ROYAL ALLIANCE ASSOCIATES, INC.ROYAL ALLIANCE ASSOCIATES, INC. CRD# 23131 SEC# 8-40218 Main Office...

BrokerCheck Report

ROYAL ALLIANCE ASSOCIATES, INC.

Section Title

Report Summary

Firm History

CRD# 23131

1

15

Firm Profile 2 - 14

Page(s)

Firm Operations 16 - 32

Disclosure Events 33

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ROYAL ALLIANCE ASSOCIATES,INC.

CRD# 23131

SEC# 8-40218

Main Office Location

10 EXCHANGE PLACESUITE 1410JERSEY CITY, NJ 07302Regulated by FINRA Woodbridge Office

Mailing Address

10 EXCHANGE PLACESUITE 1410JERSEY CITY, NJ 07302

This firm is a brokerage firm and an investmentadviser firm. For more information aboutinvestment adviser firms, visit the SEC'sInvestment Adviser Public Disclosure website at:

Business Telephone Number

800-821-5100

https://www.adviserinfo.sec.gov

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 41

Arbitration 29

Bond 7

Firm Profile

This firm is classified as a corporation.

This firm was formed in Delaware on 08/05/1988.

Its fiscal year ends in December.

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 15 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©2020 FINRA. All rights reserved. Report about ROYAL ALLIANCE ASSOCIATES, INC.

https://adviserinfo.sec.gov/firm/summary/23131


http://www.finra.org/brokercheck

http://www.finra.org/brokercheck_reports


This firm is classified as a corporation.

This firm was formed in Delaware on 08/05/1988.

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 December.

ROYAL ALLIANCE ASSOCIATES, INC.

SEC#

23131

8-40218

Main Office Location

Mailing Address

Business Telephone Number

Doing business as ROYAL ALLIANCE ASSOCIATES, INC.

800-821-5100

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?

ADVISOR GROUP, INC.

SHAREHOLDER

75% or more

No

Domestic Entity

01/2004

Yes

Is this a domestic or foreignentity or an individual?

Legal Name & CRD# (if any):

Position



Position Start Date


GOLDIN, DMITRY NMN

DIRECTOR, CHIEF EXECUTIVE OFFICER, PRESIDENT

Less than 5%

No

Individual

01/2014

Yes

3011313



Position


Position Start Date

GULDNER, ROBERT JOHN

CHIEF COMPLIANCE OFFICER, INVESTMENT ADVISORY

Less than 5%

Individual

08/2014

2283980








Direct Owners and Executive Officers (continued)

Firm Profile




Less than 5%

No

No

Position



Position Start Date


HAMEL, CYNTHIA ANN

CHIEF OPERATIONS OFFICER, EVP

Less than 5%

No

Individual

05/2017

Yes

3014361



Position



Position Start Date


PRICE, JAMES DALE

CHAIRMAN, DIRECTOR

Less than 5%

No

Individual

11/2016

Yes

1243224



SACCA, JUSTIN IVES

4043711








Firm Profile

Position



Position Start Date


VICE PRESIDENT, CHIEF COMPLIANCE OFFICER

Less than 5%

No

Individual

05/2014

No

4043711


Position



Position Start Date


SCHLUETER, MATTHEW ADAM

DIRECTOR, EVP

Less than 5%

No

Individual

03/2019

Yes

2627931



Position


Position Start Date


SCHMIDT, DAVID MARTIN

PRINCIPAL FINANCIAL OFFICER, PRINCIPAL OPERATIONS OFFICER,TREASURER AND FNOP

Less than 5%

Individual

03/2017

No

5675524









Firm Profile



No

No

Position



Position Start Date


SIDLO, THOMAS BLAKE

MUNICIPAL PRINCIPAL

Less than 5%

No

Individual

01/2016

No

1012276








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

Indirect Owners

Firm Profile

ADVISOR GROUP HOLDINGS, INC.

SHAREHOLDER

ADVISOR GROUP, INC.

75% or more

No

Domestic Entity

05/2016

Yes



Company through whichindirect ownership isestablished

Relationship to Direct Owner

Relationship Established




AG ARTEMIS HOLDINGS,L.P.

SHAREHOLDER

AG INTERMEDIATE CORPORATION

75% or more

No

Domestic Entity

08/2019

Yes









AG INTERMEDIATE CORPORATION

AG PARENT CORPORATION

Domestic Entity









Indirect Owners (continued)

Firm Profile

SHAREHOLDER


75% or more

No

08/2019

Yes








SHAREHOLDER

ADVISOR GROUP HOLDINGS, INC.

75% or more

No

Domestic Entity

08/2019

Yes









RCP ARTEMIS CO-INVEST, L.P.

LIMITED PARTNER

AG ARTEMIS HOLDINGS, L.P.

75% or more

Foreign Entity

08/2019






Percentage of Ownership8©2020 FINRA. All rights reserved. Report about ROYAL ALLIANCE ASSOCIATES, INC.






Firm Profile

75% or more

No

Yes




RCP GENPAR HOLDCO LLC

LIMITED PARTNER

RCP GENPAR LP

75% or more

No

Domestic Entity

08/2014

Yes









RCP GENPAR LP

LIMITED PARTNER

RCP OPP FUND II GP, LP

75% or more

No

Domestic Entity

01/2018

Yes















Firm Profile

NoIs this a public reportingcompany?

THE BERLINSKI FAMILY 2006 TRUST

MEMBER

MRB ICBC LLC

75% or more

No

Domestic Entity

08/2014

Yes









BERLINSKI, MILTON RALPH

TRUSTEE

THE BERLINSKI FAMILY 2006 TRUST

25% but less than 50%

No

Individual

06/2006

Yes

1710939










Individual

1710939









Firm Profile

MEMBER



No

Individual

08/2014

Yes








MRB ICBC LLC

MEMBER



No

Domestic Entity

08/2014

Yes









AG ARTEMIS HOLDINGS GP, LLC

GENERAL PARTNER


Domestic Entity




Relationship to Direct Owner11©2020 FINRA. All rights reserved. Report about ROYAL ALLIANCE ASSOCIATES, INC.






Firm Profile

GENERAL PARTNER

Other General Partners

No

05/2019

Yes







GENERAL PARTNER

RCP GENPAR LP


No

Individual

08/2014

Yes

1710939










GENERAL PARTNER



Individual

01/2018

1710939






Percentage of Ownership12©2020 FINRA. All rights reserved. Report about ROYAL ALLIANCE ASSOCIATES, INC.






Firm Profile


No

Yes





INVESTMENT MEMBER

MRB ICBC LLC


No

Individual

08/2014

Yes

1710939









RCP ARTEMIS CO-INVEST GP LLC

GENERAL PARTNER

RCP ARTEMIS CO-INVEST, L.P.


No

Domestic Entity

05/2019

Yes















Firm Profile

NoIs this a public reportingcompany?


MEMBER

RCP ARTEMIS CO-INVEST GP LLC


No

Domestic Entity

05/2019

Yes










GENERAL PARTNER



No

Domestic Entity

05/2019

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 10/21/1988

Self-Regulatory Organization Status Date Effective

FINRA Approved 07/10/1989






Firm Operations

Registrations (continued)

U.S. States &Territories

Status Date Effective

Alabama Approved 07/27/1989

Alaska Approved 07/10/1989

Arizona Approved 11/21/1989

Arkansas Approved 11/20/1989

California Approved 07/19/1989

Colorado Approved 07/10/1989

Connecticut Approved 07/24/1989

Delaware Approved 08/04/1989

District of Columbia Approved 04/28/1989

Florida Approved 08/08/1989

Georgia Approved 07/21/1989

Hawaii Approved 06/01/1989

Idaho Approved 07/12/1989

Illinois Approved 08/24/1989

Indiana Approved 08/28/1989

Iowa Approved 10/18/1989

Kansas Approved 07/11/1989

Kentucky Approved 06/20/1989

Louisiana Approved 11/16/1989

Maine Approved 06/08/1989

Maryland Approved 07/20/1989

Massachusetts Approved 07/20/1989

Michigan Approved 12/06/1989

Minnesota Approved 06/07/1989

Mississippi Approved 04/19/1989

Missouri Approved 04/11/1989

Montana Approved 07/11/1989

Nebraska Approved 08/04/1989

Nevada Approved 04/10/1989

New Hampshire Approved 03/22/1989

New Jersey Approved 05/01/1989

New Mexico Approved 08/18/1989

New York Approved 04/27/1989

U.S. States &Territories

Status Date Effective

North Carolina Approved 07/11/1989

North Dakota Approved 10/17/1989

Ohio Approved 05/10/1989

Oklahoma Approved 07/25/1989

Oregon Approved 10/10/1989

Pennsylvania Approved 07/17/1989

Puerto Rico Approved 04/06/1990

Rhode Island Approved 07/12/1989

South Carolina Approved 07/26/1989

South Dakota Approved 07/27/1989

Tennessee Approved 11/20/1989

Texas Approved 03/24/1989

Utah Approved 06/16/1989

Vermont Approved 08/07/1989

Virginia Approved 03/24/1989

Washington Approved 07/12/1989

West Virginia Approved 07/12/1989

Wisconsin Approved 08/02/1989

Wyoming Approved 10/23/1989






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.

This firm currently conducts 15 types of businesses.

Types of Business

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

Mutual fund retailer

U S. government securities broker

Municipal securities dealer

Municipal securities broker

Broker or dealer selling variable life insurance or annuities

Solicitor of time deposits in a financial institution

Broker or dealer selling oil and gas interests

Put and call broker or dealer or option writer

Investment advisory services

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

Non-exchange member arranging for transactions in listed securities by exchange member

Private placements of securities

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

Broker or dealer involved in a networking, kiosk or similar arrangment with a: insurance company or agency






Firm Operations

Clearing Arrangements

This firm does 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: PERSHING LLC

Business Address: ONE PERSHING PLAZAJERSEY CITY, NJ 07399

CRD #: 7560

Effective Date: 12/01/1990

Description: FULLY DISCLOSED CLEARING ARRANGEMENT WITH PERSHING,DIVISION OF DONALDSON, LUFKIN AND JENRETTE CORPORATION, ONEPERSHING PLAZA, JERSEY CITY, NJ 07399.

Name: NATIONAL FINANCIAL SERVICES LLC

Business Address: 155 SEAPORT BLVD2W9BBOSTON, MA 02210

CRD #: 13041


Description: APPLICANT MAINTAINS A FULLY DISCLOSED CLEARING AGREEMENTWITH NATIONAL FINANCIAL SERVICES LLC.






Firm Operations

Industry Arrangements

This firm does have books or records maintained by a third party.

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


Business Address: 155 SEAPORT BLVD.ZW9BBOSTON, MA 02210

CRD #: 13041



Name: PERSHING LLC


CRD #: 7560





CRD #: 13041



Name: PERSHING LLC


CRD #: 7560







Firm Operations

Industry Arrangements (continued)

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




CRD #: 13041



Name: PERSHING LLC


CRD #: 7560








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.

Yes

No

No

02/14/2020

4401 BISCAYNE BLVD.MIAMI, FL 33138

109011

INVESTACORP ADVISORY SERVICES INC is under common control with the firm.

APPLICANT AND INVESTACORP ADVISORY SERVICES ARE UNDERCOMMON CONTROL OF ADVISOR GROUP HOLDING, INC.

Description:

Investment AdvisoryActivities:

Securities Activities:

Country:

Foreign Entity:

Effective Date:

Business Address:

CRD #:

Yes

Yes

No

02/14/2020

5185 PEACHTREE PARKWAYSUITE 2801NORCROSS, GA 33092

25803

TRIAD ADVISORS LLC is under common control with the firm.

APPLICANT AND TRAID ADVISORS LLC ARE UNDER COMMON CONTROL OFADVISOR GROUP HOLDINGS, INC.

Description:



Country:

Foreign Entity:

Effective Date:

Business Address:

CRD #:






Firm Operations

Organization Affiliates (continued)APPLICANT AND TRAID ADVISORS LLC ARE UNDER COMMON CONTROL OFADVISOR GROUP HOLDINGS, INC.

Description:

Yes

No

No

02/14/2020

9729 COGDILL RDSUITE 302KNOXVILLE, TN 37932

126090

SSN ADVISORY, INC. is under common control with the firm.

APPLICANT AND SSN ADVISORY, INC. ARE UNDER COMMON CONTROL OFADVISOR GROUP HOLDINGS, INC.

Description:



Country:

Foreign Entity:

Effective Date:

Business Address:

CRD #:

No

Yes

No

02/14/2020

9729 COGDILL RDSUITE 301KNOXVILLE, TN 37932

13318

SECURITIES SERVICE NETWORK, LLC is under common control with the firm.

APPLICANT AND SECURITIES SERVICE NETWORK, LLC. ARE UNDER THECOMMON CONTROL OF ADVISOR GROUP HOLDINGS, INC.

Description:



Country:

Foreign Entity:

Effective Date:

Business Address:

CRD #:

02/14/2020

520 MADISON AVENUE9TH FLNEW YORK, NY 10023

LADENBURG THALMANN ALTERNATIVE, INC. is under common control with the firm.

Effective Date:

Business Address:






Firm Operations

Organization Affiliates (continued)

No

Yes

No

02/14/2020

APPLICANT AND LADENBURG THALMANN ALTERNATIVE, INC. ARE UNDERCOMMON CONTROL OF ADVISOR GROUP HOLDINGS, INC.

Description:



Country:

Foreign Entity:

Effective Date:

No

Yes

No

02/14/2020


505

LADENBURG THALMANN & CO. INC. is under common control with the firm.

APPLICANT AND LADENBURG THALMANN & CO. ARE UNDER COMMONCONTROL OF ADVISOR GROUP HOLDINGS, INC.

Description:



Country:

Foreign Entity:

Effective Date:

Business Address:

CRD #:

Yes

Yes

No

02/14/2020

2001 SIXTH AVENUESUITE 2801SEATTLE, WA 98121

3866

KMS FINANCIAL SERVICES, INC. is under common control with the firm.



Country:

Foreign Entity:

Effective Date:

Business Address:

CRD #:






Firm Operations


Yes

APPLICANT AND KMS FINANCIAL SERVICES, INC. ARE UNDER COMMONCONTROL OF ADVISOR GROUP HOLDINGS, INC.

Description:


No

Yes

No

02/14/2020

12325 PORT GRACE BLVDLA VISTA, NE 68128

10205

SECURITIES AMERICA, INC. is under common control with the firm.

APPLICANT AND SECURITIES AMERICA, INC. ARE UNDER COMMONCONTROL OF ADVISOR GROUP HOLDINGS, INC.

Description:



Country:

Foreign Entity:

Effective Date:

Business Address:

CRD #:

Yes

No

No

02/14/2020

12325 PORT GRACE BLVDLA VISTA, NE 68128

110518

SECURITIES AMERICA ADVISORS, INC. is under common control with the firm.

APPLICANT AND SECURITIES AMERICA ADVISORS, INC. ARE UNDERCOMMON CONTROL OF ADVISOR GROUP HOLDINGS, INC.

Description:



Country:

Foreign Entity:

Effective Date:

Business Address:

CRD #:


108604

LADENBURG THALMANN ASSET MANAGEMENT INC is under common control with the firm.

Business Address:

CRD #:






Firm Operations


Yes

No

No

02/14/2020


APPLICANT AND LADENBURG THALMANN ASSET MANAGEMENT, INC AREUNDER COMMON CONTROL OF ADVISOR GROUP HOLDINGS, INC.

Description:



Country:

Foreign Entity:

Effective Date:

Business Address:

No

Yes

No

02/14/2020

20 EAST THOMAS RDSUITE 2000PHOENIX, AZ 85012

AG ARTEMIS HOLDINGS GP, LLC controls the firm.

RCP ARTEMIS CO-INVEST GP LLC INDIRECTLY CONTROLS THE APPLICANT.Description:



Country:

Foreign Entity:

Effective Date:

Business Address:

Yes

No

No

02/14/2020

5155 PREACHTREE PARKWAYSUITE 3230NORCROSS, GA 33093

171070

TRIAD HYBRID SOLUTIONS, LLC is under common control with the firm.



Country:

Foreign Entity:

Effective Date:

Business Address:

CRD #:






Firm Operations


Yes

APPLICANT AND TRIAD HYBRID SOLUTIONS, LLC ARE UNDER COMMONCONTROL OF ADVISOR GROUP HOLDINGS, INC.

Description:


No

Yes

No

02/14/2020

10 E. 53RD STNEW YORK, NY 10022

THE BERLINSKI FAMILY 2006 TRUST controls the firm.

THE BERLINSKI FAMILY 2006 TRUST INDIRECTLY CONTROLS THEAPPLICANT.

Description:



Country:

Foreign Entity:

Effective Date:

Business Address:

No

Yes

No

02/14/2020


MRB ICBC LLC controls the firm.

MRB ICBC LLC INDIRECTLY CONTROLS THE APPLICANT.Description:



Country:

Foreign Entity:

Effective Date:

Business Address:

No

02/14/2020


RCP GENPAR LP controls the firm.

Country:

Foreign Entity:

Effective Date:

Business Address:






Firm Operations


No

Yes

RCP GENPAR LP INDIRECTLY CONTROLS THE APPLICANT.Description:



Country:

No

Yes

No

02/14/2020


RCP OPP FUND II GP, LP controls the firm.

RCP OPP FUND II GP, LP INDIRECTLY CONTROLS THE APPLICANT.Description:



Country:

Foreign Entity:

Effective Date:

Business Address:

No

Yes

No

02/14/2020


RCP GENPAR HOLDCO LLC controls the firm.

RCP GENPAR HOLDCO LLC INDIRECTLY CONTROLS THE APPLICANT.Description:



Country:

Foreign Entity:

Effective Date:

Business Address:

No

02/14/2020


RCP ARTEMIS CO-INVEST GP LLC controls the firm.

Foreign Entity:

Effective Date:

Business Address:






Firm Operations


No

Yes

RCP ARTEMIS CO-INVEST GP LLC INDIRECTLY CONTROLS THE APPLICANT.Description:



Country:

No

Yes

No

08/01/2019

20 EAST THOMAS ROADSUITE 2000PHOENIX, AZ 85012

AG PARENT CORPORATION controls the firm.

AG PARENT CORPORATION INDIRECTLY CONTROLS THE APPLICANT.Description:



Country:

Foreign Entity:

Effective Date:

Business Address:

No

Yes

No

08/01/2019


AG INTERMEDIATE CORPORATION controls the firm.

AG INTERMEDIATE CORPORATION INDIRECTLY CONTROLS THEAPPLICANT.

Description:



Country:

Foreign Entity:

Effective Date:

Business Address:

UGLAND HOUSE, SOUTH CHURCH STREETP O BOX 309GRAND CAYMAN, CAYMAN ISLANDS KY1-1104

RCP ARTEMIS CO-INVEST, L.P. controls the firm.

Business Address:






Firm Operations


Yes

No

CAYMAN ISLANDS

Yes

07/31/2019

UGLAND HOUSE, SOUTH CHURCH STREETP O BOX 309GRAND CAYMAN, CAYMAN ISLANDS KY1-1104

RCP ARTEMIS CO-INVEST, L.P. INDIRECTLY CONTROLS THE APPLICANT.Description:



Country:

Foreign Entity:

Effective Date:

Yes

Yes

No

12/01/2012

7755 3RD STREET NORTHOAKDALE, MN 55128

421

WOODBURY FINANCIAL SERVICES, INC. is under common control with the firm.

THE APPLICANT AND THE AFFILIATE ARE UNDER COMMON CONTROL OFRCP ARTEMIS CO-INVEST, L.P.

Description:



Country:

Foreign Entity:

Effective Date:

Business Address:

CRD #:

Yes

No

No

06/21/2010


154149

VISION2020 WEALTH MANAGEMENT CORP. is under common control with the firm.



Country:

Foreign Entity:

Effective Date:

Business Address:

CRD #:






Firm Operations


Yes


Description:


Yes

Yes

No

10/12/2014


133763

SAGEPOINT FINANCIAL, INC. is under common control with the firm.


Description:



Country:

Foreign Entity:

Effective Date:

Business Address:

CRD #:

Yes

Yes

No

01/01/1999

2300 WINDY RIDGE PARKWAYSUITE 750NATLANTA, GA 30339

7461

FSC SECURITIES CORPORATION is under common control with the firm.


Description:



Country:

Foreign Entity:

Effective Date:

Business Address:

CRD #:

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






Firm Operations


· 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 41 0

Arbitration N/A 29 N/A

Bond N/A 7 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 41

Reporting Source: Regulator

Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT FAILED TOENFORCE ITS PROCEDURES OR, IN CERTAIN INSTANCES, RESPONDREASONABLY TO RED FLAGS OF POTENTIAL MISCONDUCT INPROCESSING WIRE TRANSFERS AND CHECK REQUESTS THROUGHWHICH THEFTS WERE PERPETRATED. THE FINDINGS STATED THAT TWOOF THE FIRM'S REGISTERED REPRESENTATIVES, ACTING INDEPENDENTLYOF EACH OTHER, STOLE A TOTAL OF MORE THAN $3,800,000 FROM FOURCUSTOMERS. THE FIRM HAS COMPENSATED ALL OF THE CUSTOMERSADDRESSED IN THE AWC.

Current Status: Final






Initiated By: FINRA

Principal Sanction(s)/ReliefSought:

Other Sanction(s)/ReliefSought:

Date Initiated: 01/16/2020

Docket/Case Number: 2017056769402

Principal Product Type: No Product

Other Product Type(s):

Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT FAILED TOENFORCE ITS PROCEDURES OR, IN CERTAIN INSTANCES, RESPONDREASONABLY TO RED FLAGS OF POTENTIAL MISCONDUCT INPROCESSING WIRE TRANSFERS AND CHECK REQUESTS THROUGHWHICH THEFTS WERE PERPETRATED. THE FINDINGS STATED THAT TWOOF THE FIRM'S REGISTERED REPRESENTATIVES, ACTING INDEPENDENTLYOF EACH OTHER, STOLE A TOTAL OF MORE THAN $3,800,000 FROM FOURCUSTOMERS. THE FIRM HAS COMPENSATED ALL OF THE CUSTOMERSADDRESSED IN THE AWC.

Resolution Date: 01/16/2020

Resolution:

Other Sanctions Ordered: UNDERTAKING

Sanction Details: THE FIRM WAS CENSURED, FINED $400,000 AND REQUIRED TO CERTIFYTO FINRA THAT IT HAS ESTABLISHED AND IMPLEMENTED POLICIES,PROCEDURES, AND INTERNAL CONTROLS REASONABLY DESIGNED TOADDRESS AND REMEDIATE THE ISSUES IDENTIFIED IN THE AWC. FINE PAIDIN FULL ON 2/10/2020.

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

No

Sanctions Ordered: CensureMonetary/Fine $400,000.00

Acceptance, Waiver & Consent(AWC)

iReporting Source: Firm





https://www.finra.org/rules-guidance/oversight-enforcement/finra-disciplinary-actions?search=2017056769402


Initiated By: FINRA


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


CENSURE


Docket/Case Number: CASE NO. 2017056769402



Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT FAILED TOENFORCE ITS PROCEDURES OR, IN CERTAIN INSTANCES, RESPONDREASONABLY TO INDICATIONS OF POTENTIAL MISCONDUCT INPROCESSING WIRE TRANSFERS AND CHECK REQUESTS THROUGHWHICH MISAPPROPRIATIONS/CONVERSIONS WERE COMMITTED. THEFINDINGS STATED THAT TWO OF THE FIRM'S REGISTEREDREPRESENTATIVES MISAPPROPRIATED FUNDS FROM FOUR CUSTOMERS.THE FIRM HAS COMPENSATED ALL CUSTOMERS ADDRESSED IN THEORDER.



Resolution:


Sanction Details: THE FIRM WAS CENSURED, FINED $400,000 AND CERTIFIED TO FINRA THATIT HAS ESTABLISHED AND IMPLEMENTED POLICIES, PROCEDURES ANDINTERNAL CONTROLS REASONABLY DESIGNED TO ADDRESS ANDREMEDIATE THE ISSUES IDENTIFIED IN THE ORDER.



Disclosure 2 of 41

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Allegations: DURING THE RELEVANT PERIOD, ROYAL ALLIANCE'S WRITTEN POLICIESAND PROCEDURES REGARDING FEDERAL FUND WIRES AND STANDINGINSTRUCTIONS CONSTITUTED A FAILURE TO REASONABLY SUPERVISE.







Initiated By: NEW JERSEY BUREAU OF SECURITIES





Docket/Case Number: N/A

URL for Regulatory Action: HTTPS://WWW.NJCONSUMERAFFAIRS.GOV/ACTIONS/ROYAL_ALLIANCE_CONSENT_19DEC2019.PDF



DURING THE RELEVANT PERIOD, ROYAL ALLIANCE'S WRITTEN POLICIESAND PROCEDURES REGARDING FEDERAL FUND WIRES AND STANDINGINSTRUCTIONS CONSTITUTED A FAILURE TO REASONABLY SUPERVISE.


Resolution:

Other Sanctions Ordered: ROYAL ALLIANCE SHALL REVIEW AND REVISE AS NECESSARY (TO THEEXTENT IT HAS NOT DONE SO ALREADY), ITS WRITTEN POLICIES ANDPROCEDURES REGARDING FEDERAL FUND WIRES AND STANDINGINSTRUCTIONS, SO THAT THEY ARE REASONABLY DESIGNED TO PREVENTTHE TYPE OF CONDUCT DESCRIBED IN THIS CONSENT ORDER FROMOCCURRING IN THE FUTURE.

Sanction Details: ROYAL ALLIANCE SHALL PAY TWO HUNDRED AND FIFTY THOUSANDDOLLARS ($250,000) TO THE BUREAU UPON EXECUTION OF THISCONSENT ORDER AS FOLLOWS:A. ROYAL ALLIANCE IS ASSESSED A CIVIL MONETARY PENALTY IN THEAMOUNT OF ONE HUNDRED NINETY THOUSAND DOLLARS ($190,000);B. ROYAL ALLIANCE IS ASSESSED THIRTY THOUSAND DOLLARS ($30,000)IN COSTS; ANDC. ROYAL ALLIANCE SHALL PAY THIRTY THOUSAND DOLLARS ($30,000)WHICH SHALL BE PLACED IN A FUND TO BE USED FOR THE BUREAU'SINVESTOR EDUCATION PROGRAM.

Regulator Statement ROYAL ALLIANCE'S POLICIES AND PROCEDURES PROHIBITED THIRD-PARTY WIRE TRANSFERS, EXCEPT IN LIMITED CIRCUMSTANCES - OR WITHAPPROVAL OF THE ANTI-MONEY LAUNDERING ("AML") DEPARTMENT. INPRACTICE, HOWEVER, IN CONNECTION WITH WIRE TRANSFERS FROM ACUSTOMER'S ACCOUNT, THE CASHIERINGDEPARTMENT TREATED THIRD-PARTY TRANSFER REQUESTS TO OUTSIDEACCOUNTS IDENTIFIED AS "FBO" THE CLIENT AS EITHER A FIRST PARTYTRANSFER OR A PERMISSIBLE THIRD-PARTY WIRE TRANSFER.ADDITIONALLY, AT THAT TIME, IF A CUSTOMER HAD A STANDING WIREINSTRUCTION TO A SPECIFIC ACCOUNT, A CUSTOMER MERELY NEEDEDTO CONTACT THEIR FINANCIAL REPRESENTATIVE AND COULD REQUESTANY AMOUNT OF FUNDS BE TRANSFERRED AT ANY TIME WITHIN FIFTEENMONTHS OF EXECUTING THE WIRE REQUEST FORMTHAT INDICATES IT IS A STANDING INSTRUCTION. THE FINANCIALREPRESENTATIVE WOULD ONLY NEED TO ENTER THE REQUEST INTOROYAL ALLIANCE'S WIRE PROCESSING PLATFORM, WITH NO ADDITIONALREVIEW BY ROYAL ALLIANCE, OTHER THAN THE REVIEW PERFORMEDPRIOR TO EXECUTION BY ROYAL ALLIANCE'S CASHIERINGPERSONNEL.


No

Sanctions Ordered: Monetary/Fine $250,000.00Cease and Desist/Injunction

Consent






Regulator Statement ROYAL ALLIANCE'S POLICIES AND PROCEDURES PROHIBITED THIRD-PARTY WIRE TRANSFERS, EXCEPT IN LIMITED CIRCUMSTANCES - OR WITHAPPROVAL OF THE ANTI-MONEY LAUNDERING ("AML") DEPARTMENT. INPRACTICE, HOWEVER, IN CONNECTION WITH WIRE TRANSFERS FROM ACUSTOMER'S ACCOUNT, THE CASHIERINGDEPARTMENT TREATED THIRD-PARTY TRANSFER REQUESTS TO OUTSIDEACCOUNTS IDENTIFIED AS "FBO" THE CLIENT AS EITHER A FIRST PARTYTRANSFER OR A PERMISSIBLE THIRD-PARTY WIRE TRANSFER.ADDITIONALLY, AT THAT TIME, IF A CUSTOMER HAD A STANDING WIREINSTRUCTION TO A SPECIFIC ACCOUNT, A CUSTOMER MERELY NEEDEDTO CONTACT THEIR FINANCIAL REPRESENTATIVE AND COULD REQUESTANY AMOUNT OF FUNDS BE TRANSFERRED AT ANY TIME WITHIN FIFTEENMONTHS OF EXECUTING THE WIRE REQUEST FORMTHAT INDICATES IT IS A STANDING INSTRUCTION. THE FINANCIALREPRESENTATIVE WOULD ONLY NEED TO ENTER THE REQUEST INTOROYAL ALLIANCE'S WIRE PROCESSING PLATFORM, WITH NO ADDITIONALREVIEW BY ROYAL ALLIANCE, OTHER THAN THE REVIEW PERFORMEDPRIOR TO EXECUTION BY ROYAL ALLIANCE'S CASHIERINGPERSONNEL.






CEASE AND DESIST





Allegations: THE BUREAU CONDUCTED A REVIEW OF ACTIVITY BY ONE ROYALALLIANCE ADVISOR IN OR ABOUT FEBRUARY 2009 THROUGH JULY 2017.THE ADVISOR INITIATED UNAUTHORIZED WIRE TRANSFERS ANDAUTHORIZED THIRD-PARTY CHECK PAYMENTS FROM THREE CLIENTS'ACCOUNTS TOTALING $1.4 MILLION TO ENTITIES HE CONTROLLED.



Resolution: Consent







Other Sanctions Ordered:

Sanction Details: CEASE AND DESIST FROM FURTHER VIOLATIONS OF SECURITIES LAW;PAYMENT OF A CIVIL MONETARY PENALTY, COSTS AND PAYMENT TO THEBUREAU'S INVESTOR EDUCATION PROGRAM TOTALING $250,000; ANDREVIEW AND REVISIONS AS NECESSARY TO RELEVANT FIRM POLICIESAND PROCEDURES.

Firm Statement WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, THE FIRMCONSENTED TO THE BUREAU'S CONCLUSION THAT ITS WRITTENPOLICIES AND PROCEDURES REGARDING FEDERAL FUND WIRES ANDSTANDING INSTRUCTIONS CONSTITUTED A FAILURE TO REASONABLYSUPERVISE THE REPRESENTATIVE PURSUANT TO N.J.S.A. 49:3-58(A)(2)(XI).


Disclosure 3 of 41

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Reporting Source: Firm

Initiated By: NEW HAMPSHIRE BUREAU OF SECURITIES REGULATION




CEASE AND DESIST

THE FIRM AGREED TO REPORT TO THE BUREAU DETAILS OFENHANCEMENTS MADE TO ITS SUPERVISORY AND COMPLIANCEPROCEDURE REGARDING PROCESSING OF REQUEST FOR WITHDRAWALSOR TRANSFERS OF CUSTOMER FUNDS.


Docket/Case Number: COM2018-00011



Allegations: THE STATE ALLEGED THAT, WITH REGARD TO ONE FORMER ROYALADVISOR AND ONE CUSTOMER, THE FRIM FAILED TO ADDRESS REDFLAGS TO FRAUDULENT FUND WITHDRAWALS OVER A PERIOD OF TIME,AND THAT THERE WAS A FAILURE AND LAPSE IN SUPERVISION OF THEADVISOR.








Resolution:


Sanction Details: THE FRIM AGREED TO A FINE,NONE OF WHICH WAS WAIVED AND WHICHHAS NOT YET BEEN PAID.

Firm Statement WITHOUT ADMITTING NOR DENYING THE ALLEGATIONS, THE FIRMAGREED TO AN ORDER WHEREIN IT AGREED TO PAY AN ADMINSTRATIVEFINE OF $190,000; TO CEASE AND DESIST FROM ANY FURTHERVIOLATIONS OF RSA 421-B; AND TO UNDERTAKE SUPERVISORY ANDCOMPLIANCE ENHANCEMENTS AND REPORT SAID ENHANCEMENTS TOTHE BUREAU.


Consent

Disclosure 4 of 41

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Initiated By: MASSACHUSETTS SECURITIES DIVISION




RESTITUTIONCEASE AND DESISTCENSUREDISGORGEMENT


Docket/Case Number: E-2018-0093

URL for Regulatory Action: HTTPS://WWW.SEC.STATE.MA.US/SCT/CURRENT/SCTROYAL/E-2018-0093-COMPLAINT.PDF

Principal Product Type: Annuity(ies) - Fixed


Allegations: ROYAL ALLIANCE FAILED TO SUPERVISE ITS REGISTEREDREPRESENTATIVES IN THE SALE OF A FIXED ANNUITY PRODUCT TO ITSCUSTOMERS.



Resolution: Consent








Sanction Details: MASSACHUSETTS SECURITIES DIVISION IS CURRENTLY AWAITINGMONETARY/FINE AND RESTITUTION PAYMENT FROM ROYAL ALLIANCEASSOCIATES, INC..


No

Sanctions Ordered: CensureMonetary/Fine $50,000.00Disgorgement/RestitutionCease and Desist/Injunction




Cease and Desist


DISGORGEMENTRESTITUTION



Principal Product Type: Annuity(ies) - Fixed


Allegations: THE SECURITIES DIVISION ALLEGED THAT THE FIRM FAILED TOSUPERVISE THE SALE OF AN ANNUITY PRODUCT TO ONE MARRIEDCOUPLE.



Resolution:



Consent







Sanction Details: THE FIRM AGREED TO PAY A $50,000 ADMINISTRATIVE FINE, AND TO OFFERRESTITUTION TO TWO CLIENTS

Firm Statement THE FIRM CONSENTED TO AN ORDER AGREEING TO CEASE AND DESISTFROM ANY FURTHER VIOLATIONS AND TO A CENSURE. IT FURTHERAGREED TO PAY A FINE AND MAKE OFFERS OF RESTITUTION TO TWOCLIENTS.THE FRIM ALSO AGREED TO UNDERTAKE A REVIEW OF ITSPOLICIES AND PROCEDURES RELATED TO OUTSIDE BUSINESSACTIVITIES, SUBJECT TO THE STATE'S REVIEW.

Disclosure 5 of 41

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Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM, AS ONE OFTHE RESPONDENTS WITH OTHER MEMBER FIRMS, CONSENTED TO THESANCTIONS AND TO THE ENTRY OF FINDINGS THAT THESE FIRMS EACHFAILED TO ESTABLISH, MAINTAIN AND ENFORCE A SUPERVISORY SYSTEMAND WRITTEN SUPERVISORY PROCEDURES (WSPS) REASONABLYDESIGNED TO SUPERVISE REPRESENTATIVES' SALE OF MULTI-SHARECLASS VARIABLE ANNUITIES (VAS). THE FINDINGS STATED THAT THEFIRMS' PROCEDURES DID NOT SPECIFICALLY ADDRESS THE SUITABILITYISSUES RELATED TO THE DIFFERENT SURRENDER PERIODS, FEES ANDCOSTS OF THE DIFFERENT VA SHARE CLASSES. SIMILARLY, THE FIRM'SPROCEDURES DID NOT SPECIFICALLY ADDRESS THE SUITABILITYCONCERNS RAISED BY THE SALE OF AN L-SHARE CONTRACT WHENCOMBINED WITH A LONG-TERM INCOME RIDER OR TO A CUSTOMER WITHA LONG-TERM INVESTMENT TIME HORIZON. THE FIRMS' WSPS ALSOFAILED TO ADDRESS WHEN ADDITIONAL SCRUTINY MAY BE WARRANTEDDURING THE REQUIRED PRINCIPAL REVIEW AND APPROVAL PROCESSBECAUSE OF SUITABILITY CONCERNS ABOUT THE VA SHARE CLASS THATWAS SELECTED FOR THE TRANSACTION. HOWEVER, ROYAL ALLIANCE'SPROCEDURES FOR PRINCIPALS DID EXPLAIN BASIC DIFFERENCES IN THESURRENDER PERIOD FOR VA SHARE CLASSES. THEY ALSO NOTED THATREVIEWING PRINCIPALS SHOULD ATTEMPT TO GET A RATIONALEADDRESSING THE CUSTOMER'S DECISION TO PAY THE INCREASEDANNUAL FEE FOR AN L-SHARE CONTRACT. THE RESPONDENT FIRMS ALSOFAILED TO PROVIDE SUFFICIENT TRAINING TO THEIR REGISTEREDREPRESENTATIVES AND REVIEWING PRINCIPALS TO ENSURE THAT THEYUNDERSTOOD THE MATERIAL FEATURES OF VAS. DESPITE THESIGNIFICANT ROLE THAT VARIABLE ANNUITY SALES PLAYED IN THE FIRMS'OVERALL BUSINESS, THEY FAILED TO IMPLEMENT A SUPERVISORYSYSTEM AND PROCEDURES REASONABLY DESIGNED TO ENSURESUITABILITY IN MULTI-SHARE CLASS VA SALES, INCLUDING L-SHARECONTRACTS. AT EACH OF THE FIRMS, A SIGNIFICANT NUMBER OF THE L-SHARE CONTRACTS WERE SOLD WITH LONG-TERM RIDERS. MANY OFTHE CUSTOMERS PURCHASING L-SHARES INDICATED THEY HAD A LONG-TERM INVESTMENT HORIZON. THE FINDINGS ALSO STATED THAT ROYALALLIANCE FAILED TO ESTABLISH AND MAINTAIN A SUPERVISORY SYSTEMAND PROCEDURES REASONABLY DESIGNED TO SUPERVISE VAEXCHANGES. ROYAL ALLIANCE'S SYSTEM FOR REVIEWING VAEXCHANGES WAS FLAWED IN SEVERAL RESPECTS. ROYAL ALLIANCESELECTED FOR REVIEW ONLY A LIMITED NUMBER OF REPRESENTATIVESBASED ON AD HOC CRITERIA UNRELATED TO THEIR VOLUME OF VARECOMMENDATIONS. MOREOVER, THE FIRM'S WSPS DID NOT INCLUDEANY "SURVEILLANCE PROCEDURES" DESIGNED TO DETERMINE IFREPRESENTATIVES HAD PROBLEMATIC RATES OF VA EXCHANGES, ASREQUIRED.







Initiated By: FINRA





Principal Product Type: Other

Other Product Type(s): MULTI-SHARE CLASS VARIABLE ANNUITIES

WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM, AS ONE OFTHE RESPONDENTS WITH OTHER MEMBER FIRMS, CONSENTED TO THESANCTIONS AND TO THE ENTRY OF FINDINGS THAT THESE FIRMS EACHFAILED TO ESTABLISH, MAINTAIN AND ENFORCE A SUPERVISORY SYSTEMAND WRITTEN SUPERVISORY PROCEDURES (WSPS) REASONABLYDESIGNED TO SUPERVISE REPRESENTATIVES' SALE OF MULTI-SHARECLASS VARIABLE ANNUITIES (VAS). THE FINDINGS STATED THAT THEFIRMS' PROCEDURES DID NOT SPECIFICALLY ADDRESS THE SUITABILITYISSUES RELATED TO THE DIFFERENT SURRENDER PERIODS, FEES ANDCOSTS OF THE DIFFERENT VA SHARE CLASSES. SIMILARLY, THE FIRM'SPROCEDURES DID NOT SPECIFICALLY ADDRESS THE SUITABILITYCONCERNS RAISED BY THE SALE OF AN L-SHARE CONTRACT WHENCOMBINED WITH A LONG-TERM INCOME RIDER OR TO A CUSTOMER WITHA LONG-TERM INVESTMENT TIME HORIZON. THE FIRMS' WSPS ALSOFAILED TO ADDRESS WHEN ADDITIONAL SCRUTINY MAY BE WARRANTEDDURING THE REQUIRED PRINCIPAL REVIEW AND APPROVAL PROCESSBECAUSE OF SUITABILITY CONCERNS ABOUT THE VA SHARE CLASS THATWAS SELECTED FOR THE TRANSACTION. HOWEVER, ROYAL ALLIANCE'SPROCEDURES FOR PRINCIPALS DID EXPLAIN BASIC DIFFERENCES IN THESURRENDER PERIOD FOR VA SHARE CLASSES. THEY ALSO NOTED THATREVIEWING PRINCIPALS SHOULD ATTEMPT TO GET A RATIONALEADDRESSING THE CUSTOMER'S DECISION TO PAY THE INCREASEDANNUAL FEE FOR AN L-SHARE CONTRACT. THE RESPONDENT FIRMS ALSOFAILED TO PROVIDE SUFFICIENT TRAINING TO THEIR REGISTEREDREPRESENTATIVES AND REVIEWING PRINCIPALS TO ENSURE THAT THEYUNDERSTOOD THE MATERIAL FEATURES OF VAS. DESPITE THESIGNIFICANT ROLE THAT VARIABLE ANNUITY SALES PLAYED IN THE FIRMS'OVERALL BUSINESS, THEY FAILED TO IMPLEMENT A SUPERVISORYSYSTEM AND PROCEDURES REASONABLY DESIGNED TO ENSURESUITABILITY IN MULTI-SHARE CLASS VA SALES, INCLUDING L-SHARECONTRACTS. AT EACH OF THE FIRMS, A SIGNIFICANT NUMBER OF THE L-SHARE CONTRACTS WERE SOLD WITH LONG-TERM RIDERS. MANY OFTHE CUSTOMERS PURCHASING L-SHARES INDICATED THEY HAD A LONG-TERM INVESTMENT HORIZON. THE FINDINGS ALSO STATED THAT ROYALALLIANCE FAILED TO ESTABLISH AND MAINTAIN A SUPERVISORY SYSTEMAND PROCEDURES REASONABLY DESIGNED TO SUPERVISE VAEXCHANGES. ROYAL ALLIANCE'S SYSTEM FOR REVIEWING VAEXCHANGES WAS FLAWED IN SEVERAL RESPECTS. ROYAL ALLIANCESELECTED FOR REVIEW ONLY A LIMITED NUMBER OF REPRESENTATIVESBASED ON AD HOC CRITERIA UNRELATED TO THEIR VOLUME OF VARECOMMENDATIONS. MOREOVER, THE FIRM'S WSPS DID NOT INCLUDEANY "SURVEILLANCE PROCEDURES" DESIGNED TO DETERMINE IFREPRESENTATIVES HAD PROBLEMATIC RATES OF VA EXCHANGES, ASREQUIRED.


Resolution:


Sanction Details: THE FIRM WAS CENSURED, FINED $350,000 AND REQUIRED TO REVIEWAND REVISE, AS NECESSARY, ITS SYSTEMS, POLICIES AND PROCEDURES(WRITTEN AND OTHERWISE) AND TRAINING WITH RESPECT TO THE AREASDESCRIBED WITHIN THE AWC. THE FIRM SHALL CERTIFY TO FINRA THATTHAT IT HAS ENGAGED IN THE REVIEW AND AS OF THE DATE OF THECERTIFICATION, IT HAS ESTABLISHED AND IMPLEMENTED SYSTEMS,POLICIES, AND PROCEDURES (WRITTEN OR OTHERWISE) THAT AREREASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITH THEAPPLICABLE FINRA AND NASD RULES. FINES PAID IN FULL ON AUGUST 7,2018.


No









THE FIRM WAS CENSURED, FINED $350,000 AND REQUIRED TO REVIEWAND REVISE, AS NECESSARY, ITS SYSTEMS, POLICIES AND PROCEDURES(WRITTEN AND OTHERWISE) AND TRAINING WITH RESPECT TO THE AREASDESCRIBED WITHIN THE AWC. THE FIRM SHALL CERTIFY TO FINRA THATTHAT IT HAS ENGAGED IN THE REVIEW AND AS OF THE DATE OF THECERTIFICATION, IT HAS ESTABLISHED AND IMPLEMENTED SYSTEMS,POLICIES, AND PROCEDURES (WRITTEN OR OTHERWISE) THAT AREREASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITH THEAPPLICABLE FINRA AND NASD RULES. FINES PAID IN FULL ON AUGUST 7,2018.


Initiated By: FINRA





Principal Product Type: Annuity(ies) - Variable

Other Product Type(s): MULTI-SHARE CLASS VARIABLE ANNUITIES

Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE ENTRY OF FINDINGS THAT IT FAILED TO ESTABLISH, MAINTAIN ANDENFORCE A SUPERVISORY SYSTEM AND WRITTEN SUPERVISORYPROCEDURES (WSPS) REASONABLY DESIGNED TO SUPERVISEREPRESENTATIVES' SALE OF MULTI-SHARE CLASS VARIABLE ANNUITIES(VAS). THE FIRM'S PROCEDURES FOR PRINCIPALS DID EXPLAIN BASICDIFFERENCES IN THE SURRENDER PERIOD FOR VA SHARE CLASSES, ANDNOTED THAT REVIEWING PRINCIPALS SHOULD ATTEMPT TO GET ARATIONALE ADDRESSING THE CUSTOMER'S DECISION TO PAY THEINCREASED ANNUAL FEE FOR AN L-SHARE CONTRACT. THE FIRM ALSOFAILED TO PROVIDE SUFFICIENT TRAINING TO THEIR REGISTEREDREPRESENTATIVES AND REVIEWING PRINCIPALS TO ENSURE THAT THEYUNDERSTOOD THE MATERIAL FEATURES OF VAS. THE FINDINGS ALSOSTATED THAT THE FIRM FAILED TO ESTABLISH AND MAINTAIN ASUPERVISORY SYSTEM AND PROCEDURES REASONABLY DESIGNED TOSUPERVISE VA EXCHANGES. MOREOVER, THE FIRM'S WSPS DID NOTINCLUDE ANY "SURVEILLANCE PROCEDURES" DESIGNED TO DETERMINEIF REPRESENTATIVES HAD PROBLEMATIC RATES OF VA EXCHANGES.



Resolution: Acceptance, Waiver & Consent(AWC)









Sanction Details: THE FIRM WAS CENSURED, FINED $350,000.00 AND REQUIRED TO REVIEWAND REVISE, AS NECESSARY, ITS SYSTEMS, POLICIES AND PROCEDURESAND TRAINING WITH RESPECT TO THE AREAS DESCRIBED WITHIN THEAWC. THE FIRM WILL CERTIFY TO FINRA THAT THAT IT HAS ENGAGED INTHE REVIEW AND HAS ESTABLISHED AND IMPLEMENTED SYSTEMS,POLICIES, AND PROCEDURES THAT ARE REASONABLY DESIGNED TOACHIEVE COMPLIANCE WITH THE APPLICABLE FINRA AND NASD RULES.


Disclosure 6 of 41

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Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT ITDISADVANTAGED CERTAIN RETIREMENT PLAN AND CHARITABLEORGANIZATION CUSTOMERS THAT WERE ELIGIBLE TO PURCHASE CLASSA SHARES IN CERTAIN MUTUAL FUNDS WITHOUT A FRONT-END SALESCHARGE. THE FINDINGS STATED THAT NOTWITHSTANDING THEAVAILABILITY OF THE WAIVERS, THE FIRM FAILED TO APPLY THE WAIVERSTO MUTUAL FUND PURCHASES MADE BY ELIGIBLE CUSTOMERS ANDINSTEAD SOLD THESE ELIGIBLE CUSTOMERS CLASS A SHARES WITH AFRONT-END SALES CHARGE OR CLASS B OR C SHARES WITH BACK-ENDSALES CHARGES AND HIGHER ONGOING FEES AND EXPENSES. THESESALES DISADVANTAGED ELIGIBLE CUSTOMERS BY CAUSING THECUSTOMERS TO PAY HIGHER FEES THAN THEY WERE ACTUALLYREQUIRED TO PAY. THE FINDINGS ALSO STATED THAT THE FIRM FAILED TOSUPERVISE REASONABLY THE APPLICATION OF SALES-CHARGE WAIVERSTO ELIGIBLE MUTUAL FUND SALES. THE FIRM RELIED ON ITS FINANCIALADVISORS TO DETERMINE THE APPLICABILITY OF SALES-CHARGEWAIVERS BUT FAILED TO MAINTAIN ADEQUATE WRITTEN POLICIES ORPROCEDURES TO ASSIST FINANCIAL ADVISORS IN MAKING THISDETERMINATION. FOR INSTANCE, THE FIRM FAILED TO ESTABLISH ANDMAINTAIN WRITTEN PROCEDURES TO IDENTIFY APPLICABLE SALESCHARGE WAIVERS IN FUND PROSPECTUSES FOR ELIGIBLE CUSTOMERS.IN ADDITION, THE FIRM FAILED TO ADEQUATELY NOTIFY AND TRAIN ITSFINANCIAL ADVISORS REGARDING THE AVAILABILITY OF MUTUAL FUNDSALES-CHARGE WAIVERS FOR ELIGIBLE CUSTOMERS. THE FIRM ALSOFAILED TO ADOPT ADEQUATE CONTROLS TO DETECT INSTANCES INWHICH THEY DID NOT PROVIDE SALES-CHARGE WAIVERS TO ELIGIBLECUSTOMERS IN CONNECTION WITH THEIR MUTUAL FUND PURCHASES.BECAUSE OF THE FIRM'S FAILURE TO APPLY AVAILABLE SALES-CHARGEWAIVERS, THE FIRM ESTIMATES THAT IT OVERCHARGED ELIGIBLECUSTOMERS BY APPROXIMATELY $458,830 FOR MUTUAL FUNDPURCHASES MADE SINCE JANUARY 1, 2011.







Initiated By: FINRA





Principal Product Type: Mutual Fund(s)


WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT ITDISADVANTAGED CERTAIN RETIREMENT PLAN AND CHARITABLEORGANIZATION CUSTOMERS THAT WERE ELIGIBLE TO PURCHASE CLASSA SHARES IN CERTAIN MUTUAL FUNDS WITHOUT A FRONT-END SALESCHARGE. THE FINDINGS STATED THAT NOTWITHSTANDING THEAVAILABILITY OF THE WAIVERS, THE FIRM FAILED TO APPLY THE WAIVERSTO MUTUAL FUND PURCHASES MADE BY ELIGIBLE CUSTOMERS ANDINSTEAD SOLD THESE ELIGIBLE CUSTOMERS CLASS A SHARES WITH AFRONT-END SALES CHARGE OR CLASS B OR C SHARES WITH BACK-ENDSALES CHARGES AND HIGHER ONGOING FEES AND EXPENSES. THESESALES DISADVANTAGED ELIGIBLE CUSTOMERS BY CAUSING THECUSTOMERS TO PAY HIGHER FEES THAN THEY WERE ACTUALLYREQUIRED TO PAY. THE FINDINGS ALSO STATED THAT THE FIRM FAILED TOSUPERVISE REASONABLY THE APPLICATION OF SALES-CHARGE WAIVERSTO ELIGIBLE MUTUAL FUND SALES. THE FIRM RELIED ON ITS FINANCIALADVISORS TO DETERMINE THE APPLICABILITY OF SALES-CHARGEWAIVERS BUT FAILED TO MAINTAIN ADEQUATE WRITTEN POLICIES ORPROCEDURES TO ASSIST FINANCIAL ADVISORS IN MAKING THISDETERMINATION. FOR INSTANCE, THE FIRM FAILED TO ESTABLISH ANDMAINTAIN WRITTEN PROCEDURES TO IDENTIFY APPLICABLE SALESCHARGE WAIVERS IN FUND PROSPECTUSES FOR ELIGIBLE CUSTOMERS.IN ADDITION, THE FIRM FAILED TO ADEQUATELY NOTIFY AND TRAIN ITSFINANCIAL ADVISORS REGARDING THE AVAILABILITY OF MUTUAL FUNDSALES-CHARGE WAIVERS FOR ELIGIBLE CUSTOMERS. THE FIRM ALSOFAILED TO ADOPT ADEQUATE CONTROLS TO DETECT INSTANCES INWHICH THEY DID NOT PROVIDE SALES-CHARGE WAIVERS TO ELIGIBLECUSTOMERS IN CONNECTION WITH THEIR MUTUAL FUND PURCHASES.BECAUSE OF THE FIRM'S FAILURE TO APPLY AVAILABLE SALES-CHARGEWAIVERS, THE FIRM ESTIMATES THAT IT OVERCHARGED ELIGIBLECUSTOMERS BY APPROXIMATELY $458,830 FOR MUTUAL FUNDPURCHASES MADE SINCE JANUARY 1, 2011.


Resolution:


Sanction Details: THE FIRM WAS CENSURED, FINED $150,000, AND REQUIRED TO PROVIDE AREMEDIATION PLAN TO FINRA TO REMEDIATE ELIGIBLE CUSTOMERS WHOQUALIFIED FOR, BUT DID NOT RECEIVE, AN APPLICABLE MUTUAL FUNDSALES-CHARGE WAIVER. AS PART OF THIS SETTLEMENT, THE FIRMAGREED TO PAY RESTITUTION TO ELIGIBLE CUSTOMERS, ESTIMATED TOTOTAL $519,699 (THE AMOUNT IT OVERCHARGED ELIGIBLE CUSTOMERS,INCLUSIVE OF INTEREST). FINES PAID IN FULL ON JANUARY 8, 2018.


No




Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE ENTRY OF FINDINGS THAT IT DISADVANTAGED CERTAINRETIREMENT PLAN AND CHARITABLE ORGANIZATION CUSTOMERS THATWERE ELIGIBLE TO PURCHASE CLASS A SHARES IN CERTAIN MUTUALFUNDS WITHOUT A FRONT-END SALES CHARGE. THE FINDINGS ALSOSTATED THAT THE FIRM FAILED TO SUPERVISE REASONABLY THEAPPLICATION OF SALES-CHARGE WAIVERS TO ELIGIBLE MUTUAL FUNDSALES. THE FIRM RELIED ON ITS FINANCIAL ADVISORS TO DETERMINETHE APPLICABILITY OF SALES- CHARGE WAIVERS BUT DID NOT MAINTAINADEQUATE WRITTEN POLICIES OR PROCEDURES TO ASSIST FINANCIALADVISORS IN MAKING THIS DETERMINATION. IN ADDITION, THE FIRMFAILED TO ADEQUATELY NOTIFY AND TRAIN ITS FINANCIAL ADVISORSREGARDING THE AVAILABILITY OF MUTUAL FUND SALES-CHARGEWAIVERS FOR ELIGIBLE CUSTOMERS. THE FIRM ALSO FAILED TO ADOPTADEQUATE CONTROLS TO DETECT INSTANCES IN WHICH THEY DID NOTPROVIDE SALES-CHARGE WAIVERS TO ELIGIBLE CUSTOMERS INCONNECTION WITH THEIR MUTUAL FUND PURCHASES.








Initiated By: FINRA




CENSURERESTITUTIONUNDERTAKING



Principal Product Type: Money Market Fund(s)


Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE ENTRY OF FINDINGS THAT IT DISADVANTAGED CERTAINRETIREMENT PLAN AND CHARITABLE ORGANIZATION CUSTOMERS THATWERE ELIGIBLE TO PURCHASE CLASS A SHARES IN CERTAIN MUTUALFUNDS WITHOUT A FRONT-END SALES CHARGE. THE FINDINGS ALSOSTATED THAT THE FIRM FAILED TO SUPERVISE REASONABLY THEAPPLICATION OF SALES-CHARGE WAIVERS TO ELIGIBLE MUTUAL FUNDSALES. THE FIRM RELIED ON ITS FINANCIAL ADVISORS TO DETERMINETHE APPLICABILITY OF SALES- CHARGE WAIVERS BUT DID NOT MAINTAINADEQUATE WRITTEN POLICIES OR PROCEDURES TO ASSIST FINANCIALADVISORS IN MAKING THIS DETERMINATION. IN ADDITION, THE FIRMFAILED TO ADEQUATELY NOTIFY AND TRAIN ITS FINANCIAL ADVISORSREGARDING THE AVAILABILITY OF MUTUAL FUND SALES-CHARGEWAIVERS FOR ELIGIBLE CUSTOMERS. THE FIRM ALSO FAILED TO ADOPTADEQUATE CONTROLS TO DETECT INSTANCES IN WHICH THEY DID NOTPROVIDE SALES-CHARGE WAIVERS TO ELIGIBLE CUSTOMERS INCONNECTION WITH THEIR MUTUAL FUND PURCHASES.


Resolution:


Sanction Details: PARAGRAPH "13'THE FIRM AGREED TO A CENSURE AND A FINE OF $150,000. IT FURTHERAGREED TO PROVIDE A REMEDIATION PLAN TO FINRA TO REMEDIATEELIGIBLE CUSTOMERS WHO QUALIFIED FOR, BUT DID NOT RECEIVE, ANAPPLICABLE MUTUAL FUND SALES-CHARGE WAIVER. AS PART OF THISSETTLEMENT, THE FIRM AGREED TO PAY RESTITUTION TO ELIGIBLECUSTOMERS ESTIMATED TO TOTAL $519,699.

Sanctions Ordered: CensureMonetary/Fine $150,000.00Disgorgement/Restitution







www.finra.org/brokercheck User GuidancePARAGRAPH "13'THE FIRM AGREED TO A CENSURE AND A FINE OF $150,000. IT FURTHERAGREED TO PROVIDE A REMEDIATION PLAN TO FINRA TO REMEDIATEELIGIBLE CUSTOMERS WHO QUALIFIED FOR, BUT DID NOT RECEIVE, ANAPPLICABLE MUTUAL FUND SALES-CHARGE WAIVER. AS PART OF THISSETTLEMENT, THE FIRM AGREED TO PAY RESTITUTION TO ELIGIBLECUSTOMERS ESTIMATED TO TOTAL $519,699.

Firm Statement THE FIRM AGREED TO A CENSURE AND A FINE OF $150,000. IT FURTHERAGREED TO PROVIDE A REMEDIATION PLAN TO FINRA TO REMEDIATEELIGIBLE CUSTOMERS WHO QUALIFIED FOR, BUT DID NOT RECEIVE, ANAPPLICABLE MUTUAL FUND SALES-CHARGE WAIVER. AS PART OF THISSETTLEMENT, THE FIRM AGREED TO PAY RESTITUTION TO ELIGIBLECUSTOMERS ESTIMATED TO TOTAL $519,699.

Disclosure 7 of 41

i


Initiated By: FINRA






Other Product Type(s): UNSPECIFIED SECURITIES

Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT APPLIED ANINACCURATE ACCOUNTING AND NET CAPITAL TREATMENT OFINVESTMENT ADVISORY FEES. THE FINDINGS STATED THAT THE FIRMFAILED TO COMPUTE ITS NET CAPITAL AND EXCESS NET CAPITALACCURATELY AND, AS A RESULT, CONDUCTED A GENERAL SECURITIESBUSINESS WITHOUT HAVING THE REQUIRED NET CAPITAL. SUBSEQUENTADJUSTMENTS TO CORRECT THE NET CAPITAL COMPUTATIONSRESULTED IN HINDSIGHT NET CAPITAL DEFICIENCIES FOR THE FIRM, ANDBOOKS AND RECORDS VIOLATIONS AND FINANCIAL REPORTINGINACCURACIES ACROSS THE FIRM. THE FINDINGS ALSO STATED THAT THEFIRM FAILED TO PREPARE AND MAINTAIN ACCURATE FINANCIALRECORDS, INCLUDING GENERAL LEDGERS, BALANCE SHEETS AND TRIALBALANCES, AND NET CAPITAL COMPUTATIONS. THE FIRM ALSO FILEDINACCURATE MONTHLY FOCUS REPORTS CORRESPONDING TO THESEMONTHLY REPORTING PERIODS.











Sanction Details: THE FIRM IS CENSURED AND FINED $260,000. FINES PAID IN FULL ON MAY16, 2017.

Regulator Statement IN DETERMINING THE APPROPRIATE SANCTIONS IN THIS MATTER, FINRACONSIDERED THE FIRM'S SELF-REPORTING OF THE CONDUCT, THEFIRM'S RETENTION OF A NEW FINANCIAL AND OPERATIONS PRINCIPAL(FINOP), AND CERTAIN SUBSEQUENT REMEDIAL MEASURES, INCLUDINGTHAT THE FIRM FILED A SATISFACTORY SUBORDINATED LOANAGREEMENT WITH FINRA THE DAY AFTER FINRA NOTIFIED THE FIRM THATTHEIR PRIOR ACCOUNTING TREATMENT WAS INCORRECT.


No



Initiated By: FINRA


Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRMCONSENTED TO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THATIT APPLIED AN INACCURATE ACCOUNTING AND NET CAPITAL TREATMENTOF INVESTMENT ADVISORY FEES. THE FINDINGS STATED THAT THE FIRMFAILED TO COMPUTE ITS NET CAPITAL AND EXCESS NET CAPITALACCURATELY AND, AS A RESULT, CONDUCTED A GENERAL SECURITIESBUSINESS WITHOUT HAVING THE REQUIRED NET CAPITAL. SUBSEQUENTADJUSTMENTS TO CORRECT THE NET CAPITAL COMPUTATIONSRESULTED IN HINDSIGHT NET CAPITAL DEFICIENCIES FOR THE FIRM, ANDBOOKS AND RECORDS VIOLATIONS AND FINANCIAL REPORTINGINACCURACIES ACROSS THE FIRM. THE FINDINGS ALSO STATED THAT THEFIRM FAILED TO PREPARE AND MAINTAIN ACCURATE FINANCIALRECORDS, INCLUDING GENERAL LEDGERS, BALANCE SHEETS AND TRIALBALANCES, AND NET CAPITAL COMPUTATIONS. THE FIRM ALSO FILEDINACCURATE MONTHLY FOCUS REPORTS CORRESPONDING TO THESEMONTHLY REPORTING PERIODS.












Other Product Type(s): UNSPECIFIED SECURITIES


Resolution:


Sanction Details: THE FIRM WAS CENSURED AND FINED $260,000.00

Firm Statement IN DETERMINING THE APPROPRIATE SANCTIONS IN THIS MATTER, FINRACONSIDERED THE FIRM'S PROMPT SELF-REPORTING OF THE CONDUCT,THE FIRM'S RETENTION OF A NEW FINANCIAL AND OPERATIONS PRICIPAL(FINOP) AND CERTAIN SUBSEQUENT REMEDIAL MEASURES, INCLUDINGTHAT THE FIRM FILED A SATISFACTORY SUBORDINATED LOANAGREEMENT WITH FINRA THE DAY AFTER FINRA NOTIFIED THE FIRM THATTHEIR PRIOR ACCOUNTING TREATMENT WAS INCORRECT.



Disclosure 8 of 41

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Allegations: SEC ADMIN RELEASE 34-77362, IA RELEASE 40-4351 / MARCH 14, 2016: THESECURITIES AND EXCHANGE COMMISSION DEEMS IT APPROPRIATE ANDIN THE PUBLIC INTEREST THAT PUBLIC ADMINISTRATIVE AND CEASE-AND-DESIST PROCEEDINGS BE, AND HEREBY ARE, INSTITUTED PURSUANT TOSECTION 15(B) OF THE SECURITIES EXCHANGE ACT OF 1934 ANDSECTIONS 203(E) AND 203(K) OF THE INVESTMENT ADVISERS ACT OF 1940AGAINST THE FIRM (RESPONDENT). ON THE BASIS OF THIS ORDER ANDRESPONDENT'S OFFER, THE COMMISSION FINDS THAT THIS PROCEEDINGARISES FROM BREACH OF FIDUCIARY DUTY AND MULTIPLE COMPLIANCEFAILURES BY RESPONDENT. FROM AT LEAST 2012 TO 2014, RESPONDENTINVESTED ADVISORY CLIENTS IN MUTUAL FUND SHARE CLASSES WITH12B-1 FEES INSTEAD OF LOWER-FEE SHARE CLASSES OF THE SAMEFUNDS THAT WERE AVAILABLE WITHOUT 12B-1 FEES. THE AFFECTEDCLIENTS WERE ADVISORY CLIENTS WHOM ADVISOR GROUP FIRMSINVESTED IN A FEE-BASED ADVISORY SERVICE CALLED THE ADVISORMANAGED PORTFOLIO ("AMP") IN ACCOUNTS THAT ARE NOT QUALIFIEDRETIREMENT OR ERISA ACCOUNTS, WHERE 12B-1 FEES ARE REBATED. INITS CAPACITY AS BROKER-DEALERS, RESPONDENT RECEIVED 12B-1 FEESPAID BY THE FUNDS IN WHICH AMP ADVISORY CLIENTS INVESTED. BYINVESTING THESE NON-QUALIFIED ADVISORY CLIENTS IN THE HIGHER-FEE SHARE CLASSES, RESPONDENT AND TWO OTHER FIRMS RECEIVEDAPPROXIMATELY $2 MILLION IN 12B-1 FEES THAT THEY WOULD NOT HAVECOLLECTED FROM THE LOWER-FEE SHARE CLASSES. RESPONDENTFAILED TO DISCLOSE IN ITS FORMS ADV OR OTHERWISE THAT IT HAD ACONFLICT OF INTEREST DUE TO A FINANCIAL INCENTIVE TO PLACE NON-QUALIFIED ADVISORY CLIENTS IN HIGHER-FEE MUTUAL FUND SHARECLASSES. AS A RESULT, RESPONDENT BREACHED ITS FIDUCIARY DUTIESAS AN INVESTMENT ADVISER TO CERTAIN OF ITS AMP ADVISORY CLIENTSBY INVESTING THEM IN HIGHER-FEE MUTUAL FUND SHARE CLASSES. INADDITION, RESPONDENT FAILED TO ADOPT ANY COMPLIANCE POLICYGOVERNING MUTUAL FUND SHARE CLASS SELECTION. DURING 2013,RESPONDENT ALSO FAILED TO MONITOR ADVISORY ACCOUNTSQUARTERLY FOR INACTIVITY OR "REVERSE CHURNING" AS REQUIREDUNDER ITS COMPLIANCE POLICIES AND PROCEDURES TO ENSURE THATFEE-BASED ADVISORY OR "WRAP" ACCOUNTS THAT CHARGED ANINCLUSIVE FEE FOR BOTH ADVISORY SERVICES AND TRADING COSTSREMAINED IN THE BEST INTEREST OF CLIENTS THAT TRADEDINFREQUENTLY. EVEN THOUGH COMMISSION EXAMINATION STAFFPREVIOUSLY HAD CITED THE FIRM FOR FAILING TO CONDUCT SUCHMONITORING SEVERAL YEARS EARLIER, RESPONDENT DID NOT CONDUCTITS INACTIVE ACCOUNT REVIEW ON A TIMELY BASIS FOR THE FOURTHQUARTER OF 2012 AND THE FIRST AND SECOND QUARTERS OF 2013. BYVIRTUE OF THIS CONDUCT, RESPONDENT WILLFULLY VIOLATED SECTIONS206(2), 206(4) AND 207 OF THE ADVISERS ACT AND RULE 206(4)-7THEREUNDER.








Initiated By: UNITED STATES SECURITIES AND EXCHANGE COMMISSION


Cease and Desist



Docket/Case Number: 3-17169



SEC ADMIN RELEASE 34-77362, IA RELEASE 40-4351 / MARCH 14, 2016: THESECURITIES AND EXCHANGE COMMISSION DEEMS IT APPROPRIATE ANDIN THE PUBLIC INTEREST THAT PUBLIC ADMINISTRATIVE AND CEASE-AND-DESIST PROCEEDINGS BE, AND HEREBY ARE, INSTITUTED PURSUANT TOSECTION 15(B) OF THE SECURITIES EXCHANGE ACT OF 1934 ANDSECTIONS 203(E) AND 203(K) OF THE INVESTMENT ADVISERS ACT OF 1940AGAINST THE FIRM (RESPONDENT). ON THE BASIS OF THIS ORDER ANDRESPONDENT'S OFFER, THE COMMISSION FINDS THAT THIS PROCEEDINGARISES FROM BREACH OF FIDUCIARY DUTY AND MULTIPLE COMPLIANCEFAILURES BY RESPONDENT. FROM AT LEAST 2012 TO 2014, RESPONDENTINVESTED ADVISORY CLIENTS IN MUTUAL FUND SHARE CLASSES WITH12B-1 FEES INSTEAD OF LOWER-FEE SHARE CLASSES OF THE SAMEFUNDS THAT WERE AVAILABLE WITHOUT 12B-1 FEES. THE AFFECTEDCLIENTS WERE ADVISORY CLIENTS WHOM ADVISOR GROUP FIRMSINVESTED IN A FEE-BASED ADVISORY SERVICE CALLED THE ADVISORMANAGED PORTFOLIO ("AMP") IN ACCOUNTS THAT ARE NOT QUALIFIEDRETIREMENT OR ERISA ACCOUNTS, WHERE 12B-1 FEES ARE REBATED. INITS CAPACITY AS BROKER-DEALERS, RESPONDENT RECEIVED 12B-1 FEESPAID BY THE FUNDS IN WHICH AMP ADVISORY CLIENTS INVESTED. BYINVESTING THESE NON-QUALIFIED ADVISORY CLIENTS IN THE HIGHER-FEE SHARE CLASSES, RESPONDENT AND TWO OTHER FIRMS RECEIVEDAPPROXIMATELY $2 MILLION IN 12B-1 FEES THAT THEY WOULD NOT HAVECOLLECTED FROM THE LOWER-FEE SHARE CLASSES. RESPONDENTFAILED TO DISCLOSE IN ITS FORMS ADV OR OTHERWISE THAT IT HAD ACONFLICT OF INTEREST DUE TO A FINANCIAL INCENTIVE TO PLACE NON-QUALIFIED ADVISORY CLIENTS IN HIGHER-FEE MUTUAL FUND SHARECLASSES. AS A RESULT, RESPONDENT BREACHED ITS FIDUCIARY DUTIESAS AN INVESTMENT ADVISER TO CERTAIN OF ITS AMP ADVISORY CLIENTSBY INVESTING THEM IN HIGHER-FEE MUTUAL FUND SHARE CLASSES. INADDITION, RESPONDENT FAILED TO ADOPT ANY COMPLIANCE POLICYGOVERNING MUTUAL FUND SHARE CLASS SELECTION. DURING 2013,RESPONDENT ALSO FAILED TO MONITOR ADVISORY ACCOUNTSQUARTERLY FOR INACTIVITY OR "REVERSE CHURNING" AS REQUIREDUNDER ITS COMPLIANCE POLICIES AND PROCEDURES TO ENSURE THATFEE-BASED ADVISORY OR "WRAP" ACCOUNTS THAT CHARGED ANINCLUSIVE FEE FOR BOTH ADVISORY SERVICES AND TRADING COSTSREMAINED IN THE BEST INTEREST OF CLIENTS THAT TRADEDINFREQUENTLY. EVEN THOUGH COMMISSION EXAMINATION STAFFPREVIOUSLY HAD CITED THE FIRM FOR FAILING TO CONDUCT SUCHMONITORING SEVERAL YEARS EARLIER, RESPONDENT DID NOT CONDUCTITS INACTIVE ACCOUNT REVIEW ON A TIMELY BASIS FOR THE FOURTHQUARTER OF 2012 AND THE FIRST AND SECOND QUARTERS OF 2013. BYVIRTUE OF THIS CONDUCT, RESPONDENT WILLFULLY VIOLATED SECTIONS206(2), 206(4) AND 207 OF THE ADVISERS ACT AND RULE 206(4)-7THEREUNDER.








Resolution:

Other Sanctions Ordered: PREJUDGMENT INTEREST AND UNDERTAKINGS

Sanction Details: THE RESPONDENT SHALL CEASE AND DESIST FROM COMMITTING ORCAUSING ANY VIOLATIONS AND ANY FUTURE VIOLATIONS OF SECTIONS206(2), 206(4) AND 207 OF THE ADVISERS ACT AND RULE 206(4)-7THEREUNDER; IS CENSURED; JOINTLY AND SEVERALLY, SHALL PAY ATOTAL OF $2,049,859 CONSISTING OF DISGORGEMENT OF $1,956,460 ANDPREJUDGMENT INTEREST OF $93,399; JOINTLY AND SEVERALLY, SHALLPAY A CIVIL MONETARY PENALTY IN THE AMOUNT OF $7.5 MILLION; ANDSHALL COMPLY WITH THE UNDERTAKINGS ENUMERATED IN THE OFFER.

Regulator Statement IN ANTICIPATION OF THE INSTITUTION OF THESE PROCEEDINGS,RESPONDENT HAS SUBMITTED AN OFFER OF SETTLEMENT (THE "OFFER")WHICH THE COMMISSION HAS DETERMINED TO ACCEPT. SOLELY FOR THEPURPOSE OF THESE PROCEEDINGS AND ANY OTHER PROCEEDINGSBROUGHT BY OR ON BEHALF OF THE COMMISSION, OR TO WHICH THECOMMISSION IS A PARTY, AND WITHOUT ADMITTING OR DENYING THEFINDINGS HEREIN, EXCEPT AS TO THE COMMISSION'S JURISDICTIONOVER THE RESPONDENT AND THE SUBJECT MATTER OF THESEPROCEEDINGS, WHICH ARE ADMITTED, RESPONDENT CONSENT TO THEENTRY OF THIS ORDER INSTITUTING ADMINISTRATIVE AND CEASE-AND-DESIST PROCEEDINGS PURSUANT TO SECTION 15(B) OF THE SECURITIESEXCHANGE ACT OF 1934 AND SECTIONS 203(E) AND 203(K) OF THEINVESTMENT ADVISERS ACT OF 1940, MAKING FINDINGS, AND IMPOSINGREMEDIAL SANCTIONS AND A CEASE-AND-DESIST ORDER.ACCORDINGLY, PURSUANT TO SECTION 15(B) OF THE EXCHANGE ACT ANDSECTIONS 203(E) AND 203(K) OF THE ADVISERS ACT, IT IS HEREBYORDERED THAT: RESPONDENT SHALL CEASE AND DESIST FROMCOMMITTING OR CAUSING ANY VIOLATIONS AND ANY FUTURE VIOLATIONSOF SECTIONS 206(2), 206(4) AND 207 OF THE ADVISERS ACT AND RULE206(4)-7 THEREUNDER; RESPONDENT IS CENSURED; WITHIN TEN (10)DAYS OF ENTRY OF THIS ORDER, RESPONDENT, JOINTLY AND SEVERALLY,SHALL PAY A TOTAL OF $2,049,859 CONSISTING OF DISGORGEMENT OF$1,956,460 AND PREJUDGMENT INTEREST OF $93,399; WITHIN TEN (10)DAYS OF ENTRY OF THIS ORDER, RESPONDENT, JOINTLY AND SEVERALLY,SHALL PAY A CIVIL MONETARY PENALTY IN THE AMOUNT OF $7.5 MILLION;AND RESPONDENT SHALL COMPLY WITH THE UNDERTAKINGSENUMERATED IN THE OFFER.


Yes

Sanctions Ordered: CensureMonetary/Fine $7,500,000.00Disgorgement/RestitutionCease and Desist/Injunction

Order






IN ANTICIPATION OF THE INSTITUTION OF THESE PROCEEDINGS,RESPONDENT HAS SUBMITTED AN OFFER OF SETTLEMENT (THE "OFFER")WHICH THE COMMISSION HAS DETERMINED TO ACCEPT. SOLELY FOR THEPURPOSE OF THESE PROCEEDINGS AND ANY OTHER PROCEEDINGSBROUGHT BY OR ON BEHALF OF THE COMMISSION, OR TO WHICH THECOMMISSION IS A PARTY, AND WITHOUT ADMITTING OR DENYING THEFINDINGS HEREIN, EXCEPT AS TO THE COMMISSION'S JURISDICTIONOVER THE RESPONDENT AND THE SUBJECT MATTER OF THESEPROCEEDINGS, WHICH ARE ADMITTED, RESPONDENT CONSENT TO THEENTRY OF THIS ORDER INSTITUTING ADMINISTRATIVE AND CEASE-AND-DESIST PROCEEDINGS PURSUANT TO SECTION 15(B) OF THE SECURITIESEXCHANGE ACT OF 1934 AND SECTIONS 203(E) AND 203(K) OF THEINVESTMENT ADVISERS ACT OF 1940, MAKING FINDINGS, AND IMPOSINGREMEDIAL SANCTIONS AND A CEASE-AND-DESIST ORDER.ACCORDINGLY, PURSUANT TO SECTION 15(B) OF THE EXCHANGE ACT ANDSECTIONS 203(E) AND 203(K) OF THE ADVISERS ACT, IT IS HEREBYORDERED THAT: RESPONDENT SHALL CEASE AND DESIST FROMCOMMITTING OR CAUSING ANY VIOLATIONS AND ANY FUTURE VIOLATIONSOF SECTIONS 206(2), 206(4) AND 207 OF THE ADVISERS ACT AND RULE206(4)-7 THEREUNDER; RESPONDENT IS CENSURED; WITHIN TEN (10)DAYS OF ENTRY OF THIS ORDER, RESPONDENT, JOINTLY AND SEVERALLY,SHALL PAY A TOTAL OF $2,049,859 CONSISTING OF DISGORGEMENT OF$1,956,460 AND PREJUDGMENT INTEREST OF $93,399; WITHIN TEN (10)DAYS OF ENTRY OF THIS ORDER, RESPONDENT, JOINTLY AND SEVERALLY,SHALL PAY A CIVIL MONETARY PENALTY IN THE AMOUNT OF $7.5 MILLION;AND RESPONDENT SHALL COMPLY WITH THE UNDERTAKINGSENUMERATED IN THE OFFER.


Initiated By: U.S. SECURITIES AND EXCHANGE COMMISSION


Cease and Desist





Allegations: IN ITS CAPACITY AS AN INVESTMENT ADVISOR, ROYAL ALLIANCE,TOGETHER WITH TWO AFFILIATES (COLLECTIVELY, THE "ADVISOR GROUPFIRMS"), WITHOUT ADMITTING OR DENYING THE U.S. SECURITIES ANDEXCHANGE COMMISSION'S (THE "SEC") FINDINGS CONSENTED TO THEENTRY OF AN ORDER INSTITUTING ADMINISTRATIVE AND CEASE-AND-DESIST PROCEEDINGS ("ORDER") BY THE SEC. THE ORDER FOCUSES ONTWO ISSUES RELATED TO OUR FEE-BASED ADVISORY BUSINESSCONDUCTED BETWEEN 2012 AND 2014. THE SEC FOUND THAT THEADVISOR GROUP FIRMS PLACED CERTAIN ADVISORY CLIENTS INVESTEDIN THE ADVISOR MANAGED PORTFOLIOS PROGRAM IN MUTUAL FUNDSHARE CLASSES WITH HIGHER EXPENSE COSTS WHEN LOWER EXPENSECOST SHARE CLASSES OF THOSE FUNDS WERE AVAILABLE. THE SECFOUND THAT THIS FINANCIAL INCENTIVE, TO PLACE NON-QUALIFIEDADVISORY CLIENTS IN HIGHER FEE SHARE CLASSES, PRESENTED ACONFLICT OF INTEREST THAT SHOULD HAVE BEEN DISCLOSED TOCLIENTS. THE SEC ALSO CONCLUDED THAT THE ADVISOR GROUP FIRMSFAILED TO ADOPT WRITTEN COMPLIANCE POLICIES OR PROCEDURESGOVERNING MUTUAL FUND SHARE CLASS SELECTION. IN ADDITION, THESEC FOUND THE ADVISOR GROUP FIRMS FAILED TO TIMELY MONITORCERTAIN WRAP ADVISORY ACCOUNTS FOR INACTIVITY PURSUANT TO THEFIRM'S WRITTEN COMPLIANCE POLICIES AND PROCEDURES.









Resolution:

Other Sanctions Ordered: PREJUDGMENT INTEREST AND UNDERTAKING

Sanction Details: ROYAL ALLIANCE AGREED TO CEASE AND DESIST FROM COMMITTING ORCAUSING ANY VIOLATIONS AND ANY FUTURE VIOLATIONS OF SECTIONS206(2), 206(4) AND 207 OF THE INVESTMENT ADVISERS ACT AND RULE206(4)-7 THEREUNDER. THE FIRM AND TWO OF ITS AFFILIATES AGREED TOJOINTLY PAY DISGORGEMENT OF $1,956,460 AND PREJUDGMENTINTEREST OF $93,399, A CIVIL PENALTY OF $7,500,000, AND TO RETAIN AQUALIFIED INDEPENDENT COMPLIANCE CONSULTANT. THE FIRMSUBMITTED PAYMENT TO THE SEC ON MARCH 18, 2016.

Firm Statement THE FIRM IMPLEMENTED NEW POLICIES AND PROCEDURES RELATING TOMUTUAL FUND SHARE CLASS SELECTION INCLUDING REBATING 12B-1FEES TO ALL ADVISORY CLIENTS. THE FIRM ALSO ENHANCED ITS FORMADV DISCLOSURES. IN ADDITION, THE FIRM ENHANCED ITS POLICIES ANDPROCEDURES FOR THE REVIEW AND ON-GOING USE OF WRAPACCOUNTS MANAGED BY THE FIRM'S INVESTMENT ADVISORYREPRESENTATIVES AND PROVIDED RESTITUTION TO AFFECTEDCUSTOMERS. THE FIRM WIRED THE REQUIRED PAYMENTS TO THE SEC ONMARCH 18, 2016.

Sanctions Ordered: Monetary/Fine $7,500,000.00

Order

Disclosure 9 of 41

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Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT FAILED TOIDENTIFY AND APPLY SALES CHARGE DISCOUNTS TO CERTAINCUSTOMER'S ELIGIBLE PURCHASES OF UNIT INVESTMENT TRUSTS (UITS)RESULTING IN CUSTOMERS PAYING EXCESSIVE SALES CHARGES OFAPPROXIMATELY $204,000. THE FINDINGS STATED THAT THE FIRM HASPAID RESTITUTION TO ALL AFFECTED CUSTOMERS. ADDITIONALLY, THEFIRM FAILED TO ESTABLISH, MAINTAIN AND ENFORCE A SUPERVISORYSYSTEM AND WSPS REASONABLY DESIGNED TO ENSURE THATCUSTOMERS RECEIVED SALES CHARGE DISCOUNTS ON ALL ELIGIBLE UITPURCHASES. THE FINDINGS ALSO STATED THAT THE FIRM FAILED TOREASONABLY SUPERVISE A REGISTERED REPRESENTATIVE THATEFFECTED UIT TRANSACTIONS IN CUSTOMER ACCOUNTS THATPRESENTED RED FLAGS AND WERE IDENTIFIED AS POTENTIALCOMPLIANCE ISSUES ON FIRM SURVEILLANCE REPORTS. THE FIRMINSTITUTED TRADING PARAMETERS TO ADDRESS THE REGISTEREDREPRESENTATIVE'S ACTIVITIES, BUT DID NOT EFFECTIVELY IMPLEMENTTHOSE MEASURES. THE FINDINGS ALSO INCLUDED THAT THE FIRM FAILEDTO ESTABLISH, MAINTAIN AND ENFORCE A SUPERVISORY SYSTEM ANDWSPS REASONABLY DESIGNED TO ENSURE THAT REGISTEREDREPRESENTATIVES FURNISHED CUSTOMERS WITH A PROSPECTUS FORUIT INVESTMENTS.







Initiated By: FINRA


Other


N/A



Principal Product Type: Unit Investment Trust(s)


WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT FAILED TOIDENTIFY AND APPLY SALES CHARGE DISCOUNTS TO CERTAINCUSTOMER'S ELIGIBLE PURCHASES OF UNIT INVESTMENT TRUSTS (UITS)RESULTING IN CUSTOMERS PAYING EXCESSIVE SALES CHARGES OFAPPROXIMATELY $204,000. THE FINDINGS STATED THAT THE FIRM HASPAID RESTITUTION TO ALL AFFECTED CUSTOMERS. ADDITIONALLY, THEFIRM FAILED TO ESTABLISH, MAINTAIN AND ENFORCE A SUPERVISORYSYSTEM AND WSPS REASONABLY DESIGNED TO ENSURE THATCUSTOMERS RECEIVED SALES CHARGE DISCOUNTS ON ALL ELIGIBLE UITPURCHASES. THE FINDINGS ALSO STATED THAT THE FIRM FAILED TOREASONABLY SUPERVISE A REGISTERED REPRESENTATIVE THATEFFECTED UIT TRANSACTIONS IN CUSTOMER ACCOUNTS THATPRESENTED RED FLAGS AND WERE IDENTIFIED AS POTENTIALCOMPLIANCE ISSUES ON FIRM SURVEILLANCE REPORTS. THE FIRMINSTITUTED TRADING PARAMETERS TO ADDRESS THE REGISTEREDREPRESENTATIVE'S ACTIVITIES, BUT DID NOT EFFECTIVELY IMPLEMENTTHOSE MEASURES. THE FINDINGS ALSO INCLUDED THAT THE FIRM FAILEDTO ESTABLISH, MAINTAIN AND ENFORCE A SUPERVISORY SYSTEM ANDWSPS REASONABLY DESIGNED TO ENSURE THAT REGISTEREDREPRESENTATIVES FURNISHED CUSTOMERS WITH A PROSPECTUS FORUIT INVESTMENTS.


Resolution:

Other Sanctions Ordered: REQUIRED TO SUBMIT SATISFACTORY PROOF OF PAYMENT OFRESTITUTION.

Sanction Details: THE FIRM WAS CENSURED, FINED $225,000, AND REQUIRED TO SUBMITSATISFACTORY PROOF OF PAYMENT OF RESTITUTION TO AFFECTEDCUSTOMERS, OR OF REASONABLE AND DOCUMENTED EFFORTSUNDERTAKEN TO EFFECT RESTITUTION.FINE PAID IN FULL ON DECEMBER 18, 2015.


No



iReporting Source:








Initiated By: FINRA




CENSURE AND RESTITUTION



Principal Product Type: Unit Investment Trust(s)


Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT FAILED TOIDENTIFY AND APPLY SALES CHARGE DISCOUNTS TO CERTAINCUSTOMER'S ELIGIBLE PURCHASES OF UNIT INVESTMENT TRUSTS (UITS).THE FIRM HAS PAID RESTITUTION TO ALL AFFECTED CUSTOMERSTOTALING APPROXIMATELY $204,00.00 THE FIRM WAS ALSO ALLEGED TOHAVE FAILED TO ESTABLISH, MAINTAIN AND ENFORCE A SUPERVISORYSYSTEM AND WSPS REASONABLY DESIGNED TO ENSURE THATCUSTOMERS RECEIVED THE APPROPRIATE SALES CHARGE DISCOUNT.THE FINDINGS ALSO STATED THAT THE FIRM FAILED TO REASONABLYSUPERVISE ONE REGISTERED REPRESENTATIVE WHO EFFECTED UITTRANSACTIONS AND THAT THE FIRM FAILED TO ESTABLISH, MAINTAIN ANDENFORCE A SUPERVISORY SYSTEM AND WSPS REASONABLY DESIGNEDTO ENSURE THAT REGISTERED REPRESENTATIVES FURNISHEDCUSTOMERS WITH PROSPECTUSES FOR UIT INVESTMENTS.



Resolution:


Sanction Details: THE FINE WAS PAID ON DECEMBER 18, 2015

Firm Statement THE FIRM ENHANCED ITS POLICIES AND PROCEDURES RELATED TOIDENTIFYING AND APPLYING SALES CHARGE DISCOUNTS FOR ALLELIGIBLE PURCHASES OF UITS. THE FIRM HAS PAID RESTITUTION TOAFFECTED CUSTOMERS TOTALING APPROXIMATELY $204,000. THE FIRMPAID THE $225,000 FINE ON DECEMBER 18, 2015.








www.finra.org/brokercheck User GuidanceTHE FIRM ENHANCED ITS POLICIES AND PROCEDURES RELATED TOIDENTIFYING AND APPLYING SALES CHARGE DISCOUNTS FOR ALLELIGIBLE PURCHASES OF UITS. THE FIRM HAS PAID RESTITUTION TOAFFECTED CUSTOMERS TOTALING APPROXIMATELY $204,000. THE FIRMPAID THE $225,000 FINE ON DECEMBER 18, 2015.

Disclosure 10 of 41

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Initiated By: NEVADA DIVISION OF INSURANCE





Docket/Case Number: 15.0229

Principal Product Type: Annuity(ies) - Variable


Allegations: ROYAL ALLIANCE ASSOCIATES, INC. WAS ALLEGED TO HAVE BEENDEFICIENT IN ITS ABILITY TO DEMONSTRATE SUPERVISON PROCEDURESIN PLACE FOR THE SALE OF CERTAIN VARIABLE ANNUITY PRODUCTS, INVIOLATION OF NEVADA ADMINSTRATIVE CODE 668A.460(2)DURING THETIME PERIOD OF JANUARY1, 2007 THROUGH DECEMBER 31,2012.



Resolution:


Sanction Details: FINE TO BE PAID WITHIN 30 DAYS OF ORDER; NO PORTION OF THEPENALTY WAS WAIVED.

Firm Statement ROYAL ALLIANCE ASSOCIATES, INC. ("RAA") ENTERED INTO A CONCENTORDER WITH THE NEVADA DIVISION OF INSURANCE ("NDOI"). WITHOUTADMITTING OR DENYING THE ALLEGATIONS, RAA CONCENTED TO THEDESCRIBED SANCTIONS AND A FINE OF $21,000 AND HAS IMPLEMENTEDAPPROPRIATE SUPERVISORY PROCEDURES. RAA ALSO AGREED TOREPORT TO THE NDOI ANY COMPLAINTS OR PROTENTIAL COMPLAINTSFROM PURCHASERS OF ANNUITIES BY RESIDENTS OF NEVADA DURINGTHE PERIOD COVERED BY THE ORDER AND TO PROVIDE PROOF OF ITSRESPONSE TO THE NDOI.

Sanctions Ordered: Monetary/Fine $21,000.00

Consent

Disclosure 11 of 41

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Disclosure 11 of 41








URL for Regulatory Action:

Principal Product Type: Options


Allegations: ROYAL ALLIANCE, THROUGH ITS REGISTERED REPRESENTATIVES, SOLDNON-TRADED REITS IN EXCESS OF MASSACHUSETTS HEIGHTENEDCONCENTRATION LIMITS IMPOSED BY THE PROSPECTUS.



Resolution:

Other Sanctions Ordered: ROYAL ALLIANCE SHALL CERTIFY IN WRITING TO THE DIVISION A REPORTADDRESSING ROYAL ALLIANCE'S POLICIES AND PROCEDURES FOR THESALE AND APPROVAL OF ALTERNATIVE INVESTMENTS.

Sanction Details: ROYAL ALLIANCE MUST OFFER RESTITUTION TO CUSTOMERS THAT WERESOLD NON-TRADED REITS IN EXCESS OF MASSACHUSETTS HEIGHTENEDCONCENTRATION LIMITS IMPOSED BY THE PROSPECTUS.


No


Order

iReporting Source:













Principal Product Type: Options


Allegations: ROYAL ALLIANCE, THROUGH ITS REGISTERED REPRESENTATIVES, SOLDNON-TRADED REITS IN EXCESS OF MASSACHUSETTS HEIGHTENEDCONCENTRATION LIMITS IMPOSED BY THE PROSPECTUS.



Resolution:

Other Sanctions Ordered: ROYAL ALLIANCE SHALL CERTIFY IN WRITING TO THE DIVISION A REPORTADDRESSING ROYAL ALLIANCE'S POLICIES AND PROCEDURES FOR THESALE AND APPROVAL OF ALTERNATIVE INVESTMENTS.

Sanction Details: ROYAL ALLIANCE MUST OFFER RESTITUTION TO SEVEN (7) CUSTOMERSFOR TEN (10)TRADES SOLD IN EXCESS OF MASSACHUSETTSHEIGHTENED CONCENTRATION LIMITS IMPOSED BY THE PROSPECTUS.


Order

Disclosure 12 of 41

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Allegations: FINRA BY-LAWS OF THE CORPORATION ARTICLE V, SECTION 2(C), FINRABY-LAWS OF THE CORPORATION ARTICLE III, SECTION 3(B), FINRA RULE2010, NASD RULES 2110, 3010, 3070: THE FIRM PERMITTED TWOINDIVIDUALS TO BE ASSOCIATED WITH THE FIRM WHILE THEY WERESTATUTORILY DISQUALIFIED. STATE REGULATORY ACTIONS RESULTED INSTATUTORY DISQUALIFICATIONS OF THE INDIVIDUALS. THE FIRMREVIEWED CERTAIN FILINGS MADE IN CONNECTION WITH THESEACTIONS. DESPITE THIS, THE FIRM ALLOWED THESE INDIVIDUALS TOCONTINUE TO BE ASSOCIATED WITH THE FIRM UNTIL SEVERAL MONTHSLATER. THE FIRM TIMELY AND ACCURATELY FAILED TO FILE REQUIREDFORM U4 UPDATES FOR THE INDIVIDUALS. FOR INSTANCE, OVER ANALMOST TWO YEAR PERIOD THE FIRM FAILED TO FILE REQUIRED FORMU4 UPDATES FOR ONE OF THE INDIVIDUALS TO REFLECT A STATE ORDER-DESPITE THE FACT THAT FINRA SENT THE FIRM SEVERAL DISCLOSURELETTERS. IN EACH SUCH LETTER, THE FIRM WAS INSTRUCTED TO AMENDTHE INDIVIDUAL'S FORM U4 TO REFLECT THE CEASE AND DESIST NATUREOF A STATE ORDER. NEVERTHELESS, THE FIRM FAILED TO UPDATE THEINDIVIDUAL'S FORM U4 AS REQUIRED. THE FIRM ALSO FAILED TO UPDATETHE INDIVIDUAL'S FORM U4 WITHIN THE REQUIRED 30-DAY PERIOD TOREFLECT SEVERAL OTHER STATE ORDERS. THE FIRM DID NOT UPDATETHE INDIVIDUAL'S FORM U4 TO DISCLOSE A COMPLAINT ISSUED BY STATEREGULATORS UNTIL MORE THAN FOUR MONTHS AFTER THE COMPLAINTWAS FILED. IN ADDITION, THE FIRM FAILED TO UPDATE THE OTHERINDIVIDUAL'S FORM U4 WITH RESPECT TO A STATE UNTIL TEN MONTHSAFTER THE COMPLAINT WAS FILED. THE FIRM FAILED TO UPDATE THEINDIVIDUAL'S FORM U4 TO DISCLOSE ANOTHER STATE MATTER UNTILMORE THAN TWO YEARS AFTER THE STATE FILED ITS COMPLAINT. THEFIRM FAILED TO TIMELY MAKE THE REQUIRED NASD RULE 3070 FILINGWITH RESPECT TO THE REGULATORY ACTION FROM A STATE. THE FIRMDID NOT MAKE ITS RULE 3070 FILING RELATING TO THE STATEREGULATORY ACTION UNTIL SEVEN MONTHS AFTER THE INDIVIDUALSWERE NAMED AND THREE MONTHS AFTER THE INJUNCTION ISSUED. THEFIRM FAILED TO MAKE ANY RULE 3070 FILINGS WITH RESPECT TO THEACTIONS EMANATING FROM SEVERAL STATES. THE FIRM FAILED TOREASONABLY SUPERVISE THE INDIVIDUALS TO ENSURE THAT THEY MADEREQUIRED DISCLOSURES REGARDING THEIR OUTSIDE BUSINESSACTIVITIES THEY OWNED AND OPERATED. ALTHOUGH THESE INDIVIDUALSENGAGED IN EXTENSIVE OUTSIDE BUSINESS ACTIVITIES THROUGH THEIRENTITY, THEY FAILED TO ADEQUATELY DISCLOSE THOSE ACTIVITIES TOTHE FIRM AS REQUIRED BY RULE 3030. THE FIRM FAILED TO DETERMINEWHETHER ANY ADDITIONAL DISCLOSURES WERE NECESSARY DESPITENUMEROUS INDICATIONS THAT THESE INDIVIDUALS WERE ENGAGED INTHE ACTIVITIES AT THEIR OUTSIDE BUSINESS. FOR INSTANCE TWOSUPERVISORS VISITED THE INDIVIDUALS' OUTSIDE BUSINESS OFFICES,AND SAW NUMEROUS PEOPLE WORKING IN THE CALL CENTER. DESPITETHIS, NO ONE AT THE FIRM DID ANY FOLLOW-UP TO DETERMINEWHETHER THESE ACTIVITIES WERE AN OUTSIDE BUSINESS ACTIVITYTHAT NEEDED TO BE DISCLOSED BY THE INDIVIDUALS. THE FIRM FAILEDTO REASONABLY SUPERVISE THESE INDIVIDUALS TO ENSURE THEY MADEAPPROPRIATE DISCLOSURES REGARDING THE STATE REGULATORYACTIONS. ONE OF THE INDIVIDUALS HAD DISCUSSIONS WITH VARIOUSINDIVIDUALS AT THE FIRM, INCLUDING HIS SUPERVISORS, CONCERNINGCERTAIN STATE REGULATORY ACTIONS. DESPITE KNOWLEDGE OF THOSESTATE REGULATORY ACTIONS, THE FIRM FAILED TO DETERMINEWHETHER THESE ACTIONS REQUIRED DISCLOSURE BY THESEINDIVIDUALS AND FAILED TO REQUIRE ANY DISCLOSURES.






www.finra.org/brokercheck User GuidanceFINRA BY-LAWS OF THE CORPORATION ARTICLE V, SECTION 2(C), FINRABY-LAWS OF THE CORPORATION ARTICLE III, SECTION 3(B), FINRA RULE2010, NASD RULES 2110, 3010, 3070: THE FIRM PERMITTED TWOINDIVIDUALS TO BE ASSOCIATED WITH THE FIRM WHILE THEY WERESTATUTORILY DISQUALIFIED. STATE REGULATORY ACTIONS RESULTED INSTATUTORY DISQUALIFICATIONS OF THE INDIVIDUALS. THE FIRMREVIEWED CERTAIN FILINGS MADE IN CONNECTION WITH THESEACTIONS. DESPITE THIS, THE FIRM ALLOWED THESE INDIVIDUALS TOCONTINUE TO BE ASSOCIATED WITH THE FIRM UNTIL SEVERAL MONTHSLATER. THE FIRM TIMELY AND ACCURATELY FAILED TO FILE REQUIREDFORM U4 UPDATES FOR THE INDIVIDUALS. FOR INSTANCE, OVER ANALMOST TWO YEAR PERIOD THE FIRM FAILED TO FILE REQUIRED FORMU4 UPDATES FOR ONE OF THE INDIVIDUALS TO REFLECT A STATE ORDER-DESPITE THE FACT THAT FINRA SENT THE FIRM SEVERAL DISCLOSURELETTERS. IN EACH SUCH LETTER, THE FIRM WAS INSTRUCTED TO AMENDTHE INDIVIDUAL'S FORM U4 TO REFLECT THE CEASE AND DESIST NATUREOF A STATE ORDER. NEVERTHELESS, THE FIRM FAILED TO UPDATE THEINDIVIDUAL'S FORM U4 AS REQUIRED. THE FIRM ALSO FAILED TO UPDATETHE INDIVIDUAL'S FORM U4 WITHIN THE REQUIRED 30-DAY PERIOD TOREFLECT SEVERAL OTHER STATE ORDERS. THE FIRM DID NOT UPDATETHE INDIVIDUAL'S FORM U4 TO DISCLOSE A COMPLAINT ISSUED BY STATEREGULATORS UNTIL MORE THAN FOUR MONTHS AFTER THE COMPLAINTWAS FILED. IN ADDITION, THE FIRM FAILED TO UPDATE THE OTHERINDIVIDUAL'S FORM U4 WITH RESPECT TO A STATE UNTIL TEN MONTHSAFTER THE COMPLAINT WAS FILED. THE FIRM FAILED TO UPDATE THEINDIVIDUAL'S FORM U4 TO DISCLOSE ANOTHER STATE MATTER UNTILMORE THAN TWO YEARS AFTER THE STATE FILED ITS COMPLAINT. THEFIRM FAILED TO TIMELY MAKE THE REQUIRED NASD RULE 3070 FILINGWITH RESPECT TO THE REGULATORY ACTION FROM A STATE. THE FIRMDID NOT MAKE ITS RULE 3070 FILING RELATING TO THE STATEREGULATORY ACTION UNTIL SEVEN MONTHS AFTER THE INDIVIDUALSWERE NAMED AND THREE MONTHS AFTER THE INJUNCTION ISSUED. THEFIRM FAILED TO MAKE ANY RULE 3070 FILINGS WITH RESPECT TO THEACTIONS EMANATING FROM SEVERAL STATES. THE FIRM FAILED TOREASONABLY SUPERVISE THE INDIVIDUALS TO ENSURE THAT THEY MADEREQUIRED DISCLOSURES REGARDING THEIR OUTSIDE BUSINESSACTIVITIES THEY OWNED AND OPERATED. ALTHOUGH THESE INDIVIDUALSENGAGED IN EXTENSIVE OUTSIDE BUSINESS ACTIVITIES THROUGH THEIRENTITY, THEY FAILED TO ADEQUATELY DISCLOSE THOSE ACTIVITIES TOTHE FIRM AS REQUIRED BY RULE 3030. THE FIRM FAILED TO DETERMINEWHETHER ANY ADDITIONAL DISCLOSURES WERE NECESSARY DESPITENUMEROUS INDICATIONS THAT THESE INDIVIDUALS WERE ENGAGED INTHE ACTIVITIES AT THEIR OUTSIDE BUSINESS. FOR INSTANCE TWOSUPERVISORS VISITED THE INDIVIDUALS' OUTSIDE BUSINESS OFFICES,AND SAW NUMEROUS PEOPLE WORKING IN THE CALL CENTER. DESPITETHIS, NO ONE AT THE FIRM DID ANY FOLLOW-UP TO DETERMINEWHETHER THESE ACTIVITIES WERE AN OUTSIDE BUSINESS ACTIVITYTHAT NEEDED TO BE DISCLOSED BY THE INDIVIDUALS. THE FIRM FAILEDTO REASONABLY SUPERVISE THESE INDIVIDUALS TO ENSURE THEY MADEAPPROPRIATE DISCLOSURES REGARDING THE STATE REGULATORYACTIONS. ONE OF THE INDIVIDUALS HAD DISCUSSIONS WITH VARIOUSINDIVIDUALS AT THE FIRM, INCLUDING HIS SUPERVISORS, CONCERNINGCERTAIN STATE REGULATORY ACTIONS. DESPITE KNOWLEDGE OF THOSESTATE REGULATORY ACTIONS, THE FIRM FAILED TO DETERMINEWHETHER THESE ACTIONS REQUIRED DISCLOSURE BY THESEINDIVIDUALS AND FAILED TO REQUIRE ANY DISCLOSURES.






Initiated By: FINRA


Other


N/A





FINRA BY-LAWS OF THE CORPORATION ARTICLE V, SECTION 2(C), FINRABY-LAWS OF THE CORPORATION ARTICLE III, SECTION 3(B), FINRA RULE2010, NASD RULES 2110, 3010, 3070: THE FIRM PERMITTED TWOINDIVIDUALS TO BE ASSOCIATED WITH THE FIRM WHILE THEY WERESTATUTORILY DISQUALIFIED. STATE REGULATORY ACTIONS RESULTED INSTATUTORY DISQUALIFICATIONS OF THE INDIVIDUALS. THE FIRMREVIEWED CERTAIN FILINGS MADE IN CONNECTION WITH THESEACTIONS. DESPITE THIS, THE FIRM ALLOWED THESE INDIVIDUALS TOCONTINUE TO BE ASSOCIATED WITH THE FIRM UNTIL SEVERAL MONTHSLATER. THE FIRM TIMELY AND ACCURATELY FAILED TO FILE REQUIREDFORM U4 UPDATES FOR THE INDIVIDUALS. FOR INSTANCE, OVER ANALMOST TWO YEAR PERIOD THE FIRM FAILED TO FILE REQUIRED FORMU4 UPDATES FOR ONE OF THE INDIVIDUALS TO REFLECT A STATE ORDER-DESPITE THE FACT THAT FINRA SENT THE FIRM SEVERAL DISCLOSURELETTERS. IN EACH SUCH LETTER, THE FIRM WAS INSTRUCTED TO AMENDTHE INDIVIDUAL'S FORM U4 TO REFLECT THE CEASE AND DESIST NATUREOF A STATE ORDER. NEVERTHELESS, THE FIRM FAILED TO UPDATE THEINDIVIDUAL'S FORM U4 AS REQUIRED. THE FIRM ALSO FAILED TO UPDATETHE INDIVIDUAL'S FORM U4 WITHIN THE REQUIRED 30-DAY PERIOD TOREFLECT SEVERAL OTHER STATE ORDERS. THE FIRM DID NOT UPDATETHE INDIVIDUAL'S FORM U4 TO DISCLOSE A COMPLAINT ISSUED BY STATEREGULATORS UNTIL MORE THAN FOUR MONTHS AFTER THE COMPLAINTWAS FILED. IN ADDITION, THE FIRM FAILED TO UPDATE THE OTHERINDIVIDUAL'S FORM U4 WITH RESPECT TO A STATE UNTIL TEN MONTHSAFTER THE COMPLAINT WAS FILED. THE FIRM FAILED TO UPDATE THEINDIVIDUAL'S FORM U4 TO DISCLOSE ANOTHER STATE MATTER UNTILMORE THAN TWO YEARS AFTER THE STATE FILED ITS COMPLAINT. THEFIRM FAILED TO TIMELY MAKE THE REQUIRED NASD RULE 3070 FILINGWITH RESPECT TO THE REGULATORY ACTION FROM A STATE. THE FIRMDID NOT MAKE ITS RULE 3070 FILING RELATING TO THE STATEREGULATORY ACTION UNTIL SEVEN MONTHS AFTER THE INDIVIDUALSWERE NAMED AND THREE MONTHS AFTER THE INJUNCTION ISSUED. THEFIRM FAILED TO MAKE ANY RULE 3070 FILINGS WITH RESPECT TO THEACTIONS EMANATING FROM SEVERAL STATES. THE FIRM FAILED TOREASONABLY SUPERVISE THE INDIVIDUALS TO ENSURE THAT THEY MADEREQUIRED DISCLOSURES REGARDING THEIR OUTSIDE BUSINESSACTIVITIES THEY OWNED AND OPERATED. ALTHOUGH THESE INDIVIDUALSENGAGED IN EXTENSIVE OUTSIDE BUSINESS ACTIVITIES THROUGH THEIRENTITY, THEY FAILED TO ADEQUATELY DISCLOSE THOSE ACTIVITIES TOTHE FIRM AS REQUIRED BY RULE 3030. THE FIRM FAILED TO DETERMINEWHETHER ANY ADDITIONAL DISCLOSURES WERE NECESSARY DESPITENUMEROUS INDICATIONS THAT THESE INDIVIDUALS WERE ENGAGED INTHE ACTIVITIES AT THEIR OUTSIDE BUSINESS. FOR INSTANCE TWOSUPERVISORS VISITED THE INDIVIDUALS' OUTSIDE BUSINESS OFFICES,AND SAW NUMEROUS PEOPLE WORKING IN THE CALL CENTER. DESPITETHIS, NO ONE AT THE FIRM DID ANY FOLLOW-UP TO DETERMINEWHETHER THESE ACTIVITIES WERE AN OUTSIDE BUSINESS ACTIVITYTHAT NEEDED TO BE DISCLOSED BY THE INDIVIDUALS. THE FIRM FAILEDTO REASONABLY SUPERVISE THESE INDIVIDUALS TO ENSURE THEY MADEAPPROPRIATE DISCLOSURES REGARDING THE STATE REGULATORYACTIONS. ONE OF THE INDIVIDUALS HAD DISCUSSIONS WITH VARIOUSINDIVIDUALS AT THE FIRM, INCLUDING HIS SUPERVISORS, CONCERNINGCERTAIN STATE REGULATORY ACTIONS. DESPITE KNOWLEDGE OF THOSESTATE REGULATORY ACTIONS, THE FIRM FAILED TO DETERMINEWHETHER THESE ACTIONS REQUIRED DISCLOSURE BY THESEINDIVIDUALS AND FAILED TO REQUIRE ANY DISCLOSURES.


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 $175,000. FINE PAID INFULL JANUARY 17, 2012.


No




Allegations: ON MARCH 9, 2011, THE FIRM RECEIVED A "WELLS NOTICE" ADVISING THATFINRA HAS MADE A PRELIMINARY DETERMINATION THAT DISCIPLINARYACTION BE BROUGHT AGAINST THE FIRM FOR ALLEGED VIOLATIONS OF:1. ALLOWING TWO INDIVIDUALS WHO WERE SUBJECT TO "STATUTORYDISQUALIFICATION" TO ASSOCIATE WITH THE FIRM.2. FAILING TO TIMELY FILE CERTAIN FORM U4 AND RULE 3070 FILINGS.3. CERTAIN SUPERVISORY VIOLATIONS RELATING TO THE OUTSIDEBUSINESS ACTIVITIES OF TWO INDIVIDUALS.








Initiated By: FINANCIAL INDUSTRY REGULATORY AUTHORITY (FINRA)






Principal Product Type: Insurance


ON MARCH 9, 2011, THE FIRM RECEIVED A "WELLS NOTICE" ADVISING THATFINRA HAS MADE A PRELIMINARY DETERMINATION THAT DISCIPLINARYACTION BE BROUGHT AGAINST THE FIRM FOR ALLEGED VIOLATIONS OF:1. ALLOWING TWO INDIVIDUALS WHO WERE SUBJECT TO "STATUTORYDISQUALIFICATION" TO ASSOCIATE WITH THE FIRM.2. FAILING TO TIMELY FILE CERTAIN FORM U4 AND RULE 3070 FILINGS.3. CERTAIN SUPERVISORY VIOLATIONS RELATING TO THE OUTSIDEBUSINESS ACTIVITIES OF TWO INDIVIDUALS.


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 $175,000. FINE PAID INFULL JANUARY 17,2012.

Firm Statement FINRA BY-LAWS OF THE CORPORATION ARTICLE V, SECTION 2(C), FINRABY-LAWS OF THE CORPORATION ARTICLE III, SECTION 3(B), FINRA RULE2010, NASD RULES 2110, 3010, 3070: THE FIRM PERMITTED TWOINDIVIDUALS TO BE ASSOCIATED WITH THE FIRM WHILE THEY WERESTATUTORILY DISQUALIFIED. STATE REGULATORY ACTIONS RESULTED INSTATUTORY DISQUALIFICATIONS OF THE INDIVIDUALS. THE FIRMREVIEWED CERTAIN FILINGS MADE IN CONNECTION WITH THESEACTIONS. DESPITE THIS, THE FIRM ALLOWED THESE INDIVIDUALS TOCONTINUE TO BE ASSOCIATED WITH THE FIRM UNTIL SEVERAL MONTHSLATER. THE FIRM TIMELY AND ACCURATELY FAILED TO FILE REQUIREDFORM U4 UPDATES FOR THE INDIVIDUALS. FOR INSTANCE, OVER ANALMOST TWO YEAR PERIOD THE FIRM FAILED TO FILE REQUIRED FORMU4 UPDATES FOR ONE OF THE INDIVIDUALS TO REFLECT A STATE ORDER-DESPITE THE FACT THAT FINRA SENT THE FIRM SEVERAL DISCLOSURELETTERS. IN EACH SUCH LETTER, THE FIRM WAS INSTRUCTED TO AMENDTHE INDIVIDUAL'S FORM U4 TO REFLECT THE CEASE AND DESIST NATUREOF A STATE ORDER. NEVERTHELESS, THE FIRM FAILED TO UPDATE THEINDIVIDUAL'S FORM U4 AS REQUIRED. THE FIRM ALSO FAILED TO UPDATETHE INDIVIDUAL'S FORM U4 WITHIN THE REQUIRED 30-DAY PERIOD TOREFLECT SEVERAL OTHER STATE ORDERS. THE FIRM DID NOT UPDATETHE INDIVIDUAL'S FORM U4 TO DISCLOSE A COMPLAINT ISSUED BY STATEREGULATORS UNTIL MORE THAN FOUR MONTHS AFTER THE COMPLAINTWAS FILED. IN ADDITION, THE FIRM FAILED TO UPDATE THE OTHERINDIVIDUAL'S FORM U4 WITH RESPECT TO A STATE UNTIL TEN MONTHSAFTER THE COMPLAINT WAS FILED. THE FIRM FAILED TO UPDATE THEINDIVIDUAL'S FORM U4 TO DISCLOSE ANOTHER STATE MATTER UNTILMORE THAN TWO YEARS AFTER THE STATE FILED ITS COMPLAINT. THEFIRM FAILED TO TIMELY MAKE THE REQUIRED NASD RULE 3070 FILINGWITH RESPECT TO THE REGULATORY ACTION FROM A STATE. THE FIRMDID NOT MAKE ITS RULE 3070 FILING RELATING TO THE STATEREGULATORY ACTION UNTIL SEVEN MONTHS AFTER THE INDIVIDUALSWERE NAMED AND THREE MONTHS AFTER THE INJUNCTION ISSUED. THEFIRM FAILED TO MAKE ANY RULE 3070 FILINGS WITH RESPECT TO THEACTIONS EMANATING FROM SEVERAL STATES. THE FIRM FAILED TOREASONABLY SUPERVISE THE INDIVIDUALS TO ENSURE THAT THEY MADEREQUIRED DISCLOSURES REGARDING THEIR OUTSIDE BUSINESSACTIVITIES THEY OWNED AND OPERATED. ALTHOUGH THESE INDIVIDUALSENGAGED IN EXTENSIVE OUTSIDE BUSINESS ACTIVITIES THROUGH THEIRENTITY, THEY FAILED TO ADEQUATELY DISCLOSE THOSE ACTIVITIES TOTHE FIRM AS REQUIRED BY RULE 3030. THE FIRM FAILED TO DETERMINEWHETHER ANY ADDITIONAL DISCLOSURES WERE NECESSARY DESPITENUMEROUS INDICATIONS THAT THESE INDIVIDUALS WERE ENGAGED INTHE ACTIVITIES AT THEIR OUTSIDE BUSINESS. FOR INSTANCE TWOSUPERVISORS VISITED THE INDIVIDUALS' OUTSIDE BUSINESS OFFICES,AND SAW NUMEROUS PEOPLE WORKING IN THE CALL CENTER. DESPITETHIS, NO ONE AT THE FIRM DID ANY FOLLOW-UP TO DETERMINEWHETHER THESE ACTIVITIES WERE AN OUTSIDE BUSINESS ACTIVITYTHAT NEEDED TO BE DISCLOSED BY THE INDIVIDUALS. THE FIRM FAILEDTO REASONABLY SUPERVISE THESE INDIVIDUALS TO ENSURE THEY MADEAPPROPRIATE DISCLOSURES REGARDING THE STATE REGULATORYACTIONS. ONE OF THE INDIVIDUALS HAD DISCUSSIONS WITH VARIOUSINDIVIDUALS AT THE FIRM, INCLUDING HIS SUPERVISORS, CONCERNINGCERTAIN STATE REGULATORY ACTIONS. DESPITE KNOWLEDGE OF THOSESTATE REGULATORY ACTIONS, THE FIRM FAILED TO DETERMINEWHETHER THESE ACTIONS REQUIRED DISCLOSURE BY THESEINDIVIDUALS AND FAILED TO REQUIRE ANY DISCLOSURES.








FINRA BY-LAWS OF THE CORPORATION ARTICLE V, SECTION 2(C), FINRABY-LAWS OF THE CORPORATION ARTICLE III, SECTION 3(B), FINRA RULE2010, NASD RULES 2110, 3010, 3070: THE FIRM PERMITTED TWOINDIVIDUALS TO BE ASSOCIATED WITH THE FIRM WHILE THEY WERESTATUTORILY DISQUALIFIED. STATE REGULATORY ACTIONS RESULTED INSTATUTORY DISQUALIFICATIONS OF THE INDIVIDUALS. THE FIRMREVIEWED CERTAIN FILINGS MADE IN CONNECTION WITH THESEACTIONS. DESPITE THIS, THE FIRM ALLOWED THESE INDIVIDUALS TOCONTINUE TO BE ASSOCIATED WITH THE FIRM UNTIL SEVERAL MONTHSLATER. THE FIRM TIMELY AND ACCURATELY FAILED TO FILE REQUIREDFORM U4 UPDATES FOR THE INDIVIDUALS. FOR INSTANCE, OVER ANALMOST TWO YEAR PERIOD THE FIRM FAILED TO FILE REQUIRED FORMU4 UPDATES FOR ONE OF THE INDIVIDUALS TO REFLECT A STATE ORDER-DESPITE THE FACT THAT FINRA SENT THE FIRM SEVERAL DISCLOSURELETTERS. IN EACH SUCH LETTER, THE FIRM WAS INSTRUCTED TO AMENDTHE INDIVIDUAL'S FORM U4 TO REFLECT THE CEASE AND DESIST NATUREOF A STATE ORDER. NEVERTHELESS, THE FIRM FAILED TO UPDATE THEINDIVIDUAL'S FORM U4 AS REQUIRED. THE FIRM ALSO FAILED TO UPDATETHE INDIVIDUAL'S FORM U4 WITHIN THE REQUIRED 30-DAY PERIOD TOREFLECT SEVERAL OTHER STATE ORDERS. THE FIRM DID NOT UPDATETHE INDIVIDUAL'S FORM U4 TO DISCLOSE A COMPLAINT ISSUED BY STATEREGULATORS UNTIL MORE THAN FOUR MONTHS AFTER THE COMPLAINTWAS FILED. IN ADDITION, THE FIRM FAILED TO UPDATE THE OTHERINDIVIDUAL'S FORM U4 WITH RESPECT TO A STATE UNTIL TEN MONTHSAFTER THE COMPLAINT WAS FILED. THE FIRM FAILED TO UPDATE THEINDIVIDUAL'S FORM U4 TO DISCLOSE ANOTHER STATE MATTER UNTILMORE THAN TWO YEARS AFTER THE STATE FILED ITS COMPLAINT. THEFIRM FAILED TO TIMELY MAKE THE REQUIRED NASD RULE 3070 FILINGWITH RESPECT TO THE REGULATORY ACTION FROM A STATE. THE FIRMDID NOT MAKE ITS RULE 3070 FILING RELATING TO THE STATEREGULATORY ACTION UNTIL SEVEN MONTHS AFTER THE INDIVIDUALSWERE NAMED AND THREE MONTHS AFTER THE INJUNCTION ISSUED. THEFIRM FAILED TO MAKE ANY RULE 3070 FILINGS WITH RESPECT TO THEACTIONS EMANATING FROM SEVERAL STATES. THE FIRM FAILED TOREASONABLY SUPERVISE THE INDIVIDUALS TO ENSURE THAT THEY MADEREQUIRED DISCLOSURES REGARDING THEIR OUTSIDE BUSINESSACTIVITIES THEY OWNED AND OPERATED. ALTHOUGH THESE INDIVIDUALSENGAGED IN EXTENSIVE OUTSIDE BUSINESS ACTIVITIES THROUGH THEIRENTITY, THEY FAILED TO ADEQUATELY DISCLOSE THOSE ACTIVITIES TOTHE FIRM AS REQUIRED BY RULE 3030. THE FIRM FAILED TO DETERMINEWHETHER ANY ADDITIONAL DISCLOSURES WERE NECESSARY DESPITENUMEROUS INDICATIONS THAT THESE INDIVIDUALS WERE ENGAGED INTHE ACTIVITIES AT THEIR OUTSIDE BUSINESS. FOR INSTANCE TWOSUPERVISORS VISITED THE INDIVIDUALS' OUTSIDE BUSINESS OFFICES,AND SAW NUMEROUS PEOPLE WORKING IN THE CALL CENTER. DESPITETHIS, NO ONE AT THE FIRM DID ANY FOLLOW-UP TO DETERMINEWHETHER THESE ACTIVITIES WERE AN OUTSIDE BUSINESS ACTIVITYTHAT NEEDED TO BE DISCLOSED BY THE INDIVIDUALS. THE FIRM FAILEDTO REASONABLY SUPERVISE THESE INDIVIDUALS TO ENSURE THEY MADEAPPROPRIATE DISCLOSURES REGARDING THE STATE REGULATORYACTIONS. ONE OF THE INDIVIDUALS HAD DISCUSSIONS WITH VARIOUSINDIVIDUALS AT THE FIRM, INCLUDING HIS SUPERVISORS, CONCERNINGCERTAIN STATE REGULATORY ACTIONS. DESPITE KNOWLEDGE OF THOSESTATE REGULATORY ACTIONS, THE FIRM FAILED TO DETERMINEWHETHER THESE ACTIONS REQUIRED DISCLOSURE BY THESEINDIVIDUALS AND FAILED TO REQUIRE ANY DISCLOSURES.

Disclosure 13 of 41

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Initiated By: STATE OF ILLINOIS, ILLLINOIS SECURITIES DEPARTMENT


Revocation


NOTICE OF HEARING





Other Product Type(s): PROMISSORY NOTE

Allegations: THE DEPARTMENT'S INVESTIGATION INTO THIS MATTER, AS IT RELATESTO RESPONDENTS ROYAL ALLIANCE, DIRK SALBERG AND MARCUSCARBAJAL, DETERMINED THAT THE UNDERLYING FACTS OF THIS MATTERCONSIST OF UNIQUE CIRCUMSTANCES IN WHICH RESPONDENT MARK J.BARATI, NOT AFFILIATED WITH ROYAL ALLIANCE, HAD USED HISKNOWLEDGE OF THE SECURITIES INDUSTRY'S GENERAL POLICIES ANDPROCEDURES AS WELL AS HIS RELATIONSHIP WITH RESPONDENTSSALBERG AND CARBAJAL TO MANIPULATE THE CIRCUMSTANCES SO THATHE COULD DEFRAUD CERTAIN INVESTORS. IN PARTICULAR, BARATI SOLDINVESTORS' TWO PROMISSORY NOTES FOR $1,200,00.00 BY CONVINCINGTHE INVESTORS TO BORROW ON MARGIN THROUGH THEIR BROKERAGEACCOUNTS HELD AT ROYAL ALLIANCE. BARATI OBTAINED THE INVESTORS'SIGNATURES ON APPROPRIATE DOCUMENTS TO ALLOW FOR MARGIN ANDTO DIRECT THE BORROWED MONEY BE TRANSFERRED INTO A BANKACCOUNT HELD BY BARATI. BARATI SUBMITTED CERTAIN DOCUMENTSWITH RESPONDENT SALBERG AND OTHERS WITH RESPONDENTCARBAJAL. SOON AFTER OBTAINING INVESTORS' MONEY BARATI FLEDILLINOIS. RESPONDENTS ROYAL ALLIANCE, DIRK SALBERG & MARCUSCABAJAL ENTERED A CONSENT ORDER OF CENSURE WITH THEDEPARTMENT WHEREIN THEY AGREED TO PAY INVESTORSAPPROXIMATELY 45% OF THEIR LOSSES PURSUANT TO A PRIVATESETTLEMENT & THEY AGREED WITHOUT ADMITTING OR DENYING THEFACTS OR CONCLUSIONS OF LAW, THAT THE DEPARTMENT WOULD FIND AVIOLATION OF SECTION 11.A OF THE ILLINOIS SECURITIES LAW OF 1953FOR NOT PROPERLY RECORDING THE ABOVE-DESCRIBED TRANSACTIONIN THE ROYAL ALLIANCE BLOTTER & LEDGER. THESE RESPONDENTSALSO PAID FOR THE DEPARTMENTS' INVESTIGATION INTO THIS MATTER.



Resolution: Consent








Sanction Details: CIVIL AND ADMINISTRATIVE PENALTY/FINE IN THE AMOUNT OF $10,000.00

Regulator Statement NOTICE OF HEARING WAS ISSUED JANUARY 18, 2011. AMENDED NOTICEOF HEARING WAS ISSUED ARPIL 22, 2011. CONSENT ORDER TO CENSUREWAS ISSUED JANUARY 9, 2012.CONTACT (312) 793-3384


No

Sanctions Ordered: Censure


Initiated By: STATE OF ILLINOIS, ILLINOIS SECURITIES DEPARTMENT




NOTICE OF HEARING




Other Product Type(s): PROMISSORY NOTE

Allegations: FAILURE TO SUPERVISE



Resolution:


Sanction Details: CIVIL AND ADMINISTRATIVE PENALTY/FINE IN THE AMOUNT OF$10,000.00;CENSURE


Consent






Sanction Details: CIVIL AND ADMINISTRATIVE PENALTY/FINE IN THE AMOUNT OF$10,000.00;CENSURE

Firm Statement CIVIL AND ADMINISTRATIVE PENALTY/FINE IN THE AMOUNT OG$10,000.00;CENSURE

Disclosure 14 of 41

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Initiated By: NEVADA


Restitution


COSTS OF INVESTIGATION


Docket/Case Number: I10-172-BLM



Other Product Type(s): REIT

Allegations: RESPONDENT'S REPRESENTATIVE FAILED TO FOLLOW THERESPONDENT'S POLICIES AND PROCEDURES WHEN HE INVESTED SUCHCUSTOMER'S MONEY INTO A REIT INVESTMENT FOR WHICH SAIDINVESTMENTS WERE UNSUITABLE



Resolution:

Other Sanctions Ordered: COSTS OF INVESTIGATION OF $5,000

Sanction Details: RESPONDENT PAID RESTITUTION TO THE SUBJECT CUSTOMERS BYLIQUIDATING REIT HOLDINGS FOR SAID CUSTOMERS AND PAY TO THECUSTOMERS THE TOTAL SUM OF $58,770.48 AS OF 8/16/2010

Regulator Statement WITHOUT ADMITTING OR DENYING THE STATEMENT OF FACTS ANDCONCLUSIONS OF LAW CONTAINED IN THIS ORDER, RESPONDENTCONSENTED TO THE ENTRY OF THIS ORDER


No

Sanctions Ordered: Disgorgement/Restitution

Consent






Regulator Statement WITHOUT ADMITTING OR DENYING THE STATEMENT OF FACTS ANDCONCLUSIONS OF LAW CONTAINED IN THIS ORDER, RESPONDENTCONSENTED TO THE ENTRY OF THIS ORDER


Initiated By: NEVADA


Restitution


COSTS OF INVESTIGATION


Docket/Case Number: 110-172-BLM


Other Product Type(s): REIT

Allegations: COMPANY REPRESENTATIVE FAILED TO FOLLOW COMPANY'S POLICIESAND PROCEDURES WHEN INVESTING CUSTOMER'S MONEY INTO A REITINVESTMENT WHICH WAS ALLEGED TO BE UNSUITABLE.



Resolution:

Other Sanctions Ordered: COSTS OF INVESTIGATION OF $5,000

Sanction Details: COMPANY PAID RESTITUTION TO THE SUBJECT CUSTOMERS BYLIQUIDATING THE REIT HOLDINGS FOR SAID CUSTOMERS AND PAYING TOTHE CUSTOMERS THE TOTAL SUM OF $58,770.48 AS OF 8/16/2010.

Firm Statement WITHOUT ADMITTING OR DENYING THE STATEMENT OF FACTS ANDCONCLUSIONS OF LAW CONTAINED IN THE ORDER, COMPANYCONSENTED TO THE ENTRY OF THE ORDER.

Sanctions Ordered: Disgorgement/Restitution

Consent

Disclosure 15 of 41

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Allegations: SEC ADMINISTRATIVE RELEASE 34-59830, APRIL 28, 2009: THE SECURITIESAND EXCHANGE COMMISSION ("COMMISSION") DEEMS IT APPROPRIATEAND IN THE PUBLIC INTEREST THAT PUBLIC ADMINISTRATIVEPROCEEDINGS BE, AND HEREBY ARE, INSTITUTED PURSUANT TOSECTION 15(B)(4) OF THE SECURITIES EXCHANGE ACT OF 1934 AGAINSTROYAL ALLIANCE ASSOCIATES, INC. ("RAA") BASED ON ITS FAILURE TOREASONABLY SUPERVISE AN EMPLOYEE WITH A VIEW TO PREVENTINGAND DETECTING HIS VIOLATIONS OF THE FEDERAL SECURITIES LAWS.THE COMMISSION FOUND THAT RAA'S EMPLOYEE OPERATED A PONZISCHEME AND DEFRAUDED INVESTORS BY LYING ABOUT PURCHASES ANDSALES OF SECURITIES, BY MISAPPROPRIATING FUNDS FOR HISPERSONAL USE, AND BY SENDING CERTAIN INVESTORS FALSIFIEDSTATEMENTS RELATING TO THEIR INVESTMENT ACCOUNTS. THECOMMISSION FOUND THAT RAA FAILED TO ESTABLISH AND IMPLEMENTSYSTEMS AND PROCEDURES THAT WOULD REASONABLY BE EXPECTEDTO PREVENT AND DETECT THE EMPLOYEE'S VIOLATIONS OF THEFEDERAL SECURITIES LAWS.














SEC ADMINISTRATIVE RELEASE 34-59830, APRIL 28, 2009: THE SECURITIESAND EXCHANGE COMMISSION ("COMMISSION") DEEMS IT APPROPRIATEAND IN THE PUBLIC INTEREST THAT PUBLIC ADMINISTRATIVEPROCEEDINGS BE, AND HEREBY ARE, INSTITUTED PURSUANT TOSECTION 15(B)(4) OF THE SECURITIES EXCHANGE ACT OF 1934 AGAINSTROYAL ALLIANCE ASSOCIATES, INC. ("RAA") BASED ON ITS FAILURE TOREASONABLY SUPERVISE AN EMPLOYEE WITH A VIEW TO PREVENTINGAND DETECTING HIS VIOLATIONS OF THE FEDERAL SECURITIES LAWS.THE COMMISSION FOUND THAT RAA'S EMPLOYEE OPERATED A PONZISCHEME AND DEFRAUDED INVESTORS BY LYING ABOUT PURCHASES ANDSALES OF SECURITIES, BY MISAPPROPRIATING FUNDS FOR HISPERSONAL USE, AND BY SENDING CERTAIN INVESTORS FALSIFIEDSTATEMENTS RELATING TO THEIR INVESTMENT ACCOUNTS. THECOMMISSION FOUND THAT RAA FAILED TO ESTABLISH AND IMPLEMENTSYSTEMS AND PROCEDURES THAT WOULD REASONABLY BE EXPECTEDTO PREVENT AND DETECT THE EMPLOYEE'S VIOLATIONS OF THEFEDERAL SECURITIES LAWS.


Resolution:


Sanction Details: RESPONDENT ROYAL ALLIANCE ASSOCIATES, INC. HAS SUBMITTED ANOFFER OF SETTLEMENT (THE "OFFER") WHICH THE COMMISSION HASDETERMINED TO ACCEPT. SOLELY FOR THE PURPOSE OF THESEPROCEEDINGS AND ANY OTHER PROCEEDINGS BROUGHT BY OR ONBEHALF OF THE COMMISSION, OR TO WHICH THE COMMISSION IS APARTY, AND WITHOUT ADMITTING OR DENYING THE FINDINGS, EXCEPT ASTO THE COMMISSION'S JURISDICTION OVER RAA AND THE SUBJECTMATTER OF THESE PROCEEDINGS, RAA CONSENTS TO THE ENTRY OFTHIS ORDER INSTITUTING ADMINISTRATIVE PROCEEDINGS, MAKINGFINDINGS, AND IMPOSING REMEDIAL SANCTIONS PURSUANT TO SECTION15(B)(4) OF THE SECURITIES EXCHANGE ACT OF 1934 ("ORDER").ACCORDINGLY, PURSUANT TO SECTION 15(B) AND 21B OF THE EXCHANGEACT, RAA IS CENSURED, ORDERED TO PAY DISGORGEMENT OF $1 AND ACIVIL PENALTY OF $500,000 WITHIN TEN DAYS OF ENTRY OF THE ORDER.SUCH CIVIL PENALTY MAY BE DISTRIBUTED PURSUANT TO SECTION 308(A)OF THE SARBANES-OXLEY ACT OF 2002. TO PRESERVE THE DETERRENTEFFECT OF THE CIVIL PENALTY, RAA AGREES THAT IT SHALL NOT ARGUETHAT IT IS ENTITLED TO, NOR SHALL IT FURTHER BENEFIT BY OFFSET ORREDUCTION OF ANY PART OF RAA'S PAYMENT OF A CIVIL PENALTY IN THISACTION. IF THE COURT IN ANY RELATED PRIVATE DAMAGES ACTIONBASED ON SUBSTANTIALLY THE SAME FACTS AS ALLEGED IN THE ORDERGRANTS A PENALTY OFFSET, RAA AGREES THAT IT SHALL, WITHIN 30 DAYSAFTER ENTRY OF THE FINAL ORDER GRANTING THE PENALTY OFFSET,NOTIFY THE COMMISSION'S COUNSEL AND PAY THE AMOUNT OF THEPENALTY OFFSET TO THE UNITED STATES TREASURY. SUCH A PAYMENTSHALL NOT BE DEEMED AN ADDITIONAL CIVIL PENALTY AND SHALL NOT BEDEEMED TO CHANGE THE AMOUNT OF THE CIVIL PENALTY IMPOSED INTHIS PROCEEDING.


No


Order






RESPONDENT ROYAL ALLIANCE ASSOCIATES, INC. HAS SUBMITTED ANOFFER OF SETTLEMENT (THE "OFFER") WHICH THE COMMISSION HASDETERMINED TO ACCEPT. SOLELY FOR THE PURPOSE OF THESEPROCEEDINGS AND ANY OTHER PROCEEDINGS BROUGHT BY OR ONBEHALF OF THE COMMISSION, OR TO WHICH THE COMMISSION IS APARTY, AND WITHOUT ADMITTING OR DENYING THE FINDINGS, EXCEPT ASTO THE COMMISSION'S JURISDICTION OVER RAA AND THE SUBJECTMATTER OF THESE PROCEEDINGS, RAA CONSENTS TO THE ENTRY OFTHIS ORDER INSTITUTING ADMINISTRATIVE PROCEEDINGS, MAKINGFINDINGS, AND IMPOSING REMEDIAL SANCTIONS PURSUANT TO SECTION15(B)(4) OF THE SECURITIES EXCHANGE ACT OF 1934 ("ORDER").ACCORDINGLY, PURSUANT TO SECTION 15(B) AND 21B OF THE EXCHANGEACT, RAA IS CENSURED, ORDERED TO PAY DISGORGEMENT OF $1 AND ACIVIL PENALTY OF $500,000 WITHIN TEN DAYS OF ENTRY OF THE ORDER.SUCH CIVIL PENALTY MAY BE DISTRIBUTED PURSUANT TO SECTION 308(A)OF THE SARBANES-OXLEY ACT OF 2002. TO PRESERVE THE DETERRENTEFFECT OF THE CIVIL PENALTY, RAA AGREES THAT IT SHALL NOT ARGUETHAT IT IS ENTITLED TO, NOR SHALL IT FURTHER BENEFIT BY OFFSET ORREDUCTION OF ANY PART OF RAA'S PAYMENT OF A CIVIL PENALTY IN THISACTION. IF THE COURT IN ANY RELATED PRIVATE DAMAGES ACTIONBASED ON SUBSTANTIALLY THE SAME FACTS AS ALLEGED IN THE ORDERGRANTS A PENALTY OFFSET, RAA AGREES THAT IT SHALL, WITHIN 30 DAYSAFTER ENTRY OF THE FINAL ORDER GRANTING THE PENALTY OFFSET,NOTIFY THE COMMISSION'S COUNSEL AND PAY THE AMOUNT OF THEPENALTY OFFSET TO THE UNITED STATES TREASURY. SUCH A PAYMENTSHALL NOT BE DEEMED AN ADDITIONAL CIVIL PENALTY AND SHALL NOT BEDEEMED TO CHANGE THE AMOUNT OF THE CIVIL PENALTY IMPOSED INTHIS PROCEEDING.


Initiated By: SECURITIES AND EXCHANGE COMMISSION







Allegations: SEC ALLEGES THAT ROYAL FAILED TO ADEQUATELY SUPERVISE ANYSPECIFIC ASSOCIATED PERSON WITH A VIEW TO PREVENTING ANDDETECTING HIS VIOLATIONS OF THE FEDERAL SECURITIES LAWS DURINGTHE PERIOD JANUARY 1999-DECEMBER 2004.








CENSUREDISGORGEMENT


Resolution:


Sanction Details: ROYAL ALLIANCE SUBMITTED AN OFFER OF SETTLEMENT WHICH WASACCEPTED BY THE COMMISSONER. ROYAL ALLIANCE WAS CENSURED,ORDERED TO PAY DISGORGEMENT OF $1 AND A CIVIL PENALTY OF$500,000 WITHIN TEN DAYS OF ENTRY OF THE ORDER.

Firm Statement ROYAL ALLIANCE SUBMITTED AN OFFER OF SETTLEMENT WHICH WASACCEPTED BY THE COMMISSONER. ROYAL ALLIANCE WAS CENSURED,ORDERED TO PAY DISGORGEMENT OF $1 AND A CIVIL PENALTY OF$500,000 WITHIN TEN DAYS OF ENTRY OF THE ORDER.


Order

Disclosure 16 of 41

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Allegations: NASD RULES 1021, 2110, MSRB RULES G-3, G-17, G-27, G-30 - ROYALALLIANCE ASSOCIATES, INC. FAILED TO PURCHASE MUNICIPALSECURITIES FOR ITS OWN ACCOUNT FROM A CUSTOMER OR SELLMUNICIPAL SECURITIES FOR ITS OWN ACCOUNT TO A CUSTOMER AT ANAGGREGATE PRICE (INCLUDING ANY MARKDOWN OR MARKUP) THAT WASFAIR AND REASONABLE, TAKING INTO CONSIDERATION ALL RELEVANTFACTORS, INCLUDING THE BEST JUDGMENT OF THE FIRM AS TO THE FAIRMARKET VALUE OF THE SECURITIES AT THE TIME OF THE TRANSACTIONAND OF ANY SECURITIES EXCHANGED OR TRADED IN CONNECTION WITHTHE TRANSACTION, THE EXPENSE INVOLVED IN EFFECTING THETRANSACTION, THE FACT THAT THE FIRM WAS ENTITLED TO A PROFIT ANDTHE TOTAL DOLLAR AMOUNT OF THE TRANSACTION. THE FIRM'SSUPERVISORY SYSTEM DID NOT PROVIDE FOR SUPERVISIONREASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITH APPLICABLESECURITIES LAWS, REGULATIONS AND MSRB RULES CONCERNING THEFIRM'S FAIR PRICING OF AND MARKUPS ON MUNICIPAL BONDTRANSACTIONS. THE FIRM'S SUPERVISORY SYSTEM DID NOT INCLUDEWRITTEN SUPERVISORY PROCEDURES PROVIDING FOR REVIEWS FORCOMPLIANCE WITH MSRB RULE G-30. THE FIRM WAS UNABLE TOPRODUCE SUFFICIENT EVIDENCE TO FINRA OF COMPLETION OF SUCHSUPERVISORY STEPS. THE FIRM FAILED TO ENSURE THAT ONE OF ITSCORPORATE OFFICERS WHO MANAGED THE TRADER THAT EXECUTEDTHE MUNICIPAL TRANSACTIONS AND WAS ASSIGNED SUPERVISORYRESPONSIBILITIES AS OVERSIGHT OF EQUITY AND FIXED-INCOMETRADES OF THE FIRM'S TRADING DESK,WAS PROPERLY REGISTERED ASEITHER A MUNICIPAL SECURITIES PRINCIPAL OR GENERAL SECURITIESPRINCIPAL.







Initiated By: FINRA





Principal Product Type: Debt - Municipal


NASD RULES 1021, 2110, MSRB RULES G-3, G-17, G-27, G-30 - ROYALALLIANCE ASSOCIATES, INC. FAILED TO PURCHASE MUNICIPALSECURITIES FOR ITS OWN ACCOUNT FROM A CUSTOMER OR SELLMUNICIPAL SECURITIES FOR ITS OWN ACCOUNT TO A CUSTOMER AT ANAGGREGATE PRICE (INCLUDING ANY MARKDOWN OR MARKUP) THAT WASFAIR AND REASONABLE, TAKING INTO CONSIDERATION ALL RELEVANTFACTORS, INCLUDING THE BEST JUDGMENT OF THE FIRM AS TO THE FAIRMARKET VALUE OF THE SECURITIES AT THE TIME OF THE TRANSACTIONAND OF ANY SECURITIES EXCHANGED OR TRADED IN CONNECTION WITHTHE TRANSACTION, THE EXPENSE INVOLVED IN EFFECTING THETRANSACTION, THE FACT THAT THE FIRM WAS ENTITLED TO A PROFIT ANDTHE TOTAL DOLLAR AMOUNT OF THE TRANSACTION. THE FIRM'SSUPERVISORY SYSTEM DID NOT PROVIDE FOR SUPERVISIONREASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITH APPLICABLESECURITIES LAWS, REGULATIONS AND MSRB RULES CONCERNING THEFIRM'S FAIR PRICING OF AND MARKUPS ON MUNICIPAL BONDTRANSACTIONS. THE FIRM'S SUPERVISORY SYSTEM DID NOT INCLUDEWRITTEN SUPERVISORY PROCEDURES PROVIDING FOR REVIEWS FORCOMPLIANCE WITH MSRB RULE G-30. THE FIRM WAS UNABLE TOPRODUCE SUFFICIENT EVIDENCE TO FINRA OF COMPLETION OF SUCHSUPERVISORY STEPS. THE FIRM FAILED TO ENSURE THAT ONE OF ITSCORPORATE OFFICERS WHO MANAGED THE TRADER THAT EXECUTEDTHE MUNICIPAL TRANSACTIONS AND WAS ASSIGNED SUPERVISORYRESPONSIBILITIES AS OVERSIGHT OF EQUITY AND FIXED-INCOMETRADES OF THE FIRM'S TRADING DESK,WAS PROPERLY REGISTERED ASEITHER A MUNICIPAL SECURITIES PRINCIPAL OR GENERAL SECURITIESPRINCIPAL.


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, FINED $50,000, REQUIRED TO PAY$2,767.30, PLUS INTEREST, IN RESTITUTION TO PUBLIC CUSTOMERS ANDREQUIRED TO REVISE ITS SUPERVISORY PROCEDURES REGARDING FAIRPRICING OF AND MARKUPS ON MUNICIPAL BOND TRANSACTIONS WITHIN30 BUSINESS DAYS OF ACCEPTANCE OF THIS AWC BY THE NAC. ANYUNDISTRIBUTED RESTITUTION AND INTEREST SHALL BE FORWARDED TOTHE APPROPRIATE ESCHEAT, UNCLAIMED PROPERTY OR ABANDONEDPROPERTY FUND FOR THE STATE IN WHICH THE CUSTOMER LASTRESIDED. SATISFACTORY PROOF OF PAYMENT OF RESTITUTION ORREASONABLE AND DOCUMENTED EFFORTS UNDERTAKEN TO EFFECTRESTITUTION SHALL BE PROVIDED TO FINRA NO LATER THAN 120 DAYSAFTER ACCEPTANCE OF THIS AWC.


No









WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS;THEREFORE, THE FIRM IS CENSURED, FINED $50,000, REQUIRED TO PAY$2,767.30, PLUS INTEREST, IN RESTITUTION TO PUBLIC CUSTOMERS ANDREQUIRED TO REVISE ITS SUPERVISORY PROCEDURES REGARDING FAIRPRICING OF AND MARKUPS ON MUNICIPAL BOND TRANSACTIONS WITHIN30 BUSINESS DAYS OF ACCEPTANCE OF THIS AWC BY THE NAC. ANYUNDISTRIBUTED RESTITUTION AND INTEREST SHALL BE FORWARDED TOTHE APPROPRIATE ESCHEAT, UNCLAIMED PROPERTY OR ABANDONEDPROPERTY FUND FOR THE STATE IN WHICH THE CUSTOMER LASTRESIDED. SATISFACTORY PROOF OF PAYMENT OF RESTITUTION ORREASONABLE AND DOCUMENTED EFFORTS UNDERTAKEN TO EFFECTRESTITUTION SHALL BE PROVIDED TO FINRA NO LATER THAN 120 DAYSAFTER ACCEPTANCE OF THIS AWC.


Initiated By: FINRA


Censure


MONETARY FINE $50,000.00.

DISGORGEMENT/RESTITUTION.



Principal Product Type: Debt - Municipal


Allegations: FINRA ALLEDGED VIOLATION OF NASD RULES 1021, 2110, MSRB RULES G-3, G-17, G-27, G-30.



Resolution:

Other Sanctions Ordered: UNDERTAKING.

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, FINED $50,000, REQUIRED TO PAY$2,767.30, PLUS INTEREST, IN RESTITUTION TO PUBLIC CUSTOMERS ANDREQUIRED TO REVISE IT'S SUPERVISORY PROCEDURES REGARDING FAIRPRICING OF AND MARKUPS ON MUNICIPAL BOND TRANSACTIONS WITHIN30 BUSINESS DAYS OF ACCEPTANCE OF THIS AWC BY THE NAC. ANYUNDISTRIBUTED RESTITUTION AND INTEREST SHALL BE FORWARDED TOTHE APPROPRIATE ESCHEAT, UNCLAIMED PROPERTY OR ABANDONEDPROPERTY FUND FOR THE STATE IN WHICH THE CUSTOMER LASTRESIDED. SATISFACTORY PROOF OF PAYMENT OF RESTITUTION ORREASONABLE AND DOCUMENTED EFFORTS UNDERTAKEN TO EFFECTRESTITUTION SHALL BE PROVIDED TO FINRA NO LATER THAN 120 DAYSAFTER ACCEPTANCE OF THIS AWC.








WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS;THEREFORE, THE FIRM IS CENSURED, FINED $50,000, REQUIRED TO PAY$2,767.30, PLUS INTEREST, IN RESTITUTION TO PUBLIC CUSTOMERS ANDREQUIRED TO REVISE IT'S SUPERVISORY PROCEDURES REGARDING FAIRPRICING OF AND MARKUPS ON MUNICIPAL BOND TRANSACTIONS WITHIN30 BUSINESS DAYS OF ACCEPTANCE OF THIS AWC BY THE NAC. ANYUNDISTRIBUTED RESTITUTION AND INTEREST SHALL BE FORWARDED TOTHE APPROPRIATE ESCHEAT, UNCLAIMED PROPERTY OR ABANDONEDPROPERTY FUND FOR THE STATE IN WHICH THE CUSTOMER LASTRESIDED. SATISFACTORY PROOF OF PAYMENT OF RESTITUTION ORREASONABLE AND DOCUMENTED EFFORTS UNDERTAKEN TO EFFECTRESTITUTION SHALL BE PROVIDED TO FINRA NO LATER THAN 120 DAYSAFTER ACCEPTANCE OF THIS AWC.

Disclosure 17 of 41

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Initiated By: FINRA



Docket/Case Number: E052004030102



Allegations: NASD RULES 2110 AND 3010(A) AND (B): RESPONDENT MEMBER FIRMFAILED TO IMPLEMENT, MAINTAIN, AND ENFORCE A SUPERVISORYSYSTEM REASONABLY DESIGNED TO PREVENT VIOLATION OF THE RULESAND REGULATIONS OF THE SECURITIES COMMISSION AND FINRA.SPECIFICALLY, THE FIRM HAD AN INADEQUATE SYSTEM FOR DETECTINGRAPID TURNOVER OF MUTUAL FUNDS IN CUSTOMER ACCOUNTS.BECAUSE OF ITS INADEQUATE PROCEDURES, A REGISTEREDREPRESENTATIVE OF THE FIRM EFFECTED UNSUITABLE MUTUAL FUNDSWITCHES AND EXCHANGES IN THE ACCOUNTS OF CUSTOMERS AND THEFIRM NEVER DETECTED THIS CONDUCT AND NEVER INVESTIGATEDWHETHER THE SWITCHES AND EXCHANGES WERE SUITABLE.THE FIRM FAILED TO ENFORCE ITS PROCEDURES REGARDING THE USEOF SWITCH LETTERS.THE FIRM'S WRITTEN SUPERVISORY PROCEDURES REQUIREDREGISTERED REPRESENTATIVES TO OBTAIN A SIGNED SWITCH LETTERWHENEVER A CUSTOMER SOLD A MUTUAL FUND AND REINVESTED THEPROCEEDS IN ANOTHER MUTUAL IN A DIFFERENT FUND FAMILY. THELETTER WAS TO DISCLOSE WHETHER THE TRANSACTION WOULD RESULTIN A NEW COMMISSION, WHETHER IT WOULD RESULT IN A NEWSURRENDER PERIOD, WHETHER THERE WOULD BE A SURRENDERCHARGE, AND WHETHER THE INVESTMENT OBJECTIVE DIFFEREDBETWEEN THE TWO INVESTMENTS. THE LETTER WAS TO BE SIGNED BYTHE CUSTOMER AND REVIEWED AND APPROVED BY A PRINCIPAL BEFOREENTRY OF THE ORDER. ALTHOUGH AN INDIVIDUAL EFFECTED A NUMBEROF MUTUAL FUND A SHARE SWITCHES BETWEEN JANUARY 1, 2001 ANDAUGUST 1, 2004, HE FAILED TO OBTAIN A SIGNED SWITCH LETTER, ANDTHE FIRM DID NOT DETECT HIS FAILURE TO OBTAIN THESE LETTERS.






https://www.finra.org/rules-guidance/oversight-enforcement/finra-disciplinary-actions?search=E052004030102





Resolution:

Other Sanctions Ordered: UNDERTAKINGS

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 $200,000 ANDROYAL ALLIANCE FURTHER AGREES (1) TO REVIEW ALL MUTUAL FUND ASHARE TRANSACTIONS EFFECTED ON BEHALF OF REGISTEREDREPRESENTATIVE OF THE FIRM FOR THE TIME PERIOD BETWEENJANUARY 1, 2001 AND AUGUST 1, 2004 TO DETERMINE WHETHER OR NOTCUSTOMERS PAID UNNECESSARY COMMISSIONS IN CONNECTION WITHTHOSE TRANSACTIONS; (2) TO PROVIDE FINRA WITH A REPORT OF ITSREVIEW WITHIN 60 DAYS OF ACCEPTANCE OF THIS LETTER OFACCEPTANCE, WAIVER, AND CONSENT; (3) TO PROVIDE REFUNDS OF THECOMMISSIONS TO THESE CUSTOMERS WHERE APPROPRIATE WITHIN 120DAYS OF ACCEPTANCE OF THE LETTER OF ACCEPTANCE, WAIVER, ANDCONSENT; AND (4) TO PROVIDE FINRA WITH EVIDENCE OF THE PAYMENTOF THE REFUNDS WITHIN 150 DAYS OF ACCEPTANCE OF THIS LETTER OFACCEPTANCE, WAIVER, AND CONSENT. IF FOR ANY REASON ROYALALLIANCE CANNOT LOCATE THE CUSTOMERS WHO PAID UNNECESSARYFEES IN CONNECTION WITH THE TRANSACTIONS AFTER REASONABLEAND DOCUMENTED EFFORTS WITHIN SUCH PERIOD, OR SUCHADDITIONAL PERIOD AGREED TO BY THE STAFF, ROYAL ALLIANCE SHALLFORWARD ANY UNDISTRIBUTED RESTITUTION AND INTEREST TO THEAPPROPRIATE ESCHEAT, UNCLAIMED PROPERTY, OR ABANDONEDPROPERTY FUND FOR THE STATE IN WHICH THE CUSTOMER IS LASTKNOWN TO HAVE RESIDED.


No



iReporting Source:







Initiated By: FINRA


Censure


MONETARY FINES. UNDERTAKINGS.


Docket/Case Number: E052004030102



Allegations: FINRA ALLEGED VIOLATIONS OF NASD RULES 2110 AND 3010(A) ANDALLEGED FAILURE TO IMPLEMENT, MAINTAIN AND ENFORCESUPERVISORY SYSTEM REASONABLY DESIGNED TO PREVENT VIOLATIONOF THE RULES AND REGULATION OF THE SEC AND FINRA.



Resolution:

Other Sanctions Ordered: UNDERTAKINGS.

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 $200,000 ANDROYAL ALLIANCE FURTHER AGREES (1) TO REVIEW ALL MUTUAL FUND A-SHARE TRANSACTIONS EFFECTED ON BEHALF OF THE REGISTEREDREPRESENTATIVE OF THE FIRM FOR THE TIME PERIOD BETWEENJANUARY 1, 2001 AND AUGUST 1, 2004 TO DETERMINE WHETHER OR NOTCUSTOMERS PAID UNNECESSARY COMMISSIONS IN CONNECTION WITHTHOSE TRANSACTIONS; (2) TO PROVIDE FINRA WITH A REPORT OF ITSREVIEW WITHIN 60 DAYS OF ACCEPTANCE OF THIS LETTER OFACCEPTANCE, WAIVER, AND CONSENT; (3) TO PROVIDE REFUNDS OF THECOMMISSIONS TO THESE CUSTOMERS WHERE APPROPRIATE WITHIN 120DAYS OF ACCEPTANCE OF THE LETTER OF ACCEPTANCE, WAIVER, ANDCONSENT; AND (4) TO PROVIDE FINRA WITH EVIDENCE OF THE PAYMENTOF THE REFUNDS WITHIN 150 DAYS OF ACCEPTANCE OF THIS LETTER OFACCEPTANCE, WAIVER, AND CONSENT. IF FOR ANY REASON ROYALALLIANCE CANNOT LOCATE THE CUSTOMERS WHO PAID UNNECESSARYFEES IN CONNECTION WITH THE TRANSACTIONS AFTER REASONABLEAND DOCUMENTED EFFORTS WITHIN SUCH PERIOD, OR SUCHADDITIONAL PERIOD AGREED TO BY THE STAFF, ROYAL ALLIANCE SHALLFORWARD ANY UNDISTRIBUTED RESTITUTION AND INTEREST TO THEAPPROPRIATE ESCHEAT, UNCLAIMED PROPERTY, OR ABANDONEDPROPERTY FUND FOR THE STATE IN WHICH THE CUSTOMER IS LASTKNOWN TO HAVE RESIDED.







https://www.finra.org/rules-guidance/oversight-enforcement/finra-disciplinary-actions?search=E052004030102


WITHOUT ADMITTING OR DENYING THE FINDINGS, RESPONDENT MEMBERFIRM CONSENTED TO THE DESCRIBED SANCTIONS AND TO THE ENTRY OFFINDINGS; THEREFORE, FIRM IS CENSURED AND FINED $200,000 ANDROYAL ALLIANCE FURTHER AGREES (1) TO REVIEW ALL MUTUAL FUND A-SHARE TRANSACTIONS EFFECTED ON BEHALF OF THE REGISTEREDREPRESENTATIVE OF THE FIRM FOR THE TIME PERIOD BETWEENJANUARY 1, 2001 AND AUGUST 1, 2004 TO DETERMINE WHETHER OR NOTCUSTOMERS PAID UNNECESSARY COMMISSIONS IN CONNECTION WITHTHOSE TRANSACTIONS; (2) TO PROVIDE FINRA WITH A REPORT OF ITSREVIEW WITHIN 60 DAYS OF ACCEPTANCE OF THIS LETTER OFACCEPTANCE, WAIVER, AND CONSENT; (3) TO PROVIDE REFUNDS OF THECOMMISSIONS TO THESE CUSTOMERS WHERE APPROPRIATE WITHIN 120DAYS OF ACCEPTANCE OF THE LETTER OF ACCEPTANCE, WAIVER, ANDCONSENT; AND (4) TO PROVIDE FINRA WITH EVIDENCE OF THE PAYMENTOF THE REFUNDS WITHIN 150 DAYS OF ACCEPTANCE OF THIS LETTER OFACCEPTANCE, WAIVER, AND CONSENT. IF FOR ANY REASON ROYALALLIANCE CANNOT LOCATE THE CUSTOMERS WHO PAID UNNECESSARYFEES IN CONNECTION WITH THE TRANSACTIONS AFTER REASONABLEAND DOCUMENTED EFFORTS WITHIN SUCH PERIOD, OR SUCHADDITIONAL PERIOD AGREED TO BY THE STAFF, ROYAL ALLIANCE SHALLFORWARD ANY UNDISTRIBUTED RESTITUTION AND INTEREST TO THEAPPROPRIATE ESCHEAT, UNCLAIMED PROPERTY, OR ABANDONEDPROPERTY FUND FOR THE STATE IN WHICH THE CUSTOMER IS LASTKNOWN TO HAVE RESIDED.

Disclosure 18 of 41

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Initiated By: MONTANA





Docket/Case Number: I-09-10-07-255




Allegations: UNREGISTERED INVESTMENT ADVISER.



Resolution:


Sanction Details: FINE.


No


Consent

iReporting Source:







Initiated By: MONTANA





Docket/Case Number: I-09-10-07-255


Other Product Type(s): MANAGED ACCOUNT.

Allegations: IT WAS ALLEGED THAT REGISTRATION LAPSE CAUSED ACTIVITY AS ANUNREGISTERED INVESTMENT ADVISOR.



Resolution:


Sanction Details: FINE.


Consent

Disclosure 19 of 41

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Initiated By: CONNECTICUT


Allegations: THE FEBRUARY 26, 2007 CONSENT ORDER ALLEGED THAT THE FIRMFAILED TO ADEQUATELY SUPERVISE THE ACTIVITIES OF KEVIN O. KELLEY(CRD NUMBER 1183995), AN EX-AGENT OF THE FIRM WHO, AMONG OTHERTHINGS, PURPORTEDLY MISAPPROPRIATED CLIENT FUNDS ANDPREPARED FRAUDULENT STATEMENTS THAT IMPROPERLY INFLATED THEVALUE OF CLIENT HOLDINGS. IN LATE 2006, KELLEY HAD BEENSENTENCED IN MANHATTAN FEDERAL COURT TO 170 MONTHS IN PRISONFOR DEFRAUDING SENIOR CITIZEN CLIENTS OF APPROXIMATELY $4.2MILLION. KELLEY HAD BEEN PERMANENTLY BARRED BY THEDEPARTMENT FROM CONDUCTING SECURITIES BUSINESS INCONNECTICUT ON AUGUST 23, 2005.











Docket/Case Number: CO-2007-7033-S



Other Product Type(s): FAILURE TO SUPERVISE


Resolution:

Other Sanctions Ordered: THE CONSENT ORDER ACKNOWLEDGED THAT ROYAL ALLIANCEASSOCIATES, INC. HAD COMPENSATED THOSE INDIVIDUALS HARMED BYKELLEY'S WRONGDOING AT THE FIRM'S STAMFORD, CONNECTICUTOFFICES, AND THAT SUCH RESTITUTION EXCEEDED $9.2 MILLION TODATE, INCLUDING INTEREST. THE CONSENT ORDER ALSO RECITED THATTHE FIRM HAD OFFERED TO MAKE A $250,000 CONTRIBUTION TO THEAGENCY'S SECURITIES INVESTOR EDUCATION FUND TO FINANCECONNECTICUT INVESTOR EDUCATION AND REGULATORY EFFORTS. THECONSENT ORDER ASSESSED A $750,000 ADMINISTRATIVE PENALTYAGAINST THE FIRM, ADDING THAT $250,000 OF THIS AMOUNT WOULD BEFORGIVEN IF THE FIRM PROVIDED SATISFACTORY DOCUMENTARYEVIDENCE THAT IT HAD EARMARKED $125,000 PER YEAR FOR THE NEXTTWO YEARS TO HIRE ADDITIONAL SPECIALIZED PERSONNEL TO IMPROVEITS SUPERVISORY AND COMPLIANCE SYSTEMS.

Sanction Details: SEE RESPONSE TO ITEM 13.B.

Regulator Statement SEE RESPONSE TO ITEM 13.B.


No


Consent








Initiated By: CONNECTICUT







Other Product Type(s): FAILURE TO SUPERVISE.

Allegations: THE FEBRUARY 26, 2007 CONSENT ORDER ALLEGED THAT THE FIRMFAILED TO ADEQUATELY SUPERVISE THE ACTIVITIES OF KEVIN O. KELLEY(CRD NUMBER 1183995), AN EX-AGENT OF THE FIRM WHO, AMONG OTHERTHINGS, PURPORTEDLY MISAPPROPRIATED CLIENT FUNDS ANDPREPARED FRAUDULENT STATEMENTS THAT IMPROPERLY INFLATED THEVALUE OF THE CLIENT HOLDINGS. IN LATE 2006, KELLEY HAD BEENSENTENCED IN MANHATTAN FEDERAL COURT TO 170 MONTHS IN PRISONFOR DEFRAUDING SENIOR CITIZEN CLIENTS OF APPROXIMATELY $4.2MILLION. KELLEY HAD BEEN PERMANENTLY BARRED BY THEDEPARTMENT FROM CONDUCTING SECURITIES BUSINESS INCONNECTICUT ON AUGUST 23, 2005.



Resolution:

Other Sanctions Ordered: THE CONSENT ORDER ACKNOWLEDGED THAT ROYAL ALLIANCEASSOCIATES, INC. HAD COMPENSATED THOSE INDIVIDUALS HARMED BYKELLEY'S WRONGDOING AT THE FIRM'S STAMFORD, CONNECTICUTOFFICES, AND THAT SUCH RESTITUTION EXCEEDED $9.2 MILLION TODATE, INCLUDING INTEREST. THE CONSENT ORDER ALSO RECITED THATTHE FIRM HAD OFFERED TO MAKE A $250,000 CONTRIBUTION TO THEAGENCY'S SECURITIES INVESTOR EDCUATION FUND TO FINANCECONNECTICUT INVESTOR EDUCATION AND REGULATORY EFFORTS. THECONSENT ORDER ASSESSED A $750,000 ADMINISTRATIVE PENALTYAGAINST THE FIRM, ADDING THAT $250,000 OF THIS AMOUNT WOULD BEFORGIVEN IF THE FIRM PROVIDED SATISFACTORY DOCUMENTARYEVIDENCE THAT IT HAD EARMARKED $125,000 PER YEAR FOR THE NEXTTWO YEARS TO HIRE ADDITIONAL SPECIALIZED PERSONNEL TO IMPROVEITS SUPERVISORY AND COMPLIANCE SYSTEMS.

Sanction Details: SEE RESPONSE TO ITEM 12.B


Consent






Firm Statement SEE RESPONSE TO ITEM 12.B

Disclosure 20 of 41

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Initiated By: NASD


Docket/Case Number: EAF0401080003



Allegations: NASD RULES 2110 AND 3010 - FROM JANUARY 1, 2002 THROUGHDECEMBER 31, 2004, ROYAL ALLIANCE ASSOCIATES, INC. FAILED TOPROVIDE INVESTORS THE OPPORTUNITY TO PURCHASE CLASS A SHARESOF CERTAIN MUTUAL FUNDS AT NET ASSET VALUE (NAV). IN PARTICULAR,CERTAIN MUTUAL FUNDS OFFERED "NAV TRANSFER PROGRAMS" THATALLOWED INVESTORS TO PURCHASE CLASS A SHARES AT NAV AND NOTPAY ANY SALES CHARGES, IF THE CUSTOMER INVESTED PROCEEDSFROM THE REDEMPTION OF SHARES OF ANOTHER MUTUAL FUND WITHINSPECIFIED TIME FRAMES AND PREVIOUSLY HAD PAID EITHER A FRONT-END OR BACK-END SALES CHARGE. ROYAL ALLIANCE FAILED TOEXERCISE REASONABLE DUE DILIGENCE TO IDENTIFY THE ESSENTIALTERMS AND CONDITIONS OF THE NAV TRANSFER PROGRAMS OF CERTAINMUTUAL FUNDS. ROYAL ALLIANCE FAILED TO ENSURE, AND FAILED TOESTABLISH, MAINTAIN AND ENFORCE A SUPERVISORY SYSTEM ANDPROCEDURES TO ENSURE, THAT ITS CUSTOMERS RECEIVED NAVPRICING WHEN APPROPRIATE. AS A RESULT, INVESTORS WHO WEREELIGIBLE TO PURCHASE CLASS A SHARES UNDER NAV TRANSFERPROGRAMS (1) PURCHASED CLASS A SHARES AND INCURRED FRONT-ENDSALES CHARGES THAT THEY SHOULD NOT HAVE PAID, AND/OR (2)PURCHASED OTHER SHARE CLASSES OF THESE MUTUAL FUNDS ANDTHEREBY BECAME SUBJECT TO BACK-END SALES CHARGES, ALSOKNOWN AS CONTINGENT DEFERRED SALES CHARGES AS WELL ASHIGHER ONGOING DISTRIBUTION AND SERVICE FEES, TYPICALLYASSOCIATED WITH SHARE CLASSES OTHER THAN CLASS A. ALTHOUGHROYAL ALLIANCE DID HAVE A WRITTEN SUPERVISORY PROCEDURE THATREQUIRED REPRESENTATIVES TO GIVE ELIGIBLE CUSTOMERS THEBENEFIT OF AVAILABLE NAV TRANSFER PROGRAMS, THE FAILURE TOENFORCE THAT PROCEDURE, TOGETHER WITH THE COLLECTIVEDEFICIENCIES RENDERED THE FIRM'S SUPERVISORY SYSTEM DEFICIENTWITH REGARD TO IDENTIFYING, AND ENSURING THAT QUALIFYINGCUSTOMERS RECEIVED THE BENEFIT OF, NAV TRANSFER PROGRAMS.






https://www.finra.org/rules-guidance/oversight-enforcement/finra-disciplinary-actions?search=EAF0401080003






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, FINED $250,000 AND REQUIRED TOCOMPLY WITH THE FOLLOWING UNDERTAKINGS: THE FIRM WILL PROVIDEREMEDIATION TO CLIENTS WHO PURCHASED SHARES OF MUTUAL FUNDSDURING THE PERIOD JANUARY 1, 2002 THROUGH THE NOTICE OFACCEPTANCE OF THIS AWC, AND QUALIFIED FOR, BUT DID NOT RECEIVE,THE BENEFIT OF NAV TRANSFER PROGRAMS. THE FIRM WILL PROVIDEREMEDIATION IN ACCORDANCE WITH A METHODOLOGY NOTUNACCEPTABLE TO NASD. THE FIRM SHALL RETAIN A THIRD PARTYEXAMINER, NOT UNACCEPTABLE TO NASD, TO ASSESS THE FIRM'SREMEDIATION AND PROVIDE A REPORT TO NASD. WITHIN 60 DAYS FROMTHE NOTICE OF ACCEPTANCE OF THIS AWC, THE FIRM SHALL SUBMIT TONASD FOR REVIEW A SAMPLE LETTER NOTIFYING CLIENTS OFREMEDIATION PAYMENTS. WITHIN 120 DAYS FROM THE NOTICE OFACCEPTANCE OF THIS AWC, THE FIRM WILL DESIGNATE AND TRAIN STAFFTO FIELD AND RESPOND TO CLIENT INQUIRIES IN CONNECTION WITH THISREMEDIATION PROCESS; WITHIN 150 DAYS FROM THE NOTICE OFACCEPTANCE OF THIS AWC, THE FIRM SHALL COMPLETE THEREMEDIATION PROCESS; WITHIN 180 DAYS FROM THE NOTICE OFACCEPTANCE OF THIS AWC, THE FIRM SHALL FILE A REPORT WITH NASD,AND SIMULTANEOUSLY PROVIDE A COPY TO THE THIRD PARTY EXAMINER,CERTIFIED TO, AND SIGNED BY, AN OFFICER OF THE FIRM WHO ISREGISTERED WITH NASD AT THE TIME OF CERTIFICATION. THE THIRDPARTY EXAMINER WILL UTILIZE HE REMEDIATION METHODOLOGY TOASSESS THE FIRM'S REMEDIATION PROCESS. NOT LATER THAN 240 DAYSAFTER THE DATE OF NOTICE OF ACCEPTANCE OF THIS AWC, THE FIRMSHALL REQUIRE THE THIRD PARTY EXAMINER TO SUBMIT A FINAL REPORTTO THE FIRM AND TO NASD.


No








WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS;THEREFORE THE FIRM IS CENSURED, FINED $250,000 AND REQUIRED TOCOMPLY WITH THE FOLLOWING UNDERTAKINGS: THE FIRM WILL PROVIDEREMEDIATION TO CLIENTS WHO PURCHASED SHARES OF MUTUAL FUNDSDURING THE PERIOD JANUARY 1, 2002 THROUGH THE NOTICE OFACCEPTANCE OF THIS AWC, AND QUALIFIED FOR, BUT DID NOT RECEIVE,THE BENEFIT OF NAV TRANSFER PROGRAMS. THE FIRM WILL PROVIDEREMEDIATION IN ACCORDANCE WITH A METHODOLOGY NOTUNACCEPTABLE TO NASD. THE FIRM SHALL RETAIN A THIRD PARTYEXAMINER, NOT UNACCEPTABLE TO NASD, TO ASSESS THE FIRM'SREMEDIATION AND PROVIDE A REPORT TO NASD. WITHIN 60 DAYS FROMTHE NOTICE OF ACCEPTANCE OF THIS AWC, THE FIRM SHALL SUBMIT TONASD FOR REVIEW A SAMPLE LETTER NOTIFYING CLIENTS OFREMEDIATION PAYMENTS. WITHIN 120 DAYS FROM THE NOTICE OFACCEPTANCE OF THIS AWC, THE FIRM WILL DESIGNATE AND TRAIN STAFFTO FIELD AND RESPOND TO CLIENT INQUIRIES IN CONNECTION WITH THISREMEDIATION PROCESS; WITHIN 150 DAYS FROM THE NOTICE OFACCEPTANCE OF THIS AWC, THE FIRM SHALL COMPLETE THEREMEDIATION PROCESS; WITHIN 180 DAYS FROM THE NOTICE OFACCEPTANCE OF THIS AWC, THE FIRM SHALL FILE A REPORT WITH NASD,AND SIMULTANEOUSLY PROVIDE A COPY TO THE THIRD PARTY EXAMINER,CERTIFIED TO, AND SIGNED BY, AN OFFICER OF THE FIRM WHO ISREGISTERED WITH NASD AT THE TIME OF CERTIFICATION. THE THIRDPARTY EXAMINER WILL UTILIZE HE REMEDIATION METHODOLOGY TOASSESS THE FIRM'S REMEDIATION PROCESS. NOT LATER THAN 240 DAYSAFTER THE DATE OF NOTICE OF ACCEPTANCE OF THIS AWC, THE FIRMSHALL REQUIRE THE THIRD PARTY EXAMINER TO SUBMIT A FINAL REPORTTO THE FIRM AND TO NASD.


Initiated By: NASD OFFICE OF DISCIPLINARY AFFAIRS AND THE NATIONALADJUDICATORY COUNCIL.





Docket/Case Number: AWC NO. EAF0401080003



Allegations: IT IS ALLEGED THAT FROM JANUARY 1, 2002 THROUGH DECEMBER 31,2004, THE FIRM FAILED TO EXERCISE REASONABLE DUE DILIGENCE TOIDENTIFY THE ESSENTIAL TERMS AND CONDITIONS OF THE NET ASSETVALUE ("NAV") TRANSFER PROGRAMS OF CERTAIN MUTUAL FUNDS, ANDFAILED TO ESTABLISH, MAINTAIN AND ENFORCE A SYSTEM ANDPROCEDURES TO ENSURE THAT ITS CUSTOMERS RECEIVED NAV PRICINGWHEN APPROPRIATE. THESE ALLEGED FAILURES CONSTITUTEDVIOLATIONS OF NASD CONDUCT RULES 3010 AND 2110. WITHOUTADMITTING OR DENYING THE ALLEGATIONS MADE BY THE NASD, ROYALALLIANCE CONSENTED TO THE TERMS SET FORTH IN THE AWC.


Appealed To and Date AppealFiled:

NOT APPLICABLE.


Resolution:

Other Sanctions Ordered: UNDERTAKINGS REMEDIATION TO CLIENTS.

Sanction Details: THE DETAILS OF THE PROCESS FOR PROVIDING REMEDIATION TOAFFECTED CLIENTS ARE PROVIDED IN THE AWC AND INCLUDE THEFOLLOWING: SUBMISSION OF A REMEDIATION METHODOLOGY REPORT,RETENTION OF A THIRD PARTY EXAMINER TO ASSESS THE FIRM'SREMEDIATION PROCESS, NOTIFICATION TO CLIENTS, AND FORMALCERTIFICATION SUBMITTED BY THE FIRM TO THE NASD AND THIRD PARTYEXAMINER UPON COMPLETION OF THE REMEDIATION PROCESS.








THE DETAILS OF THE PROCESS FOR PROVIDING REMEDIATION TOAFFECTED CLIENTS ARE PROVIDED IN THE AWC AND INCLUDE THEFOLLOWING: SUBMISSION OF A REMEDIATION METHODOLOGY REPORT,RETENTION OF A THIRD PARTY EXAMINER TO ASSESS THE FIRM'SREMEDIATION PROCESS, NOTIFICATION TO CLIENTS, AND FORMALCERTIFICATION SUBMITTED BY THE FIRM TO THE NASD AND THIRD PARTYEXAMINER UPON COMPLETION OF THE REMEDIATION PROCESS.

Disclosure 21 of 41

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Initiated By: NASD






Other Product Type(s): TRACE-ELIGIBLE SECURITIES

Allegations: NASD RULES 2110, 3010 - ROYAL ALLIANCE ASSOCIATES, INC. FAILED TOREPORT TO TRACE TRANSACTIONS IN TRACE-ELIGIBLE SECURITIESEXECUTED ON A BUSINESS DAY DURING TRACE SYSTEM HOURS WITHIN30 MINUTES OF THE TIME OF EXECUTION; AND THE FIRM'S SUPERVISORYSYSTEM DID NOT PROVIDE FOR SUPERVISION REASONABLY DESIGNEDTO ACHIEVE COMPLIANCE WITH APPLICABLE SECURITIES LAWS,REGULATIONS AND NASD RULES CONCERNING TRACE.



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, FINED $20,000 AND REQUIRED TOREVISE THE FIRM'S WRITTEN SUPERVISORY PROCEDURES WITHRESPECT TO TRACE WITHIN 30 BUSINESS DAYS OF ACCEPTANCE OF THISAWC BY THE NAC.


No









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, FINED $20,000 AND REQUIRED TOREVISE THE FIRM'S WRITTEN SUPERVISORY PROCEDURES WITHRESPECT TO TRACE WITHIN 30 BUSINESS DAYS OF ACCEPTANCE OF THISAWC BY THE NAC.


Initiated By: NASD OFFICE OF DISCIPLINARY AFFAIRS AND THE NATIONALADJUDICATORY COUNCIL.




CENSURE.


Docket/Case Number: AWC NO. 20050014023-01

Principal Product Type: Debt - Corporate

Other Product Type(s): TRACE ELIGIBLE SECURITIES.

Allegations: NASD DEPARTMENT OF MARKET REGULATION REVIEWED THE FIRM'STRACE REPORTING FOR THE PERIOD 1/1/2005 TO 3/31/2005 AND ALLEGED:(1) ROYAL FAILED TO REPORT 61% OF ALL TRANSACTIONS IN TRACE-ELIGIBLE SECURITIES DURING THE REVIEW PERIOD; (2) CONDUCTCONSTITUTED VIOLATIONS OF NASD MARKETPLACE RULE 6230(A) ANDNASD CONDUCT RULE 2110; (3) THE FIRM'S SUPERVISORY SYSTEM DIDNOT PROVIDE FOR SUPERVISION REASONABLY DESIGNED TO ACHIEVECOMPLIANCE WITH RESPECT TO THE APPLICABLE SECURITIES LAWS ANDREGULATIONS, AND THE RULES OF THE NASD, CONCERNING TRACE.WITHOUT ADMITTING OR DENYING THE ALLEGATIONS MADE BY THE NASD,ROYAL ALLIANCE CONSENTED TO THE TERMS SET FORTH IN THE AWC.



Resolution:


Sanction Details: CENSURE AND FINE OF $20,000 (CONSISTING OF A $15,000 FINE FOR THETRACE VIOLATIONS AND A $5,000 FINE FOR THE SUPERVISORYVIOLATIONS), AND AN UNDERTAKING TO REVISE THE FIRM'S WRITTENSUPERVISORY PROCEDURES CONCERNING TRACE REPORTING WITHWRITTEN NOTICE PROVIDED TO NASD MARKET REGULATION WITHIN 30DAYS FROM DATE OF AWC.








Sanction Details: CENSURE AND FINE OF $20,000 (CONSISTING OF A $15,000 FINE FOR THETRACE VIOLATIONS AND A $5,000 FINE FOR THE SUPERVISORYVIOLATIONS), AND AN UNDERTAKING TO REVISE THE FIRM'S WRITTENSUPERVISORY PROCEDURES CONCERNING TRACE REPORTING WITHWRITTEN NOTICE PROVIDED TO NASD MARKET REGULATION WITHIN 30DAYS FROM DATE OF AWC.

Firm Statement WITHOUT ADMITTING OR DENYING THE ALLEGATIONS MADE BY THE NASD,ROYAL ALLIANCE CONSENTED TO THE TERMS SET FORTH IN THE AWC.THE FIRM HAS AMENDED ITS SUPERVISORY PROCEDURES, AND ISAWAITING INSTRUCTIONS FROM NASD FINANCE DEPARTMENTREGARDING THE PAYMENT OF FINE.

Disclosure 22 of 41

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Initiated By: NASD




Docket/Case Number: E8A20010343



Allegations: NASD CONDUCT RULES 2110 AND 3010- RESPONDENT FIRM, ACTINGTHROUGH AN EMPLOYEE, FAILED TO ESTABLISH, MAINTAIN AND ENFORCEA SUPERVISORY SYSTEM REASONABLY DESIGNED TO ACHIEVECOMPLIANCE WITH THE PLAN OF SUPERVISORY PROCEDURES ANDOPERATING RESTRICTIONS AND FAILED TO PROPERLY SUPERVISE THESTATUTORILY DISQUALIFIED REGISTERED REPRESENTATIVE (SDRR) TOENSURE COMPLIANCE WITH THE HEIGHTENED SUPERVISION THAT WASSPECIFICALLY ORDERED IN A NOTICE.



Resolution:


No






https://www.finra.org/rules-guidance/oversight-enforcement/finra-disciplinary-actions?search=E8A20010343



Sanction Details: WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, RESPONDENT FIRMCONSENTED TO THE DESCRIBED SANCTIONS AND TO THE ENTRY OFFINDINGS; THEREFORE, FIRM IS CENSURED AND FINED $100,000.


No



Initiated By: NASD


Censure



Docket/Case Number: E8A20010343



Allegations: BETWEEN JANUARY 2001 AND APRIL 2002, THE FIRM, ACTING THROUGHAN EMPLOYEE, FAILED TO ESTABLISH, MAINTAIN AND ENFORCE ASUPERVISORY SYSTEM REASONABLY DESIGNED TO ACHIEVECOMPLIANCE WITH THE PLAN OF SUPERVISORY PROCEDURES ANDOPERATING RESTRICTIONS AND FAILED TO PROPERLY SUPERVISE THESTATUTORILY DISQUALIFIED REGISTERED REPRESENTATIVE TO ENSURECOMPLIANCE WITH ONE OR MORE AREAS OF HEIGHTENED SUPERVISIONSPECIFICALLY ORDERED IN A NOTICE FROM THE SEC.



N/A







https://www.finra.org/rules-guidance/oversight-enforcement/finra-disciplinary-actions?search=E8A20010343



Sanction Details: WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, THE COMPANYCONSENTED TO THE DESCRIBED SANCTIONS AND TO THE ENTRY OFFINDINGS OF CENSURE AND A FINE OF $100,000.

Firm Statement SEE ITEMS 7 AND 12.


Disclosure 23 of 41

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Initiated By: NASD




Docket/Case Number: CE2050011



Allegations: SECTION 17(A) OF THE SECURITIES EXCHANGE ACT OF 1934, RULE 17A-4THEREUNDER, NASD CONDUCT RULES 3110, 2830(K) AND 2110 - ROYALALLIANCE ASSOCIATES, INC. MAINTAINED SHELF SPACE (OR REVENUESHARING) PROGRAMS IN WHICH PARTICIPATING MUTUAL FUNDCOMPLEXES PAID A FEE IN RETURN FOR PREFERENTIAL MARKETING ANDDISTRIBUTION ACCESS TO THE FIRM. THE BENEFITS PROVIDED TO THEMUTUAL FUND COMPLEXES INCLUDED ENHANCED ACCESS TO THEFIRM'S SALES FORCE, PLACEMENT OF MATERIALS ON THE FIRM'S WEBSITES, AND INCLUSION OF THE FUNDS IN CERTAIN MARKETINGMATERIALS PREPARED OR DISTRIBUTED BY THE FIRM TO THEIR SALESFORCE. PARTICIPATING FUND COMPLEXES PAID ALL OR SOME OF THEIRFEES FOR PARTICIPATING IN THE PROGRAMS BY DIRECTING MUTUALFUND PORTFOLIO BROKERAGE COMMISSIONS TO THE FIRM. THOSEPAYMENTS VIOLATED NASD CONDUCT RULES 2830(K) AND 2110. INADDITION, THE FIRM FAILED TO MAINTAIN E-MAILS FOR THE TIME PERIODREQUIRED BY THE BOOKS AND RECORDS RULES.


Resolution: Acceptance, Waiver & Consent(AWC)87©2020 FINRA. All rights reserved. Report about ROYAL ALLIANCE ASSOCIATES, INC.




https://www.finra.org/rules-guidance/oversight-enforcement/finra-disciplinary-actions?search=CE2050011



Resolution:


Sanction Details: WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, ROYAL ALLIANCEASSOCIATES, INC., CONSENTED TO THE DESCRIBED SANCTIONS AND TOTHE ENTRY OF FINDINGS THEREFORE, THE FIRM IS CENSURED ANDFINED $6,600,000.

Sanctions Ordered: CensureMonetary/Fine $6,600,000.00



Initiated By: NASD




CENSURE


Docket/Case Number: AWC # CE2050011



Allegations: THE NASD ALLEGED THAT: (I) FROM JANUARY 2001 THROUGH DECEMBER2003, THE FIRM MAINTAINED REVENUE SHARING PROGRAMS IN WHICHPARTICIPATING MUTUAL FUND COMPLEXES PAID A FEE IN RETURN FORPREFERENTIAL MARKETING AND DISTRIBUTION ACCESS TO THE FIRM INVIOLATION OF NASD CONDUCT RULES 2830(K) AND 2110; AND (II) THE FIRMFAILED TO MAINTAIN E-MAILS FOR THE TIME PERIOD REQUIRED BY THEBOOKS AND RECORDS RULES IN VIOLATION OF SEC. 17(A) OF THESECURITIES EXCHANGE OF ACT OF 1934, RULE 17A-4 THEREUNDER, ANDNASD CONDUCT RULES 3110 AND 2110.



Resolution:

Other Sanctions Ordered: N/A

Sanctions Ordered: CensureMonetary/Fine $6,600,000.00








Sanction Details: N/A

Firm Statement WITHOUT ADMITTING OR DENYING THE ALLEGATIONS AND FINDINGS, THEFIRM CONSENTED TO THE ENTRY OF THE FINDINGS REFERENCED UNDERITEM 7 ABOVE, AND THE CENSURE AND FINE OF $6,600,000.00.

Disclosure 24 of 41

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Initiated By: NASD




Docket/Case Number: CMS040142



Allegations: NASD CONDUCT RULE 2110 AND NASD MARKETPLACE RULE 6130(B) -RESPONDENT MEMBER FAILED TO ACCEPT OR DECLINE IN ACTTRANSACTIONS IN ELIGIBLE SECURITIES WITHIN 20 MINUTES AFTEREXECUTION.



Resolution:


Sanction Details: WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, RESPONDENTMEMBER CONSENTED TO THE DESCRIBED SANCTIONS AND TO THEENTRY OF FINDINGS, THEREFORE, THE FIRM IS CENSURED AND FINE$11,000.


No








WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, RESPONDENTMEMBER CONSENTED TO THE DESCRIBED SANCTIONS AND TO THEENTRY OF FINDINGS, THEREFORE, THE FIRM IS CENSURED AND FINE$11,000.


Initiated By: NASD


Censure


MONETARY FINE





Allegations: NASD CONDUCT RULE 2110 AND NASD MARKETPLACE RULE 6130(B) -RESPONDENT MEMBER FAILED TO ACCEPT OR DECLINE ACTTRANSACTIONS IN ELIGIBLE SECURITIES WITHIN 20 MINUTES AFTEREXECUTION.



N/A


Resolution:


Sanction Details: WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, THE FIRMCONSENTED TO THE ENTRY OF THE FINDINGS AND THE CENSURE ANDFINE OF $11,000.



Disclosure 25 of 41

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Allegations: SEC ADMIN PROC FILE NO. 3-11538, RELS 33-8438, 34-49982, DATED JULY 8,2004 - THE SECURITIES AND EXCHANGE COMMISSION ("COMMISSION")DEEMS IT APPROPRIATE AND IN THE PUBLIC INTEREST THAT PUBLICADMINISTRATIVE AND CEASE-AND-DESIST PROCEEDINGS BE, ANDHEREBY ARE, INSTITUTED PURSUANT TO SECTION 8A OF THE SECURITIESACT OF 1933 ("SECURITIES ACT") AND SECTION 15(B) OF THE SECURITIESEXCHANGE ACT OF 1934 ("EXCHANGE ACT") AGAINST ROYAL ALLIANCEASSOCIATES, INC. IN ANTICIPATION OF THE INSTITUTION OF THESEPROCEEDINGS, RESPONDENT HAS SUBMITTED AN OFFER OFSETTLEMENT (THE "OFFER") WHICH THE COMMISSION HAS DETERMINEDTO ACCEPT.









Cease and Desist



Docket/Case Number: SEC ADMIN FILE NO. 3-11538/REL 33-8438



Allegations: SEC ADMIN PROC FILE NO. 3-11538, RELS 33-8438, 34-49982, DATED JULY 8,2004 - THE SECURITIES AND EXCHANGE COMMISSION ("COMMISSION")DEEMS IT APPROPRIATE AND IN THE PUBLIC INTEREST THAT PUBLICADMINISTRATIVE AND CEASE-AND-DESIST PROCEEDINGS BE, ANDHEREBY ARE, INSTITUTED PURSUANT TO SECTION 8A OF THE SECURITIESACT OF 1933 ("SECURITIES ACT") AND SECTION 15(B) OF THE SECURITIESEXCHANGE ACT OF 1934 ("EXCHANGE ACT") AGAINST ROYAL ALLIANCEASSOCIATES, INC. IN ANTICIPATION OF THE INSTITUTION OF THESEPROCEEDINGS, RESPONDENT HAS SUBMITTED AN OFFER OFSETTLEMENT (THE "OFFER") WHICH THE COMMISSION HAS DETERMINEDTO ACCEPT.


Resolution:


Sanction Details: ACCORDINGLY, IT IS HEREBY ORDERED: ROYAL ALLIANCE IS HEREBYCENSURED; ROYAL ALLIANCE SHALL, WITHIN 30 DAYS OF THE ENTRY OFTHIS ORDER, PAY $1 IN DISGORGEMENT AND A CIVIL MONEY PENALTY INTHE AMOUNT OF $150,000 TO THE UNITED STATES TREASURY. ROYALALLIANCE SHALL COMPLY WITH ITS UNDERTAKINGS TO: MAINTAIN THEREVISED POLICIES, PROCEDURES AND SYSTEMS, THAT IT IMPLEMENTEDTO ENHANCE THE SUPERVISION OF CLASS B SHARE SALES; AND REVIEW,WITH THE ASSISTANCE OF OUTSIDE COUNSEL, ITS PROCEDURES ANDSYSTEMS REGARDING THE SALE OF CLASS B SHARES FOR COMPLIANCEWITH THE FEDERAL SECURITIES LAWS AND REGULATIONS, AND THERULES OF THE NASD AND THE NEW YORK STOCK EXCHANGE. WITHIN 90DAYS OF THE ISSUANCE OF THIS ORDER, ROYAL ALLIANCE UNDERTAKESAND AGREES TO INFORM THE STAFF IN WRITING THAT IT HAS COMPLETEDITS REVIEW AND THAT, IF NECESSARY, IT HAS ESTABLISHED ADDITIONALSYSTEMS OR PROCEDURES REASONABLY DESIGNED TO ACHIEVECOMPLIANCE WITH THOSE LAWS, REGULATIONS, AND RULESCONCERNING THE SALE OF CLASS B SHARES.


No


Order






ACCORDINGLY, IT IS HEREBY ORDERED: ROYAL ALLIANCE IS HEREBYCENSURED; ROYAL ALLIANCE SHALL, WITHIN 30 DAYS OF THE ENTRY OFTHIS ORDER, PAY $1 IN DISGORGEMENT AND A CIVIL MONEY PENALTY INTHE AMOUNT OF $150,000 TO THE UNITED STATES TREASURY. ROYALALLIANCE SHALL COMPLY WITH ITS UNDERTAKINGS TO: MAINTAIN THEREVISED POLICIES, PROCEDURES AND SYSTEMS, THAT IT IMPLEMENTEDTO ENHANCE THE SUPERVISION OF CLASS B SHARE SALES; AND REVIEW,WITH THE ASSISTANCE OF OUTSIDE COUNSEL, ITS PROCEDURES ANDSYSTEMS REGARDING THE SALE OF CLASS B SHARES FOR COMPLIANCEWITH THE FEDERAL SECURITIES LAWS AND REGULATIONS, AND THERULES OF THE NASD AND THE NEW YORK STOCK EXCHANGE. WITHIN 90DAYS OF THE ISSUANCE OF THIS ORDER, ROYAL ALLIANCE UNDERTAKESAND AGREES TO INFORM THE STAFF IN WRITING THAT IT HAS COMPLETEDITS REVIEW AND THAT, IF NECESSARY, IT HAS ESTABLISHED ADDITIONALSYSTEMS OR PROCEDURES REASONABLY DESIGNED TO ACHIEVECOMPLIANCE WITH THOSE LAWS, REGULATIONS, AND RULESCONCERNING THE SALE OF CLASS B SHARES.

Regulator Statement THIS MATTER INVOLVES SUPERVISORY FAILURES BY ROYAL ALLIANCE.ROYAL ALLIANCE FAILED REASONABLY TO SUPERVISE ITS BRANCHMANAGER, AS WELL AS THE REGISTERED REPRESENTATIVES, WITHREGARD TO THESE MUTUAL FUND SALES PRACTICES. ALTHOUGH ROYALALLIANCE HAD POLICIES AND PROCEDURES ADDRESSING THE TYPE OFSALES PRACTICES THAT THE BRANCH MANAGER UTILIZED, IT FAILED TOIMPLEMENT SYSTEMS TO ADEQUATELY MONITOR COMPLIANCE WITHTHESE POLICIES AND PROCEDURES.






CENSURE;DISGORGEMENT


Docket/Case Number: ADMIN. PROC. FILE NO. 3-11538



Allegations: THE SEC ALLEGED THAT THE FIRM FAILED REASONABLY TO SUPERVISESCARBOROUGH, ITS BRANCH MANAGER, AS WELL AS THE REGISTEREDREPRESENTATIVES WITH REGARD TO CERTAIN MUTUAL FUND SALESPRACTICES, AND THAT, ALTHOUGH THE FIRM HAD POLICIES ANDPROCEDURES ADDRESSING THE TYPE OF SALES PRACTICES THATSCARBOROUGH UTILIZED, IT FAILED TO IMPLEMENT SYSTEMS TOADEQUATELY MONITOR COMPLIANCE WITH THESE POLICIES ANDPROCEDURES.








Resolution:

Other Sanctions Ordered: DISGORGEMENT OF $1.00

Sanction Details: SEE ITEM 13 BELOW.

Firm Statement THE FIRM WAS CENSURED, ASSESSED A CIVIL MONETARY PENALTY OF$150,000, AND ORDERED TO DISGORGE $1 [THE FIRM'S REGISTEREDREPRESENTATIVE J. MICHALE SCARBOROUGH WAS ORDERED TODISGORGE $2,111,084 AND OTHER SANCTIONS]. THE SECACKNOWLEDGED THE FIRM'S REMEDIAL EFFORTS AND THE FIRMUNDERTOOK TO DO EACH OF THE FOLLOWING: (1) MAINTAIN THEREVISED POLICIES, PROCEDURES AND SYSTEMS THAT THE FIRMIMPLEMENTED TO ENHANCE THE SUPERVISION OF CLASS B SHARESALES; AND (2) REVIEW, WITH THE ASSISTANCE OF OUTSIDE COUNSEL,ITS PROCEDURES AND SYSTEMS REGARDING THE SALE OF CLASS BSHARES FOR COMPLIANCE WITH THE FEDERAL SECURITIES LAWS ANDREGULATIONS, AND THE RULES OF THE NASD AND THE NEW YORK STOCKEXCHANGE.


Order

Disclosure 26 of 41

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Initiated By: STATE OF CONNECTICUT DEPT. OF BANKING






Allegations: COMMENCING IN 1994 AND 1995, RESPECTIVELY, THE FIRM ALLEGEDLYTRANSACTED BUSINESS FROM 2 UNREGISTERED BRANCH OFFICES INVIOLATION OF SECTION 36B-6(D) OF THE CONNECTICUT UNIFORMSECURITIES ACT NOTWITHSTANDING AN OCTOBER 14, 1992 STIPULATIONAND AGREEMENT OBLIGATING THE FIRM NOT TO TRANSACT BUSINESSFROM ANY CONNECTICUT PLACE OF BUSINESS UNLESS THAT LOCATIONWAS EFFECTIVELY REGISTERED AS A BRANCH OFFICE.












Resolution:

Other Sanctions Ordered: PER CONSENT ORDER DATED 12/10/2001:1. FIRM FINED $10,000 FOR VIOLATING THE 10/14/1992 STIPULATION ANDAGREEMENT; FINED $3000 FOR FAILING TO REGISTER THE 2 LOCATIONSAS BRANCH OFFICES; AND ASSESSED $1500 FOR DEPT. INVESTIGATIVECOSTS (TOTAL IMPOSED: $14,500);2. FIRM TO ENGAGE AN INDEPENDENT CONULSTANT TO MAKERECOMMENDATIONS ON IMPROVING THE FIRM'S SUPERVISORY ANDCOMPLIANCE PROCEDURES RELATING TO STATE AND SRO BRANCHOFFICE REGISTRATION REQUIREMENTS;3. FIRM TO ISSUE TO EACH CONNECTICUT AGENT A WRITTENCOMPLIANCE NOTICE EXPLAINING CONNECTICUT'S BRANCH OFFICEREGISTRATION REQUIREMENTS AS WELL AS THE FIRM'S SUPERVISORYOBLIGATIONS IN CONNECTION WITH THOSE REQUIREMENTS.

Sanction Details: SEE ABOVE.

Regulator Statement SEE ABOVE.


Consent


Initiated By: STATE OF CONNECTICUT DEPT. OF BANKING







Allegations: COMMENCING IN 1994 AND 1995, RESPECTIVELY, THE FIRM ALLEGEDLYTRANSACTED BUSINESS FROM 2 UNREGISTERED BRANCH OFFICES INVIOLATION OF SECTION 36B-6(D) OF THE CONNECTICUT UNIFORMSECURITIES ACT.











Resolution:

Other Sanctions Ordered: PER CONSENT ORDER DATED 12/10/2001: 1)FIRM FINED $10,000. FORVIOLATING THE TERMS OF AN EARLIER STIPULATION AND AGREEMENT;FINED $3000. FOR FAILING TO REGISTER 2 LOCATIONS AS BRANCHOFFICES; AND ASSESSED $1500. FOR DEPT INVESTIGATIVE COSTS. 2)FIRM TO ENGAGE AN INDEPENDENT CONSULTANT TO MAKERECOMMENDATIONS ON IMPROVING THE FIRM'S SUPERVISORY ANDCOMPLIANCE PROCEDURES RELATING TO STATE AND SRO BRANCHOFFICE REGISTRATION REQUIREMENTS. 3) FIRM TO ISSUE TO EACHCONNECTICUT AGENT A WRITTEN COMPLIANCE NOTICE EXPLAININGCONNECTICUT'S BRANCH OFFICE REGISTRATION REQUIREMENTS ASWELL AS THE FIRM'S SUPERVISORY OBLIGATIONS IN CONNECTION WITHTHOSE REQUIREMENTS.

Sanction Details: SEE ABOVE.

Firm Statement SEE ABOVE.


Consent

Disclosure 27 of 41

i






Principal Product Type: Debt - Asset Backed

Other Product Type(s): NOTES

Allegations: TWO AGENTS, WHILE EMPLOYED BY ROYAL ALLIANCE AND OPERATINGTHE TOMS RIVER, NJ BRANCH OFFICE OF R.A., SOLD UNREGISTEREDSECURITIES IN THEIR OWN COMPANY, PRIME MONEY MANAGEMENT, INC.IN VIOLATION OF N.J.S.A. 49:3-60. ROYAL ALLIANCE FAILED TO SUPERVISETHE AGENTS PURUANT TO N.J.S.A. 49:3-58.








Cease and Desist




Resolution:

Other Sanctions Ordered: SPECIAL SUPERVISION, SPECIFICALLY KEEPING THE BUREAU INFORMEDRE: COMPLAINTS, EXAMS, DEFICIENCY.

Sanction Details: RESTITUTION OF $400,000 TO INVESTORS AND CEASE AND DESIST FROMENGAGING IN CONDUCT VIOLATION OF THE UNIFORM SECURITIES LAW..

Regulator Statement AGENTS SELLING AWAY AND FAILURE TO SUPERVISE THEM BY ROYALALLIANCE ASSOCIATES, INC.

Sanctions Ordered: Disgorgement/RestitutionCease and Desist/Injunction

Consent




Cease and Desist




Principal Product Type: Debt - Asset Backed


Allegations: TWO AGENTS, WHILE EMPLOYED BY ROYAL ALLIANCE ASSOCIATES, INC.AND OPERATING THE TOMS RIVER, NJ BRANCH OFFICE OF ROYALALLIANCE ARE ALLEGED TO HAVE SOLD UNREGISTERED SECURITIES,ISSUED BY A COMPANY NAMED PRIME MONEY MANAGEMENT, INC. INVIOLATION OF N.J.S.A 49:3-60. ROYAL ALLIANCE IS ALLEGED TO HAVEFAILED TO SUPERVISE THE AGENTS PURSUANT TO N.J.S.A 49:3-58.


Resolution: Consent







Other Sanctions Ordered: SPECIAL SUPERVISION, SPECIFICALLY KEEPING THE BUREAU INFORMEDRE: COMPLAINTS, EXAMS, DEFICIENCY.

Sanction Details: RESTITUTION OF $400,000.00 TO INVESTORS AND CEASE AND DESISTFROM ENGAGING IN CONDUCT VIOLATION OF THE UNIFORM SECURITIESLAW.

Firm Statement TWO FORMER REPRESENTATIVES OF ROYAL ALLIANCE ASSOCIATES, INC.WERE ALLEGED TO HAVE OFFERED AND SOLD UNREGISTEREDSECURITIES. THE FIRM AND THE NEW JERSEY BUREAU OF SECURITIESENTERED INTO A CONSENT AGREEMENT, UNDER WHICH ROYAL ALLIANCE,WITHOUT ADMITTING OR DENYING ANY WRONG DOING, AGREED TO PAYTO CERTAIN PURCHASERS OF THE SECURITIES. IN ADDITION, ROYALALLIANCE AGREED TO CERTAIN REMEDIAL ACTIONS, INVOLVINGREPORTING OF CERTAIN ACTIVITIES TO THE NEW JERSY BUREAU OFSECURITIES. ALL OF THE ACTIONS OF THE FORMER ROYAL ALLIANCEREPRESENTATIVES IN OFFERING AND SELLING THESE SECURITIES WEREUNAUTHORIZED.

Sanctions Ordered: Disgorgement/RestitutionCease and Desist/Injunction

Disclosure 28 of 41

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Initiated By: NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.




Docket/Case Number: C10000146


Other Product Type(s): GENERAL SECURITIES

Allegations: NASD RULES 1120(A) AND 2110 - RESPONDENT MEMBER, ACTINGTHROUGH AN INDIVIDUAL, ALLOWED OTHER INDIVIDUALS ASSOCIATEDWITH THE FIRM TO ACT IN THE CAPACITY OF REGISTERED PERSONSWHILE THEIR REGISTRATION STATUSES WITH THE NASD WERE INACTIVEDUE TO THEIR FAILURE TO COMPLETE THE REGULATORY ELEMENT OFNASD'S CONTINUING EDUCATION REQUIREMENT.









Resolution:


Sanction Details: CENSURED, FINED $20,000, AND ORDERED TO DISGORGE $31,035.92 OFTHE FIRM'S COMMISSIONS






Other


MONETARY FINE,CENSURE AND DISGORGEMENT.




Other Product Type(s): GENERAL SECURITIES

Allegations: THE FIRM ACTING THROUGH AN INDIVIDUAL, ALLOWED OTHERINDIVIDUALS ASSOCIATED WITH THE FIRM TO ACT IN THE CAPACITY OFREGISTERED PERSONS WHILE THEIR REGISTRATION STATUS' WITH THENASD WERE INACTIVE DUE TO THEIR FAILURE TO COMPLETE THEREGULATORY ELEMENT OF NASD'S CONTINUING EDUCATIONREQUIREMENT.



Resolution:










Sanction Details: CENSURED, FINED $20,000.00, AND ORDERED TO DISGORGE $31,035.92 OFTHE FIRM'S COMMISSIONS.

Disclosure 29 of 41

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Initiated By: NATIONAL ASSOCIATION OF SECURITIES DEALERS





Principal Product Type: Equity - OTC


Allegations: NASD RULES 2110 AND 6130(B)- RESPONDENT MEMBER FAILED TOACCEPT OR DECLINE IN ACT TRANSACTIONS IN ELIGABLE SECURITIESWITHIN 20 MINUTES AFTER EXECUTION.



Resolution:


Sanction Details: NONE




Initiated By: NASD


Allegations: THE NASD ALLEGED THAT APPLICANT FAILED TO PROPERLY ACCEPT ORDECLINE CERTAIN TRANSACTIONS IN OTC SECURITIES WITHIN 20MINUTES AFTER EXECUTION, IN VIOLATION OF NASD RULES 2110 AND6130(B).












Principal Product Type: Equity - OTC



Resolution:


Sanction Details: APPLICANT AGREED TO PAY A FINE IN THE AMOUNT OF $5,000.00, WHICHWAS PAID IN MAY, 2000.



Disclosure 30 of 41

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Initiated By: MARYLAND SECURITIES DIVISION


Cease and Desist


CONSENT ORDER THAT ROYAL ALLIANCE PROVIDE FOR 2 YEARS: 1)COPIES OF COMPLAINTS REGARDING REPRESENTATIVES REGISTERED INMARYLAND AND CORRESPONDENCE AND RESPONSES TO COMPLAINTS;2) SCHEDULE OF EXAMS, WHETHER EXAMS WERE ANNOUNCED AND FORCAUSE; AND 3) DEFICIENCY LETTERS, RESPONSES AND ACTIONS TAKENARISING OUT OF EXAMS. CIVIL MONETARY PENALTY OF $15,000.





Other Product Type(s): SALE OF FICTITIOUS SECURITIES

Allegations: EDGAR H. MCGRATH, JR. (CRD #871042), A FORMER REGISTERED REP OFROYAL ALLIANCE, SOLD MORE THAN $550,000 IN UNREGISTERED ANDFICTITIOUS SECURITIES TO AT LEAST 13 ROYAL ALLIANCE CLIENTS ANDCLIENTS OF MCGRATH & ASSOCIATES, WHILE HE WAS AN AGENT OFROYAL ALLIANCE. ROYAL ALLIANCE REIMBURSED MORE THAN $550,000 INOUT OF POCKET LOSSES.








CONSENT ORDER THAT ROYAL ALLIANCE PROVIDE FOR 2 YEARS: 1)COPIES OF COMPLAINTS REGARDING REPRESENTATIVES REGISTERED INMARYLAND AND CORRESPONDENCE AND RESPONSES TO COMPLAINTS;2) SCHEDULE OF EXAMS, WHETHER EXAMS WERE ANNOUNCED AND FORCAUSE; AND 3) DEFICIENCY LETTERS, RESPONSES AND ACTIONS TAKENARISING OUT OF EXAMS. CIVIL MONETARY PENALTY OF $15,000.


Resolution:


Sanction Details: CIVIL MONETARY PENALTY PAID BEFORE CONSENT ORDER WASENTERED.

Regulator Statement ROYAL ALLIANCE COOPERATED IN THE INVESTIGATION AND CONSENTEDTO ENTRY OF THE ORDER. THE COMPANY HAS INSTITUTED HEIGHTENEDSUPERVISORY PROCEDURES AS A RESULT OF ACTION TAKEN BY THE SEC.


Consent


Initiated By: MARYLAND








Allegations: INADEQUATE SUPERVISION OF REGISTERED REPRESENTATIVE.



Resolution:

Other Sanctions Ordered: ROYAL ALLIANCE WILL PROVIDE CERTAIN DOCUMENTATION TO THESECURITIES DIVISION FOR A PERIOD OF TWO YEARS.

Sanction Details: $15,000.00 MONETARY PENALTY PAID ON 7/21/1999.


Consent






Sanction Details: $15,000.00 MONETARY PENALTY PAID ON 7/21/1999.

Disclosure 31 of 41

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Initiated By: COMMONWEALTH OF VIRGINIA


Other


ADMINSTRATIVE


Docket/Case Number:



Allegations: FAILED TO ESTABLISH ADEQUATE WRITTEN PROCEDURES AND TOENFORCE PROCEDURES WHICH HAD BEEN ESTABLISHED.



Resolution:


Sanction Details: FIRM AGREED TO MAKE WRITTEN OFFERS OF RESTITUTION TO CERTAINCLIENTS OF A FORMER REGISTERED REPRESENTATIVE. FIRM PAIDPENALTY TO STATE ON 5/22/1998 IN THE AMOUNT OF $10,000.00.

Sanctions Ordered: Monetary/Fine $10,000.00Disgorgement/Restitution

Consent

Disclosure 32 of 41

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Initiated By: BUREAU OF SECURITIES, STATE OF NEW JERSEY


Docket/Case Number:

Allegations: NET CAPITAL DEFICIENCY.








Other


ADMINISTRATIVE




Resolution:


Sanction Details: FIRM WAS CAUTIONED AND ASSESSED A CIVIL MONETARY PENALTY OF$500.00.

Firm Statement A NET CAPITAL DEFICIENCE OCCURED IN 1990 AND WAS CAUSED BY THEFACT THAT AN OVERNIGHT REPURCHASE AGREEMENT WAS DEEMED BYTHE NASD TO BE A NON-ALLOWABLE ASSET BECAUSE THE SECURITIESCOLLATERALIZING THE AGREEMENT WERE HELD IN A CUSTODIALACCOUNT WITH THE PARTY ON THE CONTRA-SIDE OF THE TRANSACTION.THIS WAS NOTED DURING A ROUTINE NASD INSPECTION. WHEN THEMATTER WAS BROUGHT TO ROYAL'S ATTENTION, THE REPURCHASEAGREEMENT WAS IMMEDIATELY BROKEN, THEREBY CURING THE NETCAPITAL DEFICIENCY. SINCE THIS TIME ROYAL ALLIANCE HAS BEEN INCOMPLIANCE WITH NET CAPITAL RULES.

Sanctions Ordered: Monetary/Fine $500.00

Consent

Disclosure 33 of 41

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Initiated By: DISTRICT OF COLUMBIA DEPARTMENT OF INSURANCE, SECURITIES ANDBANKING.


Docket/Case Number: 943-F




Allegations: FAILURE TO REGISTER AN INVESTMENT ADVISER AGENT WHO WASCONDUCTING BUSINESS WHILE UNLICENSED.








Other


FINE



Resolution:

Other Sanctions Ordered: NONE

Sanction Details: FINED $3,000.00

Regulator Statement ROYAL ALLIANCE ASSOCIATES, INC. ("RAA") FILED AN APPLICATION FORREGISTRATION AS AN INVESTMENT ADVISER, ALONG WITH THREEREPRESENTATIVES, ON DECEMBER 2, 1993. RAA RENEWED ITSAPPLICATION ALONG WITH TWO REPRESENTATIVES ON JANUARY 1, 1994.RAA RENEWED THEIR APPLICATION FOR 1995 WITH ONEREPRESENTATIVE ON JANUARY 1, 1995. RAA FAILED TO REGISTER AREPRESENTATIVE WHO WAS TRANSACTING INVESTMENT ADVISORYBUSINESS FROM THE DISTRICT UNDER THE NAME OF RAA FROM 1993 TO1995 IN VIOLATION OF THE DISTRICT OF COLUMBIA INVESTMENTADVISERS ACT OF 1992. D.C. CODE §2-2631 ET AL (1992)


No


Decision & Order of Offer of Settlement


Initiated By: PUBLIC SERVICE COMMISSION OF THE DISTRICT OF COLUMBIA



Allegations: THE PUBLIC SERVICE COMMISSION OF THE DISTRICT OF COLUMBIAALLEGED THAT ROYAL ALLIANCE FAILED TO ENSURE THAT ONE OF ITSREGISTERED REPRESENTATIVES WAS PROPERLY LICENSED AS ANADVISORY REPRESENTATIVE IN VIOLATION OF SECTION 2-2635 OF THE DCCODE.








Other


ADMINISTRATIVE





Resolution:


Sanction Details: ENTERED ORDER OF SETTLEMENT WITHOUT ADMITTING OR DENYINGALLEGATIONS. ROYAL ALLIANCE PAID A FINE IN THE AMOUNT OF $3,000.00


Settled

Disclosure 34 of 41

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Initiated By: STATE CORPORATION COMMISSION, COMMONWEALTH OF VIRGINIA


Other


ADMINSTRATIVE


Docket/Case Number:



Allegations: THE COMMONWEALTH OF VIRGINIA ALLEGED THAT ROYAL ALLIANCEFAILED TO ENSURE THAT ONE OF ITS REGISTERED REPRESENTATIVESWAS PROPERLY LICENSED AS AN ADVISORY REPRESENTATIVE INVIOLATION OF SEC.13.1-504C OF THE VIRGINIA CODE



Resolution:


Settled







Sanction Details: ENTERED ORDER OF SETTLEMENT WITHOUT ADMITTING OR DENYINGALLEGATIONS. ROYAL PAID PENALTY AND COSTS IN THE AMOUNT OF$4200.00


Disclosure 35 of 41

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Initiated By: STATE CORPORATION COMMISSION, COMMONWEALTH OF VIRGINIA


Other


ADMINISTRATIVE


Docket/Case Number:



Allegations: THE COMMONWEALTH OF VIRGINIA ALLEGED THAT ROYAL ALLIANCEFAILED TO ENSURE THAT ONE OF ITS REGISTERED REPRESENTATIVESWAS PROPERLY LICENSED AS AN ADVISORY REPRESENTATIVE INVIOLATION OF SEC 13.1-504C OF THE VIRGINIA CODE



Resolution:


Sanction Details: ENTERED ORDER OF SETTLEMENT WITHOUT ADMITTING OR DENYINGALLEGATIONS. ROYAL PAID PENALTY AND COSTS IN THE AMOUNT OF$1041.00.


Settled

Disclosure 36 of 41

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Initiated By: FLORIDA DIVISION OF SECURITIES




Docket/Case Number: DBF 2881-S-11/99




Allegations: UNREGISTERED BRANCH ACITIVITY


Resolution:

Other Sanctions Ordered: DEPARTMENT AGREES TO APPROVE THE PENDING BRANCH OFFICEAPPLICATIONS.

Sanction Details: FINAL ORDER ISSUED 11/15/1999


Stipulation and Consent


Initiated By: FLORIDA DIVISION OF SECURITIES





Docket/Case Number: DBF 2881-S-11/99



Allegations: THE DIVISION OF SECURITIES ALLEGED THAT A REGISTEREDREPRESENTATIVE OF THE FIRM DID BUSINESS FROM AN OFFICELOCATION THAT WAS NOT PROPERLY REGISTERED AS A BRANCH OFFICE.









Resolution:


Sanction Details: THE FIRM PAID AN ADMINISTRATIVE FINE IN THE AMOUNT OF $13,120.13,AND AGREED TO CEASE AND DESIST FROM FURTHER VIOLATIONS.

Firm Statement THE FLORIDA DIVISION OF SECURIITES ALLEGED THAT ROYAL ALLIANCEASSOCIATES, CONDUCTED SECURITIES BUSINESS THROUGH ANUNREGISTERED BRANCH OFFICE LOCATION. WITHOUT DENYING ORADMITTING THE ALLEGATIONS, ROYAL ALLIANCE AGREED TO AND PAID AFINE IN THE AMOUNT OF $13,120.13, AND AGREED TO CEASE AND DESISTFROM FURTHER VIOLATIONS.



Disclosure 37 of 41

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Initiated By: STATE OF INDIANA


Revocation


RESTITUTION,CIVIL PENALTIES, AND INVESTIGATION COSTS.


Docket/Case Number: 99-0190 SC


Principal Product Type: Money Market Fund(s)


Allegations: ON JUNE 23, 1999, THE INDIANA SECURITIES DIVISION FILED ITSADMINISTRATIVE ACTION AGAINST RESPONDENTS ROYAL ALLIANCE,AVALLONE, AND BILOTTA. IN ITS COMPLAINT THE DIVISION ALLEGES THATROYAL ALLIANCE AND BILOTTA FAILED TO REASONABLY SUPERVISEAVALLONE, WHO TRANSACTED BUSINESS IN THESTATE OF INDIANA WITHOUT THE BENEFIT OF REGISTRATION.


Resolution: Stipulation and Consent108©2020 FINRA. All rights reserved. Report about ROYAL ALLIANCE ASSOCIATES, INC.






Resolution:

Other Sanctions Ordered: BROKER-DEALER AGREEED TO OFFER RESCISSION TO INDIANAINVESTORS AND IMPLEMENT A MONITORING SYSTEM TO PREVENTFUTURE SIMILAR SITUATIONS.

Sanction Details: ON JUNE 23, 1999, THE INDIANA SECURITIESCOMMISSIONER ISSUED A SHOW CAUSE ORDER AGAINST RESPONDENTSROYAL ALLIANCE, AVALLONE, AND BILOTTA.

Regulator Statement ON 8/16/99, RESPONDENT,ROYAL ALLIANCE ENTERED INTO A CONSENTAGREEMENT TO MAKE RESCISSION TO INDIANA INVESTORS. ON 9/14/99,THE DIVISION FILED A MOTION TO DISMISS THE ADMINISTRATIVECOMPLAINT AND TO VACATE THE SHOW CAUSE ORDER. AN ORDERDISMISSING THE ADMINISTRATIVE COMPLAINT AND VACATING THE ORDERWAS ISSUED BY THE SECURITIES COMMISSIONER. CONTACT: JEFFREY M.GERSHON (317)232-6681

Sanctions Ordered:



Initiated By: INDIANA


Restitution



Docket/Case Number: 99-0199 SC



Allegations: THE SECURITIES DIVISION OF THE STATE OF INDIANA ALLEGED THAT AREGISTERED REPRESENTATIVE OF THE FIRM TRANSACTED BUSINESSWITHOUT BEING PROPERLY LICENSED, AND THAT THE FIRM FAILED TOADEQUATELY SUPERVISE THE ACTIVITY OF THE REPRESENTATIVE.



Resolution:

Firm Statement WITHOUT ADMITTING OR DENYING THE ALLEGATIONS IN THEADMINISTRATIVE ACTION, ROYAL ALLIANCE AGREED TO OFFERRESCISSION OF THE TRANSACTIONS EXECUTED BY THE UNLICENSEDREPRESENTATIVE, AND TO IMPLEMENT A MONITORING SYSTEM TOPREVENT FUTURE VIOLATIONS.

Consent






Firm Statement WITHOUT ADMITTING OR DENYING THE ALLEGATIONS IN THEADMINISTRATIVE ACTION, ROYAL ALLIANCE AGREED TO OFFERRESCISSION OF THE TRANSACTIONS EXECUTED BY THE UNLICENSEDREPRESENTATIVE, AND TO IMPLEMENT A MONITORING SYSTEM TOPREVENT FUTURE VIOLATIONS.

Disclosure 38 of 41

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Censure






Allegations: (NASD RULE 3010 - RESPONDENT MEMBER AND RESPONDENT TRAVISFAILED TO ADEQUATELY SUPERVISE THE ACTIVITIES OF A REGISTEREDREPRESENTATIVE, RESULTING IN THE REPRESENTATIVE ENGAGING INUNSUITABLE AND EXCESSIVE TRADING).



Resolution:


Sanction Details: ON FEBRUARY 10, 1999, DISTRICT NO. 10 NOTIFIEDRESPONDENTS ROYAL ALLIANCE ASSOCIATES, INC. AND KATHRYN TRAVISTHAT THE LETTER OF AWC NO. C10990005 WAS ACCEPTED; THEREFORE,THE FIRM IS CENSURED AND FINED $25,000, AND RESPONDENT TRAVIS ISCENSURED, FINED $10,000, AND BARRED FROM ASSOCIATION WITH ANYNASD MEMBER IN ANY SUPERVISORY CAPACITY, WITH A RIGHT TO RE-APPLY AFTER ONE YEAR -



iReporting Source: 110©2020 FINRA. All rights reserved. Report about ROYAL ALLIANCE ASSOCIATES, INC.






Initiated By: NASDR








Allegations: FAILURE TO ADEQUATELY SUPERVISE THE ACTIVITIES OF A REGISTEREDREPRESENTATIVE.



Resolution:


Sanction Details: CENSURE AND FINE OF $25,000.00. FINE PAID ON 3/18/1999.



Disclosure 39 of 41

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Docket/Case Number:



Allegations: FAILURE TO SUPERVISE









Resolution:


Sanction Details: NOT PROVIDED

Regulator Statement 01-16-97, SEC DIGEST ISSUE 97-10, DATED 1/15/97, SEC ANNOUNCEDPROCEEDINGS AGAINST ROYAL ALLIANCE ASSOCIATES, INC. (RAA)THISARISES FROM RAA?S FAILURE REASONABLY TO SUPERVISE 2 MANAGINGEXECUTIVES WHO OPERATED ONE-PERSON RAA BRANCH OFFICES INGREENBORO, SC AND COCOA BEACH, FL. SEC FOUND THAT BETWEEN11/89 AND 3/93, THE GREENSBORO EXECUTIVE, IMPROPERLY DIVERTEDAND TRANSFERRED MORE THAN $2 MILLION AMONG THE ACCOUNTS OFHIS CUSTOMERS. ACCORDING TO THE SEC'S ORDER, HE FORGEDSIGNATURES OF CUSTOMERS ON DOCUMENTS, SOLD NONEXISTENTINVESTMENTS, COMMINGLED CUSTOMER FUNDS IN HIS PERSONAL BANKACCOUNT, DISTRIBUTED FALSE CONFIRMATIONS OF TRADES AND FALSEACCOUNT VALUATIONS, AND EXCESSIVELY TURNED OVER IRA ACCOUNTSBY PARTIALLY LIQUIDATING VARIABLE ANNUITIES AND THENREPURCHASING THE SAME ANNUITIES. SEC FOUND THAT RAA COCOABEACH EXECUTIVE, MISAPPROPRIATED APPROXIMATELY $400,000 FROM10 CUSTOMERS BETWEEN 7/90 AND 7/92 AND DISTRIBUTED FALSEACCOUNT EVALUATIONS TO HIS CUSTOMERS. SEC V. CAIN, LIT. REL. NO.15181 (12/9/96);), ADMIN PROC. FILE NO. 3-9214; SEC V. SIMPSON, LIT. REL.NO. 14839 (3/7/96); ADMIN PROC FILE #3-8968. SEC FOUND THAT RAAFAILED TO ADOPT, IMPLEMENT AND FOLLOW ADEQUATE SUPERVISORYAND COMPLIANCE PROCEDURES; FAILED EFFECTIVELY TO DELEGATERESPONSIBILITIES WITH RESPECT TO THE SUPERVISION OF ITS ONE-PERSON OFFICES; FAILED TO SCRUTINIZE ADEQUATELY THE SECURITIES-RELATED BUSINESSES; RAA?S PRE-ANNOUNCED COMPLIANCEEXAMINATION ONCE A YEAR WAS INADEQUATE. SIMULTANEOUS WITH THEINSTITUTION OF PROCEEDINGS SEC ACCEPTED RAA?S OFFER OFSETTLEMENT WHEREBY WITHOUT ADMITTING OR DENYING THEFINDINGS, CONSENTED TO THE ENTRY OF THE ORDER. IT IS CENSUREDAND A CIVIL FINE OF $50,000 IS IMPOSED. THE FIRM IS REQUIRED TORETAIN AN INDEPENDENT CONSULTANT TO REVIEW THE FIRM?SCOMPLIANCE PROCEDURES AND TO RECOMMEND THE ADOPTION ANDIMPLEMENTATION OF NEW PROCEEDURES IF THE CONSULTANT BELIEVESTHEM TO BE NECESSARY.


Consent







Initiated By: U.S. SECURITIES AND EXCHANGE COMMISSION


Other


ADMINISTRATIVE


Docket/Case Number: ADMIN. PROC. FILE NO. 3-9223



Allegations: THAT THE FIRM FAILED ADEQUATELY TO SUPERVISE TWO ONE PERSONBRANCH OFFICES IN COCOA BEACH, FLORIDA AND GREENSBORO, NORTHCAROLINA.



Resolution:


Sanction Details: CENSURE, ADMINISTRATIVE PENALTY OF $50,000.00 AND RETENTION OFAN INDEPENDENT CONSULTANT TO REVIEW THE FIRM'S SUPERVISORY,COMPLIANCE AND OTHER SUPERVISORY POLICIES AND PROCEDURESDESIGNED TO PREVENT AND DETECT FEDERLA SECURITIES LAWVIOLATIONS OF THE NATURE INVOLVED IN THIS MATTER.

Firm Statement N/A


Decision & Order of Offer of Settlement

Disclosure 40 of 41

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Allegations: ALLEGED VIOLATION OF SECTION 36-474(c) OF THECONNECTICUT UNIFORM SECURITIES ACT IN CONNECTION WITH THETRANSACTING OF BUSINESS BY AN AFFILIATED UNREGISTEREDINVESTMENT ADVISER AND FAILURE TO SUPERVISE OFF PREMISEACTIVITIES.







Initiated By: CONNECTICUT DEPARTMENT OF BANKING




Docket/Case Number: ST-92-2280-5


Principal Product Type:


ALLEGED VIOLATION OF SECTION 36-474(c) OF THECONNECTICUT UNIFORM SECURITIES ACT IN CONNECTION WITH THETRANSACTING OF BUSINESS BY AN AFFILIATED UNREGISTEREDINVESTMENT ADVISER AND FAILURE TO SUPERVISE OFF PREMISEACTIVITIES.


Resolution:


Sanction Details: STIPULATION AND AGREEMENT EXECUTED ON10-14-92,PROVIDED THAT THE FIRM WOULD: 1)REVIEW AND REVISE ITSSUPERVISORY PROCEDURES;2)REFRAIN FROM TRANSACTING BUSINESSINCONNECTICUT UNLESS THEIR BRANCH OFFICES ARE REGISTERED; 3)FILEALL COMPLAINTS RECEIVED FROM CONNECTICUT INVESTORS WITH THEDIVISION FOR THE NEXT TWO YEARS; 4)FILE QUARTERLY REPORTS ONTHE STATUS OF THESE COMPLAINTS FOR THE NEXT TWO YEARS;5)CONDUCT ANNUAL COMPLIANCE AUDITS FOR THE NEXT TWO YEARS;6)REIMBURSE THE DIVISION $12,500 ($7,500 ADMINISTRATIVE FEE AND$5,000 FOR COST OF INVESTIGATION.)

Regulator Statement FROM NOVEMBER 1989 TO MARCH 1991, APPROXIMATELY26 AGENTS TRANSACTED BUSINESS FOR SUNAMERICA ASSETMANAGEMENTCORPORATION,AN AFFILIATED INVESTMENT ADVISER.BETWEEN 1989 AND1990, THE FIRM FAILED TO MONITOR THE OFF-PREMISES ACTIVITIES OFITS AGENTS.

Sanctions Ordered:

Consent


Allegations: FAILURE TO REGISTER CERTAIN REPRESENTATIVES AS INVESTMENTADVISER OF AN AFFILIATED ENTITY AND FAILURE TO APPROPRIATELYMONITOR THE ACTIVITIES OF ITS AGENTS.







Initiated By: CONNECTICUT DEPARTMENT OF BANKING


Other


ADMINISTRATIVE


Docket/Case Number: ST-92-2280-S



Allegations: FAILURE TO REGISTER CERTAIN REPRESENTATIVES AS INVESTMENTADVISER OF AN AFFILIATED ENTITY AND FAILURE TO APPROPRIATELYMONITOR THE ACTIVITIES OF ITS AGENTS.


Resolution:


Sanction Details: WITHOUT ADMITTING OR DENYING ALLEGATIONS TH FIRM AGREED TOADOPT CERTAIN REMEDIAL MEASURES, AND PAID A FINE OF $7,500.00 ANDREIMBURSED COSTS OF $5,000.00.


Settled

Disclosure 41 of 41

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Initiated By: ILLINOIS SECURITIES DEPARTMENT




Allegations: ILLINOIS HAS ENTERED A CONSENT ORDER OFCENSURE AGAINST THE ABOVE REFERENCED RESPONDENT. FINDINGS OFFACT AND CONCLUSIONS OF LAW ARE THAT RESPONDENT FAILED TOTIMELY AMEND A U-4 APPLICATION TO REFLECT A MATERIAL CHANGE OFCIRCUMSTANCES WITH REGARD TO ONE OF RESPONDENT'SSALESPERSONS.AN ADMINISTRATIVE FINE OF $500.00 HAS ALSO BEEN ASSESSED.









Principal Product Type:



Resolution:


Sanction Details: Not Provided

Regulator Statement CONSENT ORDER OF CENSURE AND $500 FINE

Sanctions Ordered: CensureMonetary/Fine $500.00

Consent


Initiated By: ILLINOIS SECURITIES DEPARTMENT








Allegations: A REPRESENTATIVE OF THE FIRM FAILED TO FILE AN AMENDED FORM U4WITHIN 10 DAYS OF A REPORTABLE EVENT.



Resolution:


Sanction Details: WITHOUT ADMITTING OR DENYING THE ALLEGATIONS THE FIRM AGREEDTO PAY A FINE IN THE AMOUNT OF $500.00.

Sanctions Ordered: Monetary/Fine $500.00

Consent






Sanction Details: WITHOUT ADMITTING OR DENYING THE ALLEGATIONS THE FIRM AGREEDTO PAY A FINE IN THE AMOUNT OF $500.00.






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 29


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

05/30/2002

02-02923

ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-SUITABILITY; ACCOUNT RELATED-FAILURE TO SUPERVISE; ACCOUNTRELATED-NEGLIGENCE

DO NOT USE-NO OTHER TYPE OF SEC INVOLVE; MUTUAL FUNDS

$66,242.00

AWARD AGAINST PARTY

04/09/2003

$5,255.00

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 29

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Arbitration Forum:

Case Initiated:

Case Number:

Allegations:


NASD

10/09/2002

02-05743

ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-UNAUTHORIZED TRADING; DONOT USE-NO OTHER CONTROVERSY INVOLVED

ANNUITIES; COMMON STOCK; DO NOT USE-NO OTHER TYPE OF SECINVOLVE; MUTUAL FUNDS 118©2020 FINRA. All rights reserved. Report about ROYAL ALLIANCE ASSOCIATES, INC.




www.finra.org/awardsonline

https://www.finra.org/arbitration-mediation/arbitration-awards-online?search=02-02923





Disposition:

Disposition Date:


ANNUITIES; COMMON STOCK; DO NOT USE-NO OTHER TYPE OF SECINVOLVE; MUTUAL FUNDS

$586,189.00

AWARD AGAINST PARTY

11/12/2004

$25,000.00


Disclosure 3 of 29

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Arbitration Forum:

Case Initiated:

Case Number:

Allegations:



Disposition:

Disposition Date:


NASD

03/06/2003

03-01407

ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT RELATED-BREACHOF CONTRACT; ACCOUNT RELATED-FAILURE TO SUPERVISE; ACCOUNTRELATED-NEGLIGENCE

COMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE

$286,209.00

AWARD AGAINST PARTY

05/18/2004

$170,917.00


Disclosure 4 of 29

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Arbitration Forum:

Allegations:

NASD

ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT RELATED-BREACHOF CONTRACT; ACCOUNT RELATED-FAILURE TO SUPERVISE; ACCOUNTRELATED-NEGLIGENCE







Arbitration Forum:

Case Initiated:

Case Number:



Disposition:

Disposition Date:


NASD

03/13/2003

03-01671

DO NOT USE-NO OTHER TYPE OF SEC INVOLVE; MUTUAL FUNDS

$730,000.00

AWARD AGAINST PARTY

11/19/2004

$554,620.00


Disclosure 5 of 29

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Arbitration Forum:

Case Initiated:

Case Number:

Allegations:



Disposition:

Disposition Date:


NASD

04/23/2003

03-02926

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

ANNUITIES; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE

$25,168.61

AWARD AGAINST PARTY

10/01/2003

$10,610.51


Disclosure 6 of 29

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Allegations: ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-OMISSIONOF FACTS; ACCOUNT ACTIVITY-SUITABILITY; ACCOUNT RELATED-NEGLIGENCE








Arbitration Forum:

Case Initiated:

Case Number:

Allegations:



Disposition:

Disposition Date:


NASD

05/14/2003

03-02990

ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-OMISSIONOF FACTS; ACCOUNT ACTIVITY-SUITABILITY; ACCOUNT RELATED-NEGLIGENCE


$555,420.00

AWARD AGAINST PARTY

06/09/2004

$563,482.42


Disclosure 7 of 29

i



Arbitration Forum:

Case Initiated:

Case Number:

Allegations:



Disposition:

Disposition Date:


NASD

11/30/2004

04-08162

ACCOUNT RELATED-BREACH OF CONTRACT; ACCOUNT RELATED-FAILURETO SUPERVISE; ACCOUNT RELATED-NEGLIGENCE; ACCOUNT RELATED-OTHER


$25,000.00

AWARD AGAINST PARTY

04/11/2005

$25,425.00


Disclosure 8 of 29

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Arbitration Forum:

Case Initiated:

Case Number:

Allegations:



Disposition:

Disposition Date:


NASD

05/25/2005

05-02299

ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT RELATED-FAILURETO SUPERVISE; ACCOUNT RELATED-OTHER

DO NOT USE-NO OTHER TYPE OF SEC INVOLVE; REAL ESTATEINVESTMENT TRUST

$13,789,537.27

AWARD AGAINST PARTY

12/21/2006

$1,806,000.22


Disclosure 9 of 29

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Arbitration Forum:

Case Initiated:

Case Number:

Allegations:



Disposition:

Disposition Date:


NASD

05/29/2007

07-01585

ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-OMISSIONOF FACTS; ACCOUNT ACTIVITY-SUITABILITY; DO NOT USE-NO OTHERCONTROVERSY INVOLVED

COMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE;MUTUAL FUNDS

$6,765,000.00

AWARD AGAINST PARTY

02/09/2010

$859,000.09

There may be a non-monetary award associated with this arbitration.








Please select the Case Number above to view more detailed information.

Disclosure 10 of 29

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Arbitration Forum:

Case Initiated:

Case Number:

Allegations:



Disposition:

Disposition Date:


FINRA

06/03/2009

09-02693

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

COMMON STOCK; OTHER TYPES OF SECURITIES

$1,400,000.00

AWARD AGAINST PARTY

10/20/2010

$80,000.00


Disclosure 11 of 29

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Arbitration Forum:

Case Initiated:

Case Number:

Allegations:



Disposition:

Disposition Date:

FINRA

09/25/2009

09-05047

ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-OMISSION OF FACTS; ACCOUNT ACTIVITY-SUITABILITY; ACCOUNTACTIVITY-UNAUTHORIZED TRADING; ACCOUNT RELATED-NEGLIGENCE

MUTUAL FUNDS

$20,966.48

AWARD AGAINST PARTY

03/12/2010








Sum of All Relief Awarded: $3,147.71


Disclosure 12 of 29

i



Arbitration Forum:

Case Initiated:

Case Number:

Allegations:



Disposition:

Disposition Date:


FINRA

10/21/2010

10-04587

ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-OMISSION OF FACTS;ACCOUNT ACTIVITY-SUITABILITY; ACCOUNT RELATED-BREACH OFCONTRACT; ACCOUNT RELATED-FAILURE TO SUPERVISE; ACCOUNTRELATED-NEGLIGENCE

MUTUAL FUNDS; PRIVATE EQUITIES; VARIABLE ANNUITIES

$1,400,000.00

AWARD AGAINST PARTY

03/19/2012

$1,403,500.00


Disclosure 13 of 29

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Arbitration Forum:

Case Initiated:

Case Number:

Allegations:


FINRA

12/14/2010

10-05508

ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT RELATED-BREACHOF CONTRACT; ACCOUNT RELATED-FAILURE TO SUPERVISE; ACCOUNTRELATED-NEGLIGENCE; ACCOUNT RELATED-OTHER

ANNUITIES; OTHER TYPES OF SECURITIES










Disposition:

Disposition Date:


ANNUITIES; OTHER TYPES OF SECURITIES

$365,880.40

AWARD AGAINST PARTY

07/05/2011

$320,238.00


Disclosure 14 of 29

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Arbitration Forum:

Case Initiated:

Case Number:

Allegations:



Disposition:

Disposition Date:


FINRA

11/12/2012

12-03721

ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-OMISSION OF FACTS;ACCOUNT ACTIVITY-OTHER; ACCOUNT RELATED-BREACH OF CONTRACT;ACCOUNT RELATED-FAILURE TO SUPERVISE; ACCOUNT RELATED-NEGLIGENCE

MUTUAL FUNDS; PRIVATE EQUITIES; REAL ESTATE INVESTMENT TRUST;VARIABLE ANNUITIES

$2,800,000.00

AWARD AGAINST PARTY

02/10/2016

$472,294.77


Disclosure 15 of 29

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Allegations: ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-OMISSION OF FACTS;ACCOUNT RELATED-BREACH OF CONTRACT; ACCOUNT RELATED-FAILURETO SUPERVISE; ACCOUNT RELATED-NEGLIGENCE







Arbitration Forum:

Case Initiated:

Case Number:



Disposition:

Disposition Date:


FINRA

08/02/2013

13-02150

ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-OMISSION OF FACTS;ACCOUNT RELATED-BREACH OF CONTRACT; ACCOUNT RELATED-FAILURETO SUPERVISE; ACCOUNT RELATED-NEGLIGENCE

OTHER TYPES OF SECURITIES

$1,200,000.00

AWARD AGAINST PARTY

07/15/2015

$1,401,687.05


Disclosure 16 of 29

i



Arbitration Forum:

Case Initiated:

Case Number:

Allegations:



Disposition:

Disposition Date:


FINRA

10/09/2013

13-02836

ACCOUNT ACTIVITY-SUITABILITY; ACCOUNT RELATED-FAILURE TOSUPERVISE; ACCOUNT RELATED-NEGLIGENCE

REAL ESTATE INVESTMENT TRUST

$200,000.00

AWARD AGAINST PARTY

11/06/2014

$45,000.00


Disclosure 17 of 29

i










Arbitration Forum:

Case Initiated:

Case Number:

Allegations:



Disposition:

Disposition Date:


FINRA

04/07/2014

14-00982

ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-OMISSION OF FACTS;ACCOUNT ACTIVITY-SUITABILITY; ACCOUNT RELATED-BREACH OFCONTRACT; ACCOUNT RELATED-FAILURE TO SUPERVISE; ACCOUNTRELATED-NEGLIGENCE

VARIABLE ANNUITIES

Unspecified Damages

AWARD AGAINST PARTY

01/09/2015

$884,222.59


Disclosure 18 of 29

i



Arbitration Forum:

Case Initiated:

Case Number:

Allegations:



Disposition:

Disposition Date:


FINRA

07/16/2014

14-01724

ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-OMISSION OF FACTS;ACCOUNT ACTIVITY-SUITABILITY; ACCOUNT RELATED-FAILURE TOSUPERVISE

ANNUITIES; REAL ESTATE INVESTMENT TRUST; VARIABLE ANNUITIES

$1,944,000.00

AWARD AGAINST PARTY

04/26/2016

$91,907.86









Disclosure 19 of 29

i



Arbitration Forum:

Case Initiated:

Case Number:

Allegations:



Disposition:

Disposition Date:


FINRA

07/03/2014

14-01816

ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-OMISSION OF FACTS;ACCOUNT ACTIVITY-SUITABILITY; ACCOUNT RELATED-FAILURE TOSUPERVISE; ACCOUNT RELATED-NEGLIGENCE

ANNUITIES; REAL ESTATE INVESTMENT TRUST; VARIABLE ANNUITIES

$2,841,000.00

AWARD AGAINST PARTY

10/04/2016

$1,105,000.00


Disclosure 20 of 29

i



Arbitration Forum:

Case Initiated:

Case Number:

Allegations:



FINRA

12/19/2014

14-03551

ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-OMISSION OF FACTS;ACCOUNT RELATED-BREACH OF CONTRACT; ACCOUNT RELATED-FAILURETO SUPERVISE; ACCOUNT RELATED-NEGLIGENCE; ACCOUNT RELATED-OTHER

OTHER TYPES OF SECURITIES; REAL ESTATE INVESTMENT TRUST

$50,000.00128©2020 FINRA. All rights reserved. Report about ROYAL ALLIANCE ASSOCIATES, INC.








Disposition:

Disposition Date:


$50,000.00

AWARD AGAINST PARTY

12/03/2015

$80,640.55


Disclosure 21 of 29

i



Arbitration Forum:

Case Initiated:

Case Number:

Allegations:



Disposition:

Disposition Date:


FINRA

06/23/2015

15-01027

ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MANIPULATION; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNTACTIVITY-OMISSION OF FACTS; ACCOUNT RELATED-BREACH OFCONTRACT; ACCOUNT RELATED-FAILURE TO SUPERVISE; ACCOUNTRELATED-NEGLIGENCE

COMMON STOCK; REAL ESTATE INVESTMENT TRUST; REVERSECONVERTIBLES

$700,000.00

AWARD AGAINST PARTY

11/22/2017

$200,300.01


Disclosure 22 of 29

i



Arbitration Forum:

Case Initiated:

Allegations:

FINRA

05/28/2015

ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT







Case Initiated:

Case Number:



Disposition:

Disposition Date:


05/28/2015

15-01057

ANNUITIES

$40,000.00

AWARD AGAINST PARTY

01/20/2016

$300.00


Disclosure 23 of 29

i



Arbitration Forum:

Case Initiated:

Case Number:

Allegations:



Disposition:

Disposition Date:


FINRA

01/09/2017

17-00068

ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-FRAUD;ACCOUNT ACTIVITY-MANIPULATION; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-OMISSION OF FACTS;ACCOUNT ACTIVITY-OTHER; ACCOUNT ACTIVITY-SUITABILITY; ACCOUNTACTIVITY-VIOLATE OF BLUE SKY LWS; ACCOUNT RELATED-BREACH OFCONTRACT; ACCOUNT RELATED-FAILURE TO SUPERVISE; ACCOUNTRELATED-NEGLIGENCE; ACCOUNT RELATED-OTHER

COMMON STOCK; CORPORATE BONDS; EXCHANGE-TRADED FUNDS;MUNICIPAL BONDS; MUTUAL FUNDS; REVERSE CONVERTIBLES;STRUCTURED PRODUCTS

$500,000.00

AWARD AGAINST PARTY

11/07/2017

$280,751.00


Disclosure 24 of 29

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Disclosure 24 of 29



Arbitration Forum:

Case Initiated:

Case Number:

Allegations:



Disposition:

Disposition Date:


FINRA

12/15/2017

17-03339

ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-FRAUD;ACCOUNT ACTIVITY-MANIPULATION; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-OMISSION OF FACTS;ACCOUNT ACTIVITY-OTHER; ACCOUNT ACTIVITY-SUITABILITY; ACCOUNTACTIVITY-VIOLATE OF BLUE SKY LWS; ACCOUNT RELATED-BREACH OFCONTRACT; ACCOUNT RELATED-FAILURE TO SUPERVISE; ACCOUNTRELATED-NEGLIGENCE; ACCOUNT RELATED-OTHER

OTHER TYPES OF SECURITIES

Unspecified Damages

AWARD AGAINST PARTY

01/15/2019

$2,630,142.55


Disclosure 25 of 29

i



Arbitration Forum:

Case Initiated:

Case Number:

Allegations:



Disposition:

Disposition Date:

NASD

11/19/1996

96-04831

ACCOUNT ACTIVITY-MANIPULATION; ACCOUNT ACTIVITY-SUITABILITY; DONOT USE-NO OTHER CONTROVERSY INVOLVED

DO NOT USE-NO OTHER TYPE OF SEC INVOLVE; LIMITED PARTNERSHIPS;REAL ESTATE INVESTMENT TRUST

$81,577.41

AWARD AGAINST PARTY

07/28/1997 131©2020 FINRA. All rights reserved. Report about ROYAL ALLIANCE ASSOCIATES, INC.







Disposition Date:


07/28/1997

$20,317.17


Disclosure 26 of 29

i



Arbitration Forum:

Case Initiated:

Case Number:

Allegations:



Disposition:

Disposition Date:


NASD

12/09/1996

96-04987

ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-OTHER;ACCOUNT ACTIVITY-SUITABILITY; DO NOT USE-NO OTHER CONTROVERSYINVOLVED

DO NOT USE-NO OTHER TYPE OF SEC INVOLVE; LIMITED PARTNERSHIPS

$101,000.00

AWARD AGAINST PARTY

08/18/1997

$18,950.00


Disclosure 27 of 29

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Arbitration Forum:

Case Initiated:

Case Number:

Allegations:


NASD

01/12/1998

97-05904

ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-CHURNING; ACCOUNT ACTIVITY-OTHER; ACCOUNT ACTIVITY-UNAUTHORIZED TRADING

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










Disposition:

Disposition Date:


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

$3,458,110.60

AWARD AGAINST PARTY

03/29/2000

$946,715.95


Disclosure 28 of 29

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Arbitration Forum:

Case Initiated:

Case Number:

Allegations:



Disposition:

Disposition Date:


NASD

04/15/1998

98-00572

ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-UNAUTHORIZED TRADING;ACCOUNT RELATED-FAILURE TO SUPERVISE


$9,017,441.72

AWARD AGAINST PARTY

12/13/1999

$452,751.24


Disclosure 29 of 29

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Arbitration Forum:

Case Initiated:

Allegations:

NASD

01/26/2000

ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-CHURNING; ACCOUNT ACTIVITY-SUITABILITY; ACCOUNT RELATED-FAILURETO SUPERVISE







Case Initiated:

Case Number:



Disposition:

Disposition Date:


01/26/2000

99-05641

COMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE;MUTUAL FUNDS

$8,000,000.00

AWARD AGAINST PARTY

06/11/2001

$69,697.37








Civil Bond

This type of disclosure event involves a civil bond for the brokerage firm that has been denied, paid, or revoked by abonding company.

Disclosure 1 of 7


Policy Holder: ROYAL ALLIANCE ASSOCIATES, INC.

Bonding Company Name: LLOYD'S OF LONDON

Disposition: Payout

Disposition Date: 09/14/2007

Payout Details: $2,023,600 - SEPTEMBER 14, 2007

Firm Statement ROYAL ALLIANCE ASSOCIATES HAS SUBMITTED A CLAIM TO IT'S FIDELITYINSURER ARISING OUT OF THE ACTIONS OF KEVIN KELLEY, A FORMERREPRESENTATIVE OF THE FIRM. MR. KELLEY CONVERTED FUNDSBELONGING TO CUSTOMERS IN AN AMOUNT EXCEEDING $5 MILLION.

Disclosure 2 of 7

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Bonding Company Name: NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH

Disposition: Payout


Payout Details: PAYOUT AMOUNT $1 MILLION PAID 8/10/2001

Firm Statement HENRY WASIK, A FORMER REGISTERED REPRESENTATIVE OF ROYALALLIANCE IS ALLEDGED TO HAVE CONVERTED FUNDS FROM A NUMBEROF CLIENTS. ROYAL ALLIANCE REIMBURSED THE CLIENTS AND WAS INTURN REIMBURSED FOR A PORTION OF THIS BY THE FIDELITY CARRIER.

Disclosure 3 of 7

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Bonding Company Name: NATIONAL UNION FIRE INSURANCE CO. OF PITTSBURGH

Disposition: Payout

Disposition Date: 11/30/2001135©2020 FINRA. All rights reserved. Report about ROYAL ALLIANCE ASSOCIATES, INC.






Payout Details: PAYOUT AMOUNT $100,000.00 ON 11/30/2001

Firm Statement EDGAR H. MCGRATH, JR., A FORMER REGISTERED REPRESENTATIVE OFROYAL ALLIANCE, IS ALLEGED TO HAVE CONVERTED FUNDS FROM ANUMBER OF CLIENTS. ROYAL ALLIANCE REIMBURSED THE CLIENTS ANDWAS IN TURN REIMBURSED FOR A PORTION OF THIS BY THE FIDELITYCARRIER.

Disclosure 4 of 7

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Disposition: Payout


Payout Details: PAYOUT AMOUNT $750,000.00. PAID 4/11/2000.

Firm Statement ROGER TURNER, A FORMER REGISTERED REPRESENTATIVE OF ROYALALLIANCE IS ALLEGED TO HAVE CONVERTED AN APPROXIMATE TOTAL OF$2 MILLION DOLLARS FROM ABOUT 15 OF HIS CLIENTS. ROYAL ALLIANCEREIMBURSED THE CLIENTS AND WAS IN TURN REIMBURSED FOR APORTION OF THIS BY THE FIDELITY CARRIER.

Disclosure 5 of 7

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Disposition: Payout


Payout Details: PAYOUT AMOUNT $350,000.00. PAID DECEMBER 1998

Firm Statement JOHN ERICKSON, A FORMER REGISTERED REPRESENTATIVE IS ALLEGEDTO HAVE MISAPPROPRIATED APPROXIMATELY $350,000.00 FROM ONE OFHIS CLIENTS. ROYAL ALLIANCE FULLY REPAID THE CLIENT AND WASPARTIALLY REIMBURSED BY ITS FIDELITY BOND CARRIER IN DECEMBEROF 1998.

Disclosure 6 of 7

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Disclosure 6 of 7




Disposition: Payout


Payout Details: PAYOUT AMOUNT $875,000.00. PAID JULY 1999.

Firm Statement SCOTT BENNET WAS A ROYAL ALLIANCE REPRESENTATIVE IN VIRGINIA.HE ALLEGEDLY EMBEZZLED A TOTAL OF $875,000.00 FROM FOUR OF HISCLIENTS. ROYAL ALLIANCE REIMBURSED THE CLIENTS AND WASPARTIALLY REIMBURSED FROM ITS FIDELITY CARRIER IN JULY 1999.

Disclosure 7 of 7

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Disposition: Payout


Payout Details: PAYOUT AMOUNT $411,020.10 ON 02/11/1998.

Firm Statement A FORMER REPRESENTATIVE, KEVIN HOGAN, MISAPPROPRIATED$411,020.10 OF CUSTOMER FUNDS OVER SEVERAL YEARS. UPONDISCOVERING THE FRAUD, ROYAL ALLIANCE FULLY REPAID THE FIVEINDIVIDUALS INVOLVED AND SUBMITTED A CLAIM UNDER ITS FIDELITYBOND. ROYAL ALLIANCE WAS PARTIALLY REIMBURSED BY ITS FIDELITYBOND FOR THE DEFALCATIONS OF ITS FORMER REPRESENTATIVE, KEVINHOGAN.






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