOUNTS TO WHICH IT WAS ELIGIBLE, EVEN AFTER THE RED FLAGSWERE RAISED.







Initiated By: FINRA






Other Product Type(s): NON-TRADED REAL ESTATE INVESTMENT TRUSTS (REITS) AND BUSINESSDEVELOPMENT COMPANIES (BDCS)

THE FIRM WAS NAMED A RESPONDENT IN A FINRA COMPLAINT ALLEGINGTHAT ITS SUPERVISORY FAILURES PREVENTED IT FROM DETECTING ANDHALTING ITS REGISTERED REPRESENTATIVE'S FRAUDULENT CONDUCT,WHEN THE REPRESENTATIVE, THROUGH THE FIRM, REGULARLY LIED TOHIS CUSTOMER, A NATIVE AMERICAN TRIBE, REGARDING INVESTMENTSHE RECOMMENDED, AND AS A RESULT OF THESE MISREPRESENTATIONSAND OMISSIONS, THE REPRESENTATIVE WILLFULLY VIOLATED SECTION10(B) OF THE SECURITIES EXCHANGE ACT OF 1934 AND RULE 10B-5THEREUNDER AND FINRA RULES 2020 AND 2010. THE COMPLAINTALLEGES THAT IN ADDITION TO SERVING AS THE CUSTOMER'SREGISTERED REPRESENTATIVE, THE REPRESENTATIVE WAS EMPLOYEDBY THE TRIBE AS ITS TREASURY INVESTMENT MANAGER ANDPARTICIPATED IN DECISIONS REGARDING THE TRIBE'S INVESTMENTS. HEFRAUDULENTLY INDUCED THE TRIBE TO INVEST HUNDREDS OF MILLIONSOF DOLLARS IN NON-TRADED REAL ESTATE INVESTMENT TRUSTS (REITS)AND BUSINESS DEVELOPMENT COMPANIES (BDCS), WITHOUT REVEALINGHE AND THE FIRM RECEIVED COMMISSIONS ON THE SALES (USUALLYSEVEN PERCENT) OR THE AVAILABILITY OF CERTAIN VOLUME DISCOUNTS.THE FIRM'S SUPERVISORY FAILURES LED IT TO FAIL TO DETECT ANDPREVENT THE REPRESENTATIVE'S FRAUD. THE REPRESENTATIVE KNEWTHAT HIS CUSTOMER, THE TRIBE, PROHIBITED ITS EMPLOYEES, SUCH ASHIMSELF, FROM ENGAGING IN BUSINESS ACTIVITIES THAT COULDCONSTITUTE A CONFLICT OF INTEREST WITH THE TRIBE, OR THAT COULDIMPAIR AN EMPLOYEE'S ABILITY TO MAKE IMPARTIAL DECISIONS ONBEHALF OF THE TRIBE. NOTWITHSTANDING THESE PROHIBITIONS, ANDKNOWING THAT TRIBAL LEADERS RELIED UPON HIS RECOMMENDATIONSAS TREASURY INVESTMENT MANAGER, HE RECOMMENDED THE TRIBEINVEST MORE THAN $190 MILLION IN NON-TRADED REITS AND BDCS OVERTHE COURSE OF THREE YEARS, GENERATING $11.4 MILLION INCOMMISSIONS FOR THE FIRM, $9.6 MILLION OF WHICH WAS PAID TO HIM.IN ORDER TO INDUCE THE TRIBE TO MAKE THESE PURCHASES,NOTWITHSTANDING THE TRIBE'S PROHIBITIONS AGAINST CONFLICTS OFINTERESTS, THE REPRESENTATIVE FALSELY REPRESENTED TO THE TRIBETHAT HE WOULD NOT RECEIVE ANY COMMISSIONS ON PURCHASES OFTHE NON-TRADED REITS AND BDCS MADE IN THE TRIBE'S ACCOUNTSWITH THE FIRM. THE REPRESENTATIVE ALSO ALLOWED TRIBAL LEADERSTO BELIEVE THE FIRM WOULD NOT RECEIVE ANY COMMISSIONS ONTHESE TRANSACTIONS, EITHER, WHEN HE KNEW OR SHOULD HAVEKNOWN THAT THIS WAS THEIR UNDERSTANDING. THE COMPLAINT ALSOALLEGES THAT THE FIRM'S REPRESENTATIVE ALSO WILLFULLY VIOLATEDSECTION 10(B) OF THE SECURITIES EXCHANGE ACT OF 1934 AND RULE10B-5 THEREUNDER AND FINRA RULES 2020 AND 2010 WHEN HE FAILEDTO DISCLOSE TO THE TRIBE THAT THE TRIBE WAS ELIGIBLE TO RECEIVEVOLUME DISCOUNTS ON ITS NON-TRADED REIT/BDC PURCHASES BASEDUPON THE FACT THAT MULTIPLE TRUST ACCOUNTS OWNED BY THECUSTOMER PURCHASED THE SAME OFFERINGS THROUGH THE FIRM. ASA RESULT, THE TRIBE FAILED TO RECEIVE MORE THAN $3.3 MILLION INVOLUME DISCOUNTS TO WHICH IT WAS ELIGIBLE. ALL OF THESE FUNDS,INSTEAD, WENT TO THE FIRM AND HIM IN THE FORM OF COMMISSIONS TOTHE DETRIMENT OF THE CUSTOMER. THE COMPLAINT FURTHER ALLEGESTHAT AT THE TIME THE TRIBE BECAME THE FIRM'S CUSTOMER, THE FIRMFAILED TO PERFORM AN ADEQUATE REVIEW OF THE REPRESENTATIVE'SDUAL RELATIONSHIP WITH THE TRIBE TO DETERMINE WHETHER THISRELATIONSHIP HEIGHTENED THE RISK OF FRAUDULENT CONDUCT BY HIMTOWARD THE TRIBE. BECAUSE THE FIRM FAILED TO CONDUCT ANADEQUATE REVIEW OF THE RISKS INHERENT TO THE REPRESENTATIVE'SDUAL RELATIONSHIP WITH THE TRIBE, IT LIKEWISE FAILED TO ESTABLISHSUFFICIENT PROCEDURES TO MITIGATE ANY SUCH RISKS. IN ADDITION,THE COMPLAINT ALLEGES THAT THE FIRM FAILED TO HAVE ADEQUATESUPERVISORY SYSTEM AND WSPS IN PLACE TO SUPERVISE THE SALE OFNON-TRADED REITS AND BDCS TO ENSURE THE PROPER APPLICATION OFVOLUME DISCOUNTS. THE FIRM FAILED TO TAKE REASONABLE STEPS TOVERIFY THE REPRESENTATIVE'S REPRESENTATIONS THAT THE TRIBE DIDNOT WANT TO TAKE ADVANTAGE OF THE ADDITIONAL VOLUMEDISCOUNTS TO WHICH IT WAS ELIGIBLE, EVEN AFTER THE RED FLAGSWERE RAISED.


Resolution:


No

Decision & Order of Offer of Settlement







Other Sanctions Ordered: UNDERTAKINGS; INTEREST

Sanction Details: THE FIRM WAS CENSURED, ORDERED TO PAY A FINE OF $750,000,ORDERED TO PAY RESTITUTION TO THE CUSTOMER IN THE AMOUNT OF$3,373,303.68, PLUS INTEREST, AND ORDERED TO RETAIN ANINDEPENDENT CONSULTANT, NOT UNACCEPTABLE TO FINRA STAFF, TOCONDUCT A COMPREHENSIVE REVIEW OF THE ADEQUACY OF THE FIRM'SPOLICIES, SYSTEMS AND PROCEDURES (WRITTEN AND OTHERWISE) ANDTRAINING RELATING TO: (1) REGISTERED REPRESENTATIVES' OUTSIDEBUSINESS ACTIVITIES; AND (2) THE APPLICATION OF VOLUME DISCOUNTSDURING THE SALE OF NON-TRADED REITS AND BDCS. FINE PAID IN FULLON 3/6/17.

Regulator Statement WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, THE FIRMCONSENTED TO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THATITS SUPERVISORY FAILURES PREVENTED IT FROM DETECTING ANDHALTING ITS REGISTERED REPRESENTATIVE'S FRAUDULENT CONDUCT,WHEN THE REPRESENTATIVE, THROUGH THE FIRM, REGULARLY LIED TOHIS CUSTOMER, A NATIVE AMERICAN TRIBE, REGARDING INVESTMENTSHE RECOMMENDED. THE FINDINGS STATED THAT THE REPRESENTATIVESUBMITTED AN "OUTSIDE BUSINESS ACTIVITIES" FORM NOTIFYING THEFIRM THAT HE WOULD BE STARTING EMPLOYMENT WITH THE NATIVEAMERICAN TRIBE AS ITS TREASURY INVESTMENT MANAGER AND WOULDBE RESPONSIBLE FOR MANAGING THE NATIVE AMERICAN TRIBE'SINVESTMENTS, INCLUDING ADVISING THE NATIVE AMERICAN TRIBE'STRIBAL COUNCIL AS TO WHICH INVESTMENTS THE TRIBE SHOULDPURCHASE. NOTWITHSTANDING THESE PROHIBITIONS, AND KNOWINGTHAT TRIBAL LEADERS RELIED UPON HIS RECOMMENDATIONS ASTREASURY INVESTMENT MANAGER, THE REPRESENTATIVERECOMMENDED THE TRIBE INVEST MORE THAN $190 MILLION IN NON-TRADED REITS AND BDCS OVER THE COURSE OF THREE YEARS,GENERATING $11.4 MILLION IN COMMISSIONS FOR THE FIRM, $9.6 MILLIONOF WHICH WAS PAID TO THE REPRESENTATIVE. THE FINDINGS ALSOSTATED THE ONCE THE NATIVE AMERICAN TRIBE BECAME A FIRMCUSTOMER, THE FIRM SHOULD HAVE REVIEWED THE REPRESENTATIVE'SDUAL RELATIONSHIP WITH THE TRIBE AND WHETHER IT CREATED AHEIGHTENED RISK OF MISCONDUCT, GIVEN THE REPRESENTATIVE, FROMTHAT POINT ON, WOULD BE ON BOTH SIDES OF ANY TRANSACTION MADEIN THE TRIBE'S FIRM ACCOUNTS. THE FIRM SHOULD HAVE THENIMPLEMENTED PROCEDURES TO MITIGATE SUCH RISK. AT NO TIME DIDTHE FIRM PERFORM A SUFFICIENT REVIEW OF THE REPRESENTATIVE'SDUAL RELATIONSHIP WITH THE TRIBE OR IMPLEMENT ANY PROCEDURESTO ADDRESS ANY RISKS RELATED TO HIS CONFLICT OF INTEREST. THEFIRM'S SUPERVISORY FAILURES LED IT TO FAIL TO DETECT AND PREVENTTHE REPRESENTATIVE'S FRAUD. THE FINDINGS ALSO INCLUDED THAT THEFIRM FAILED TO ESTABLISH, MAINTAIN AND ENFORCE AN ADEQUATESUPERVISORY SYSTEM AND WRITTEN SUPERVISORY PROCEDURES(WSPS) WITH RESPECT TO THE SALE OF NON-TRADED REITS AND BDCS.THE FIRM DID NOT HAVE PROCEDURES IN PLACE REASONABLY DESIGNEDTO IDENTIFY ACCOUNTS THAT WOULD BE ELIGIBLE FOR VOLUMEDISCOUNTS OR TO ENSURE THE DISCOUNTS WERE PROPERLY APPLIED.THE FIRM FAILED TO TAKE REASONABLE STEPS TO VERIFY THEREPRESENTATIVE'S REPRESENTATIONS THAT THE NATIVE AMERICANTRIBE DID NOT WANT TO TAKE ADVANTAGE OF THE ADDITIONAL VOLUMEDISCOUNTS TO WHICH THE NATIVE AMERICAN TRIBE WAS ELIGIBLE, EVENAFTER THE FOLLOWING RED FLAGS WERE RAISED: 1) AN INQUIRY FROM AREIT ISSUER AS TO WHY THE FIRM HAD NOT REQUESTED A VOLUMEDISCOUNT FOR WHICH THE TRIBE WAS ELIGIBLE; 2) AN INQUIRY FROMFINRA STAFF REGARDING THE FIRM'S PROCEDURES WITH RESPECT TOTHE APPLICATION OF VOLUME DISCOUNTS IN THE SALE OF NON-TRADEDREITS AND BDCS; AND, 3) AN INQUIRY FROM THE TRIBE REGARDING THEREPRESENTATIVE'S COMMISSIONS BASED ON THE TRIBE'S PURCHASE OFNON-TRADED REITS AND BDCS IN ITS FIRM ACCOUNTS. FINRA FOUNDTHAT BECAUSE OF ITS SUPERVISORY DEFICIENCIES THE FIRM FAILED TOIDENTIFY AND APPLY VOLUME DISCOUNTS TO MORE THAN 200 ELIGIBLEPURCHASES OF NON-TRADED REITS AND BDCS MADE BY THE NATIVEAMERICAN TRIBE. AS A RESULT, THE NATIVE AMERICAN TRIBE PAIDEXCESSIVE SALES CHARGES OF MORE THAN $3.3 MILLION.


No

Sanctions Ordered: CensureMonetary/Fine $750,000.00Disgorgement/Restitution






WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, THE FIRMCONSENTED TO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THATITS SUPERVISORY FAILURES PREVENTED IT FROM DETECTING ANDHALTING ITS REGISTERED REPRESENTATIVE'S FRAUDULENT CONDUCT,WHEN THE REPRESENTATIVE, THROUGH THE FIRM, REGULARLY LIED TOHIS CUSTOMER, A NATIVE AMERICAN TRIBE, REGARDING INVESTMENTSHE RECOMMENDED. THE FINDINGS STATED THAT THE REPRESENTATIVESUBMITTED AN "OUTSIDE BUSINESS ACTIVITIES" FORM NOTIFYING THEFIRM THAT HE WOULD BE STARTING EMPLOYMENT WITH THE NATIVEAMERICAN TRIBE AS ITS TREASURY INVESTMENT MANAGER AND WOULDBE RESPONSIBLE FOR MANAGING THE NATIVE AMERICAN TRIBE'SINVESTMENTS, INCLUDING ADVISING THE NATIVE AMERICAN TRIBE'STRIBAL COUNCIL AS TO WHICH INVESTMENTS THE TRIBE SHOULDPURCHASE. NOTWITHSTANDING THESE PROHIBITIONS, AND KNOWINGTHAT TRIBAL LEADERS RELIED UPON HIS RECOMMENDATIONS ASTREASURY INVESTMENT MANAGER, THE REPRESENTATIVERECOMMENDED THE TRIBE INVEST MORE THAN $190 MILLION IN NON-TRADED REITS AND BDCS OVER THE COURSE OF THREE YEARS,GENERATING $11.4 MILLION IN COMMISSIONS FOR THE FIRM, $9.6 MILLIONOF WHICH WAS PAID TO THE REPRESENTATIVE. THE FINDINGS ALSOSTATED THE ONCE THE NATIVE AMERICAN TRIBE BECAME A FIRMCUSTOMER, THE FIRM SHOULD HAVE REVIEWED THE REPRESENTATIVE'SDUAL RELATIONSHIP WITH THE TRIBE AND WHETHER IT CREATED AHEIGHTENED RISK OF MISCONDUCT, GIVEN THE REPRESENTATIVE, FROMTHAT POINT ON, WOULD BE ON BOTH SIDES OF ANY TRANSACTION MADEIN THE TRIBE'S FIRM ACCOUNTS. THE FIRM SHOULD HAVE THENIMPLEMENTED PROCEDURES TO MITIGATE SUCH RISK. AT NO TIME DIDTHE FIRM PERFORM A SUFFICIENT REVIEW OF THE REPRESENTATIVE'SDUAL RELATIONSHIP WITH THE TRIBE OR IMPLEMENT ANY PROCEDURESTO ADDRESS ANY RISKS RELATED TO HIS CONFLICT OF INTEREST. THEFIRM'S SUPERVISORY FAILURES LED IT TO FAIL TO DETECT AND PREVENTTHE REPRESENTATIVE'S FRAUD. THE FINDINGS ALSO INCLUDED THAT THEFIRM FAILED TO ESTABLISH, MAINTAIN AND ENFORCE AN ADEQUATESUPERVISORY SYSTEM AND WRITTEN SUPERVISORY PROCEDURES(WSPS) WITH RESPECT TO THE SALE OF NON-TRADED REITS AND BDCS.THE FIRM DID NOT HAVE PROCEDURES IN PLACE REASONABLY DESIGNEDTO IDENTIFY ACCOUNTS THAT WOULD BE ELIGIBLE FOR VOLUMEDISCOUNTS OR TO ENSURE THE DISCOUNTS WERE PROPERLY APPLIED.THE FIRM FAILED TO TAKE REASONABLE STEPS TO VERIFY THEREPRESENTATIVE'S REPRESENTATIONS THAT THE NATIVE AMERICANTRIBE DID NOT WANT TO TAKE ADVANTAGE OF THE ADDITIONAL VOLUMEDISCOUNTS TO WHICH THE NATIVE AMERICAN TRIBE WAS ELIGIBLE, EVENAFTER THE FOLLOWING RED FLAGS WERE RAISED: 1) AN INQUIRY FROM AREIT ISSUER AS TO WHY THE FIRM HAD NOT REQUESTED A VOLUMEDISCOUNT FOR WHICH THE TRIBE WAS ELIGIBLE; 2) AN INQUIRY FROMFINRA STAFF REGARDING THE FIRM'S PROCEDURES WITH RESPECT TOTHE APPLICATION OF VOLUME DISCOUNTS IN THE SALE OF NON-TRADEDREITS AND BDCS; AND, 3) AN INQUIRY FROM THE TRIBE REGARDING THEREPRESENTATIVE'S COMMISSIONS BASED ON THE TRIBE'S PURCHASE OFNON-TRADED REITS AND BDCS IN ITS FIRM ACCOUNTS. FINRA FOUNDTHAT BECAUSE OF ITS SUPERVISORY DEFICIENCIES THE FIRM FAILED TOIDENTIFY AND APPLY VOLUME DISCOUNTS TO MORE THAN 200 ELIGIBLEPURCHASES OF NON-TRADED REITS AND BDCS MADE BY THE NATIVEAMERICAN TRIBE. AS A RESULT, THE NATIVE AMERICAN TRIBE PAIDEXCESSIVE SALES CHARGES OF MORE THAN $3.3 MILLION.


Allegations: THE FIRM WAS NAMED A RESPONDENT IN A FINRA COMPLAINT ALLEGINGTHAT ITS SUPERVISORY FAILURES PREVENTED IT FROM DETECTING ANDHALTING ITS REGISTERED REPRESENTATIVE'S FRAUDULENT CONDUCT,WHEN THE REPRESENTATIVE, THROUGH THE FIRM, REGULARLY LIED TOHIS CUSTOMER, A NATIVE AMERICAN TRIBE, REGARDING INVESTMENTSHE RECOMMENDED, AND AS A RESULT OF THESE MISREPRESENTATIONSAND OMISSIONS, THE REPRESENTATIVE WILLFULLY VIOLATED SECTION10(B) OF THE SECURITIES EXCHANGE ACT OF 1934 AND RULE 10B-5THEREUNDER AND FINRA RULES 2020 AND 2010. THE COMPLAINTALLEGES THAT IN ADDITION TO SERVING AS THE CUSTOMER'SREGISTERED REPRESENTATIVE, THE REPRESENTATIVE WAS EMPLOYEDBY THE TRIBE AS ITS TREASURY INVESTMENT MANAGER ANDPARTICIPATED IN DECISIONS REGARDING THE TRIBE'S INVESTMENTS. HEFRAUDULENTLY INDUCED THE TRIBE TO INVEST HUNDREDS OF MILLIONSOF DOLLARS IN NON-TRADED REAL ESTATE INVESTMENT TRUSTS (REITS)AND BUSINESS DEVELOPMENT COMPANIES (BDCS), WITHOUT REVEALINGHE AND THE FIRM RECEIVED COMMISSIONS ON THE SALES (USUALLYSEVEN PERCENT) OR THE AVAILABILITY OF CERTAIN VOLUME DISCOUNTS.THE FIRM'S SUPERVISORY FAILURES LED IT TO FAIL TO DETECT ANDPREVENT THE REPRESENTATIVE'S FRAUD. THE REPRESENTATIVE KNEWTHAT HIS CUSTOMER, THE TRIBE, PROHIBITED ITS EMPLOYEES, SUCH ASHIMSELF, FROM ENGAGING IN BUSINESS ACTIVITIES THAT COULDCONSTITUTE A CONFLICT OF INTEREST WITH THE TRIBE, OR THAT COULDIMPAIR AN EMPLOYEE'S ABILITY TO MAKE IMPARTIAL DECISIONS ONBEHALF OF THE TRIBE. NOTWITHSTANDING THESE PROHIBITIONS, ANDKNOWING THAT TRIBAL LEADERS RELIED UPON HIS RECOMMENDATIONSAS TREASURY INVESTMENT MANAGER, HE RECOMMENDED THE TRIBEINVEST MORE THAN $190 MILLION IN NON-TRADED REITS AND BDCS OVERTHE COURSE OF THREE YEARS, GENERATING $11.4 MILLION INCOMMISSIONS FOR THE FIRM, $9.6 MILLION OF WHICH WAS PAID TO HIM.IN ORDER TO INDUCE THE TRIBE TO MAKE THESE PURCHASES,NOTWITHSTANDING THE TRIBE'S PROHIBITIONS AGAINST CONFLICTS OFINTERESTS, THE REPRESENTATIVE FALSELY REPRESENTED TO THE TRIBETHAT HE WOULD NOT RECEIVE ANY COMMISSIONS ON PURCHASES OFTHE NON-TRADED REITS AND BDCS MADE IN THE TRIBE'S ACCOUNTSWITH THE FIRM. THE REPRESENTATIVE ALSO ALLOWED TRIBAL LEADERSTO BELIEVE THE FIRM WOULD NOT RECEIVE ANY COMMISSIONS ONTHESE TRANSACTIONS, EITHER, WHEN HE KNEW OR SHOULD HAVEKNOWN THAT THIS WAS THEIR UNDERSTANDING. THE COMPLAINT ALSOALLEGES THAT THE FIRM'S REPRESENTATIVE ALSO WILLFULLY VIOLATEDSECTION 10(B) OF THE SECURITIES EXCHANGE ACT OF 1934 AND RULE10B-5 THEREUNDER AND FINRA RULES 2020 AND 2010 WHEN HE FAILEDTO DISCLOSE TO THE TRIBE THAT THE TRIBE WAS ELIGIBLE TO RECEIVEVOLUME DISCOUNTS ON ITS NON-TRADED REIT/BDC PURCHASES BASEDUPON THE FACT THAT MULTIPLE TRUST ACCOUNTS OWNED BY THECUSTOMER PURCHASED THE SAME OFFERINGS THROUGH THE FIRM. ASA RESULT, THE TRIBE FAILED TO RECEIVE MORE THAN $3.3 MILLION INVOLUME DISCOUNTS TO WHICH IT WAS ELIGIBLE. ALL OF THESE FUNDS,INSTEAD, WENT TO THE FIRM AND HIM IN THE FORM OF COMMISSIONS TOTHE DETRIMENT OF THE CUSTOMER. THE COMPLAINT FURTHER ALLEGESTHAT AT THE TIME THE TRIBE BECAME THE FIRM'S CUSTOMER, THE FIRMFAILED TO PERFORM AN ADEQUATE REVIEW OF THE REPRESENTATIVE'SDUAL RELATIONSHIP WITH THE TRIBE TO DETERMINE WHETHER THISRELATIONSHIP HEIGHTENED THE RISK OF FRAUDULENT CONDUCT BY HIMTOWARD THE TRIBE. BECAUSE THE FIRM FAILED TO CONDUCT ANADEQUATE REVIEW OF THE RISKS INHERENT TO THE REPRESENTATIVE'SDUAL RELATIONSHIP WITH THE TRIBE, IT LIKEWISE FAILED TO ESTABLISHSUFFICIENT PROCEDURES TO MITIGATE ANY SUCH RISKS. IN ADDITION,THE COMPLAINT ALLEGES THAT THE FIRM FAILED TO HAVE ADEQUATESUPERVISORY SYSTEM AND WSPS IN PLACE TO SUPERVISE THE SALE OFNON-TRADED REITS AND BDCS TO ENSURE THE PROPER APPLICATION OFVOLUME DISCOUNTS. THE FIRM FAILED TO TAKE REASONABLE STEPS TOVERIFY THE REPRESENTATIVE'S REPRESENTATIONS THAT THE TRIBE DIDNOT WANT TO TAKE ADVANTAGE OF THE ADDITIONAL VOLUMEDISCOUNTS TO WHICH IT WAS ELIGIBLE, EVEN AFTER THE RED FLAGSWERE RAISED.













Initiated By: FINRA






Other Product Type(s): NON-TRADED REAL ESTATE INVESTMENT TRUSTS (REITS) AND BUSINESSDEVELOPMENT COMPANIES (BDCS)



Resolution:

Other Sanctions Ordered: RESTITUTION OF $3,373,303.68 PLUS INTEREST; $750,000 FINE

Sanction Details: THE FIRM IS REQUIRED TO RETAIN AN INDEPENDANT CONSULTANTWITHIN 60 DAYS TO CONDUCT A COMPREHENSIVE REVIEW OF THEADEQUACY OF THE FIRM'S POLICIES, SYSTEMS AND PROCEDURES ANDTRAINING RELATING TO (1) REGISTERED REPRESENTATIVES' OUTSIDEBUSINESS ACTIVITIES; AND (2) THE APPLICATION OF VOLUME DISCOUNTSDURING THE SALE OF NON-TRADED REITS AND BDCS.

Sanctions Ordered: CensureMonetary/Fine $4,123,303.68Disgorgement/Restitution

Decision & Order of Offer of Settlement

Disclosure 4 of 7

i








Initiated By: FINRA


Other





Allegations: FINRA RULE 2010, NASD RULES 2110, 3010, 3012: THE FIRM FAILED TOESTABLISH, MAINTAIN AND/OR ENFORCE A SUPERVISORY SYSTEM ANDWRITTEN PROCEDURES THAT WERE REASONABLY DESIGNED TO ACHIEVECOMPLIANCE WITH THE RULES AND REGULATIONS APPLICABLE TO THESUPERVISION AND SUITABILITY OF VARIABLE ANNUITY TRANSACTIONS BY,AMONG OTHER THINGS, FAILING TO REVIEW SUCH TRANSACTIONS ON ATIMELY BASIS, SUPPLY ADEQUATE GUIDANCE TO SUPERVISORS TOEFFECTIVELY REVIEW THE SUITABILITY OF VARIABLE ANNUITYEXCHANGES AND THE SUBACCOUNT AND RIDER RECOMMENDATIONSASSOCIATED WITH VARIABLE ANNUITY SALES, AND IMPLEMENTREASONABLE MEANS OF IDENTIFYING SUSPICIOUS PATTERNS INVOLVINGVARIABLE ANNUITY EXCHANGES, SUCH AS EXCEPTION REPORTS. THEFIRM FURTHER FAILED TO ESTABLISH, MAINTAIN AND ENFORCE WRITTENSUPERVISORY CONTROL POLICIES AND PROCEDURES THAT WEREREASONABLY DESIGNED TO REVIEW AND MONITOR TRANSMITTAL OFCUSTOMER FUNDS. WITH RESPECT TO CERTAIN CUSTOMER CHECKREQUESTS, THE FIRM FAILED TO PROVIDE A MEANS OR METHOD OFCUSTOMER CONFIRMATION, NOTIFICATION, OR FOLLOW UP THAT COULDBE DOCUMENTED. IN ADDITION, THE PROCEDURES DID NOT ADDRESSWHETHER A REGISTERED REPRESENTATIVE WAS ALLOWED TO DELIVERTHE CHECK TO A CLIENT. FURTHER, SINCE THE FIRM DID NOT REQUIRE ACUSTOMER LETTER OF AUTHORIZATION OR COPIES OF DRIVER'SLICENSES FOR CHECK REQUESTS BELOW $25,000, A REGISTEREDREPRESENTATIVE COULD REQUEST THE ISSUANCE OF SUCH CHECKSWITHOUT HAVING TO PROVIDE THE FIRM WITH ANY DOCUMENTATIONINDICATING CUSTOMER APPROVAL OF THE REQUEST.AS A RESULT OF THE FIRM'S DEFICIENT CONTROL POLICIES ANDPROCEDURES CONCERNING THE TRANSMITTAL OF CUSTOMER FUNDS, AFORMER FIRM REGISTERED REPRESENTATIVE WAS ABLE TOMISAPPROPRIATE $41,300 FROM A CUSTOMER BY SUBMITTING THREESEPARATE CHECK REQUEST FORMS FOR THAT CUSTOMER'S ACCOUNT,EACH FOR AMOUNTS UNDER $25,000. MOREOVER, THE FIRM WAS UNABLETO DETERMINE FROM ITS RECORDS THE DATES OF DELIVERY ORRECIPIENTS OF THE CHECKS.









Other


N/A


Resolution:


Sanction Details: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS;THEREFORE THE FIRM IS CENSURED AND FINED $100,000.


No




Allegations: FINRA RULE 2010, NASD RULES 2110, 3010, 3012: THE FIRM FAILED TOESTABLISH, MAINTAIN AND/OR ENFORCE A SUPERVISORY SYSTEM ANDWRITTEN PROCEDURES THAT WERE REASONABLY DESIGNED TO ACHIEVECOMPLIANCE WITH THE RULES AND REGULATIONS APPLICABLE TO THESUPERVISION AND SUITABILITY OF VARIABLE ANNUITY TRANSACTIONS BY,AMONG OTHER THINGS, FAILING TO REVIEW SUCH TRANSACTIONS ON ATIMELY BASIS, SUPPLY ADEQUATE GUIDANCE TO SUPERVISORS TOEFFECTIVELY REVIEW THE SUITABILITY OF VARIABLE ANNUITYEXCHANGES AND THE SUBACCOUNT AND RIDER RECOMMENDATIONSASSOCIATED WITH VARIABLE ANNUITY SALES, AND IMPLEMENTREASONABLE MEANS OF IDENTIFYING SUSPICIOUS PATTERNS INVOLVINGVARIABLE ANNUITY EXCHANGES, SUCH AS EXCEPTION REPORTS. THEFIRM FURTHER FAILED TO ESTABLISH, MAINTAIN AND ENFORCE WRITTENSUPERVISORY CONTROL POLICIES AND PROCEDURES THAT WEREREASONABLY DESIGNED TO REVIEW AND MONITOR TRANSMITTAL OFCUSTOMER FUNDS. WITH RESPECT TO CERTAIN CUSTOMER CHECKREQUESTS, THE FIRM FAILED TO PROVIDE A MEANS OR METHOD OFCUSTOMER CONFIRMATION, NOTIFICATION, OR FOLLOW UP THAT COULDBE DOCUMENTED. IN ADDITION, THE PROCEDURES DID NOT ADDRESSWHETHER A REGISTERED REPRESENTATIVE WAS ALLOWED TO DELIVERTHE CHECK TO A CLIENT. FURTHER, SINCE THE FIRM DID NOT REQUIRE ACUSTOMER LETTER OF AUTHORIZATION OR COPIES OF DRIVER'SLICENSES FOR CHECK REQUESTS BELOW $25,000, A REGISTEREDREPRESENTATIVE COULD REQUEST THE ISSUANCE OF SUCH CHECKSWITHOUT HAVING TO PROVIDE THE FIRM WITH ANY DOCUMENTATIONINDICATING CUSTOMER APPROVAL OF THE REQUEST. AS A RESULT OFTHE FIRM'S DEFICIENT CONTROL POLICIES AND PROCEDURESCONCERNING THE TRANSMITTAL OF CUSTOMER FUNDS, A FORMER FIRMREGISTERED REPRESENTATIVE WAS ABLE TO MISAPPROPRIATE $41,300FROM A CUSTOMER BY SUBMITTING THREE SEPARATE CHECK REQUESTFORMS FOR THAT CUSTOMER'S ACCOUNT, EACH FOR AMOUNTS UNDER$25,000. MOREOVER, THE FIRM WAS UNABLE TO DETERMINE FROM ITSRECORDS THE DATES OF DELIVERY OR RECIPIENTS OF THE CHECKS.







Initiated By: FINRA


Other


N/A





FINRA RULE 2010, NASD RULES 2110, 3010, 3012: THE FIRM FAILED TOESTABLISH, MAINTAIN AND/OR ENFORCE A SUPERVISORY SYSTEM ANDWRITTEN PROCEDURES THAT WERE REASONABLY DESIGNED TO ACHIEVECOMPLIANCE WITH THE RULES AND REGULATIONS APPLICABLE TO THESUPERVISION AND SUITABILITY OF VARIABLE ANNUITY TRANSACTIONS BY,AMONG OTHER THINGS, FAILING TO REVIEW SUCH TRANSACTIONS ON ATIMELY BASIS, SUPPLY ADEQUATE GUIDANCE TO SUPERVISORS TOEFFECTIVELY REVIEW THE SUITABILITY OF VARIABLE ANNUITYEXCHANGES AND THE SUBACCOUNT AND RIDER RECOMMENDATIONSASSOCIATED WITH VARIABLE ANNUITY SALES, AND IMPLEMENTREASONABLE MEANS OF IDENTIFYING SUSPICIOUS PATTERNS INVOLVINGVARIABLE ANNUITY EXCHANGES, SUCH AS EXCEPTION REPORTS. THEFIRM FURTHER FAILED TO ESTABLISH, MAINTAIN AND ENFORCE WRITTENSUPERVISORY CONTROL POLICIES AND PROCEDURES THAT WEREREASONABLY DESIGNED TO REVIEW AND MONITOR TRANSMITTAL OFCUSTOMER FUNDS. WITH RESPECT TO CERTAIN CUSTOMER CHECKREQUESTS, THE FIRM FAILED TO PROVIDE A MEANS OR METHOD OFCUSTOMER CONFIRMATION, NOTIFICATION, OR FOLLOW UP THAT COULDBE DOCUMENTED. IN ADDITION, THE PROCEDURES DID NOT ADDRESSWHETHER A REGISTERED REPRESENTATIVE WAS ALLOWED TO DELIVERTHE CHECK TO A CLIENT. FURTHER, SINCE THE FIRM DID NOT REQUIRE ACUSTOMER LETTER OF AUTHORIZATION OR COPIES OF DRIVER'SLICENSES FOR CHECK REQUESTS BELOW $25,000, A REGISTEREDREPRESENTATIVE COULD REQUEST THE ISSUANCE OF SUCH CHECKSWITHOUT HAVING TO PROVIDE THE FIRM WITH ANY DOCUMENTATIONINDICATING CUSTOMER APPROVAL OF THE REQUEST. AS A RESULT OFTHE FIRM'S DEFICIENT CONTROL POLICIES AND PROCEDURESCONCERNING THE TRANSMITTAL OF CUSTOMER FUNDS, A FORMER FIRMREGISTERED REPRESENTATIVE WAS ABLE TO MISAPPROPRIATE $41,300FROM A CUSTOMER BY SUBMITTING THREE SEPARATE CHECK REQUESTFORMS FOR THAT CUSTOMER'S ACCOUNT, EACH FOR AMOUNTS UNDER$25,000. MOREOVER, THE FIRM WAS UNABLE TO DETERMINE FROM ITSRECORDS THE DATES OF DELIVERY OR RECIPIENTS OF THE CHECKS.


Resolution:


Sanction Details: WITHOUT ADMITTING OR DENYING THE FINDINGS THE FIRM CONSENTEDTO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS;THEREFORE THE FIRM IS CENSURED AND FINED $100,000.



Disclosure 5 of 7

i


Allegations: RESPONDENT HAS BEEN OPERATING BRANCH OFFICES IN THE STATE OFNEVADA, STARTING IN JANUARY 2009, WITHOUT OBTAINING A LICENSEFOR THE BRANCH OFFICE FROM THE DIVISION;








Initiated By: NEVADA


Civil and Administrative Penalt(ies) /Fine(s)


INSPECTION COSTS


Docket/Case Number: I09-231-BLM

URL for Regulatory Action:



Allegations: RESPONDENT HAS BEEN OPERATING BRANCH OFFICES IN THE STATE OFNEVADA, STARTING IN JANUARY 2009, WITHOUT OBTAINING A LICENSEFOR THE BRANCH OFFICE FROM THE DIVISION;


Resolution:

Other Sanctions Ordered: INSPECTION COSTS OF $1,000

Sanction Details: FINE AND FEES PAID IN FULL 05/15/10

Regulator Statement CONTACT THE STATE OF NEVADA WITH ANY QUESTIONS


No


Consent


Initiated By: NEVADA



Allegations: RESPONDENT HAS BEEN OPERATING BRANCH OFFICES IN THE STATE OFNEVADA, STARTING IN JANUARY 2009, WITHOUT OBTAINING A LICENSEFOR THE BRANCH OFFICE FROM THE DIVISION.










INSPECTION COSTS





Resolution:

Other Sanctions Ordered: INSPECTION COSTS OF $1000

Sanction Details: FINE AND FEES PAID IN FULL 5/5/10


Consent

Disclosure 6 of 7

i


Initiated By: FINRA




Principal Product Type: Mutual Fund(s)


Allegations: NASD RULES 2110 AND 3010: RESPONDENT FIRM, ACTING THROUGH ANINDIVIDUAL, FAILED TO ESTABLISH, MAINTAIN AND/OR ENFORCESUPERVISORY SYSTEM AND WRITTEN PROCEDURES REASONABLYDESIGNED TO ACHIEVE COMPLIANCE WITH FEDERAL SECURITIES LAWSAND REGULATIONS AND NASD RULES: FAILED TO ESTABLISHREASONABLE PROCEDURES CONCERNING SUITABILITY REVIEWS OFCUSTOMER MUTUAL FUND TRANSACTIONS; FAILED TO ENFORCE THEFIRM'S WRITTEN PROCEDURES REQUIRING ITS COMPLIANCEDEPARTMENT TO PERFORM SUITABILITY REVIEWS OF MUTUAL FUNDSWITCHES AND OBTAIN EXECUTED SWITCH LETTERS FROM CUSTOMERS;FAILED TO ENFORCE WRITTEN PROCEDURES PROVIDING FOR SPECIALSUPERVISION OF RR AFTER CUSTOMERS FILED COMPLAINTS.











Resolution:


Sanction Details: WITHOUT ADMITTING OR DENYING THE FINDINGS, RESPONDENT MEMBERFIRM CONSENTED TO THE DESCRIBED SANCTIONS AND TO THE ENTRY OFFINDINGS; THEREFORE, FIRM IS CENSURED AND FINED $50,000 JOINTLYAND SEVERALLY.


No




Initiated By: FINRA




Allegations: NASD RULES 2110 AND 3010; RESPONDENT, ACTING ON BEHALF OF HISMEMBER FIRM, FAILED TO ESTABLISH, MAINTAIN AND/OR ENFORCESUPERVISORY SYSTEM AND WRITTEN PROCEDURES REASONABLYDESIGNED TO ACHIEVE COMPLIANCE WITH FEDERAL SECURITIES LAWSAND REGULATIONS AND NASD RULES; FAILED TO ESTABLISHREASONABLE PROCEDURES CONCERNING SUITABILITY REVIEWS OFCUSTOMER MUTUAL FUND TRANSACTIONS; FAILED TO ENFORCE THEFIRM'S WRITTEN PROCEDURES REQUIRING ITS COMPLIANCEDEPARTMENT TO PERFORM SUITABILITY REVIEWS OF MUTUAL FUNDSWITCHES AND OBTAIN EXECUTED SWITCH LETTERS FROM CUSTOMERS;FAILED TO ENFORCE WRITTEN PROCEDURES PROVIDING FOR SPECIALSUPERVISION OF RR AFTER CUSTOMERS FILED COMPLAINTS.













Resolution:


Sanction Details: WITHOUT ADMITTING OR DENYING THE FINDINGS, RESPONDENTCONSENTED TO THE DESCRIBED SANCTIONS AND TO THE ENTRY OFFINDINGS; THEREFORE, HE IS FINED $50,000 JOINTLY AND SEVERALLY,AND SUSPENDED FROM ASSOCIATION WITH ANY FINRA MEMBER IN ANYPRINCIPAL CAPACITY FOR 30 DAYS. THE SUSPENSION IN ANY PRINCIPALCAPACITY WILL BE IN EFFECT FROM FEBRUARY 4, 2008, THROUGH MARCH4, 2008.

Sanctions Ordered: CensureMonetary/Fine $50,000.00Suspension


Disclosure 7 of 7

i


Initiated By: NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.




Docket/Case Number: C11010032



Allegations: NASD RULES 1031 AND 2110 - RESPONDENT MEMBER FIRM PERMITTED ANINDIVIDUAL TO CONDUCT A SECURITIES BUSINESS WHILE HE WASINACTIVE FOR FAILING TO SATISFY THE REGULATORY ELEMENT.








Resolution:


Sanction Details: FINED $2,500.00.




Initiated By: NATIONAL ASSOCIATION OF SECURITIES DEALERS





Docket/Case Number: C11010032



Allegations: THAT PKS ALLOWED REGISTERED REP (DEL BROCCO) TO CONDUCT ASECURITIES BUSINESS WHILE HE WAS INACTIVE FOR FAILING TO SATISFYTHE CONTINUING EDUCATION REGULATORY ELEMENT.



Resolution:


Sanction Details: PKS SIGNED AN AWC CONSENTING TO FINDINGS THAT IT ALLOWED DELBROCCO TO CONDUCT SECURITIES BUSINESS WHILE HE WAS INACTIVEFOR FAILURE TO COMPLETE HIS CONTINUING EDUCATION REGULATORYELEMENT REQUIREMENTS. PKS WAS ALSO FINED $2500.00.








Arbitration Award - Award / Judgment

Brokerage firms are not required to report arbitration claims filed against them by customers; however, BrokerCheckprovides summary information regarding FINRA arbitration awards involving securities and commodities disputesbetween public customers and registered securities firms in this section of the report. The full text of arbitration awards issued by FINRA is available at www.finra.org/awardsonline.

Disclosure 1 of 2


Type of Event: ARBITRATION

Arbitration Forum:

Case Initiated:

Case Number:

Allegations:

Disputed Product Type:

Sum of All Relief Requested:

Disposition:

Disposition Date:

Sum of All Relief Awarded:

NASD

04/11/2005

05-01834

ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT RELATED-BREACH OF CONTRACT;ACCOUNT RELATED-NEGLIGENCE

DO NOT USE-NO OTHER TYPE OF SEC INVOLVE; UNKNOWN TYPE OFSECURITIES

$850,000.00

AWARD AGAINST PARTY

06/22/2006

$299,545.01

There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.

Disclosure 2 of 2

i


Type of Event: ARBITRATION

Arbitration Forum:

Case Initiated:

Case Number:

Allegations:


NASD

05/07/1999

99-01658

ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-CHURNING; ACCOUNT ACTIVITY-OTHER; ACCOUNT ACTIVITY-SUITABILITY

DO NOT USE-NO OTHER TYPE OF SEC INVOLVE; UNKNOWN TYPE OFSECURITIES 37©2018 FINRA. All rights reserved. Report about PURSHE KAPLAN STERLING INVESTMENTS




www.finra.org/awardsonline

https://www.finra.org/arbitration-and-mediation/arbitration-awards-online?search=05-01834

https://www.finra.org/arbitration-and-mediation/arbitration-awards-online?search=99-01658



Sum of All Relief Requested:

Disposition:

Disposition Date:

Sum of All Relief Awarded:

DO NOT USE-NO OTHER TYPE OF SEC INVOLVE; UNKNOWN TYPE OFSECURITIES

$208,943.00

AWARD AGAINST PARTY

07/05/2000

$55,520.00

There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.






End of Report

This page is intentionally left blank.





Date post:	31-Mar-2018
Category:	Documents
Upload:	vunguyet
View:	212 times
Download:	0 times

PURSHE KAPLAN STERLING INVESTMENTS - FINRA · PDF fileDoing business as PURSHE KAPLAN STERLING...

Documents