VANDHAM SECURITIES CORP.VANDHAM SECURITIES CORP. CRD# 26258 SEC# 8-42448 Main Office Location ONE...

BrokerCheck Report

VANDHAM SECURITIES CORP.

Section Title

Report Summary

Registration and Withdrawal

Firm History

CRD# 26258

1

2

7

Firm Profile 3 - 6

Page(s)

Firm Operations 8 - 13

Disclosure Events 14

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CRD# 26258

SEC# 8-42448

Main Office Location

ONE MAYNARD DRIVESUITE 2201PARK RIDGE, NJ 07656

Mailing Address


Business Telephone Number

201-782-3300

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 12

Firm Profile

This firm is classified as a corporation.

This firm was formed in New York on 03/16/1990.

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

This brokerage firm is no longer registered withFINRA or a national securities exchange.

www.finra.org/brokercheck User Guidance

1©2020 FINRA. All rights reserved. Report about VANDHAM SECURITIES CORP.


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This section provides information relating to the date the brokerage firm ceased doing business and the firm's financialobligations to customers or other brokerage firms.

Registration Withdrawal Information

12/31/2018

No

This firm terminated orwithdrew registration on:

Does this brokerage firm oweany money or securities toany customer or brokeragefirm?






This firm is classified as a corporation.

This firm was formed in New York on 03/16/1990.

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.


SEC#

26258

8-42448

Main Office Location

Mailing Address

Business Telephone Number

Doing business as VANDHAM SECURITIES CORP.

201-782-3300








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?

CATRINI, FRANK PAUL

CHAIRMAN OF THE BOARD, CEO, SROP

50% but less than 75%

No

Individual

03/1990

Yes

43385

Is this a domestic or foreignentity or an individual?

Legal Name & CRD# (if any):

Position



Position Start Date


BARBA, TIMOTHY BRUCE

FINOP / DIRECTOR


No

Individual

01/1995

Yes

824607



Position

Position Start Date

CATRINI, CHRISTOPHER NICK

SR. VP

Individual

01/2001

2133382








Direct Owners and Executive Officers (continued)

Firm Profile



Position Start Date



No

01/2001

Yes

Position



Position Start Date


SPITZER, JASON HEATH

CHIEF OPERATING OFFICER

Less than 5%

No

Individual

10/2006

Yes

3156522



Position



Position Start Date


TORPEY, EUGENE PATRICK

CCO

Less than 5%

No

Individual

01/2008

Yes

730315








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

Indirect Owners

Firm Profile

No information reported.






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.

The firm's registration was from 05/23/1990 to 01/24/2019.

This firm is no longer registered.






Firm Operations

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

Other Types of Business

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

Non-Securities Business Description:

This firm currently conducts 9 types of businesses.

Types of Business

Broker or dealer making inter-dealer markets in corporation securities over-the-counter

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

Broker or dealer selling corporate debt securities

Municipal securities dealer

Municipal securities broker

Put and call broker or dealer or option writer

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

Trading securities for own account

Other - THE FIRM ENGAGES IN COMMISSION RECAPTURE FOR CERTAIN CUSTOMERS.






Firm Operations

Clearing Arrangements

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

Introducing Arrangements

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

Name: INTERACTIVE BROKERS LLC

Business Address: ONE PICKWICK PLAZA 2ND FLGREENWICH, CT 06830

CRD #: 36418

Effective Date: 05/09/2016

Description: ACCOUNTS AND RECORDS OF APPLICANT ARE MAINTAINED BYINTERACTIVE BROKERS WHICH HOLDS OR MAINTAINS FUNDS ANDSECURITIES OF APPLICANT AND ITS CUSTOMERS. ALL OF APPLICANTSCLIENTS ARE INTRODUCED ON A FULLY DISCLOSED BASIS. THE FIRMIS NOT A CLASS R BROKER DEALER

Name: MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED

Business Address: 101 HUDSON STJERSEY CITY, NJ 07302

CRD #: 7691


Description: ACCOUNTS AND RECORDS OF APPLICANT ARE MAINTAINED BYBROADCORT CLEARING, WHICH HOLDS OR MAINTAINS FUNDS ANDSECURITIES OF APPLICANT AND ITS CUSTOMERS. ALL OF APPLICANT'SCLIENTS ARE INTRODUCED TO THIS COMPANY ON A FULLY DISCLOSEDBASIS. THE FIRM IS NOT A CLASS R BROKER DEALER






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.

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



CRD #: 7691


Description: ACCOUNTS AND RECORDS OF APPLICANT ARE MAINTAINED BYBROADCORT CLEARING WHICH HOLDS OR MAINTAINS FUNDS ANDSECURITIES OF APPLICANT AND ITS CUSTOMERS. ALL OFAPPLICANTS'S CLIENTS ARE INTRODUCED TO THIS COMPANY ON AFULLY DISCLOSED BASIS. THE FIRM IS NOT A CLASS R BROKERDEALER



CRD #: 7691


Description: ACCOUNTS AND RECORDS OF APPLICANT ARE MAINTAINED BYBROADCORT CLEARING WHICH HOLDS OR MAINTAINS FUNDS ANDSECURITIES OF APPLICANT AND ITS CUSTOMERS. ALL OF APPLICANTSCLIENTS ARE INTRODUCED TO THIS COMPANY ON A FULLY DISCLOSEDBASIS. THE FIRM IS NOT A CLASS R BROKER DEALER



CRD #: 7691


Description: ACCOUNTS AND RECORDS OF APPLICANT ARE MAINTAINED BYBROADCORT CLEARING, WHICH HOLDS OR MAINTAINS FUNDS ANDSECURITIES OF APPLICANT AND ITS CUSTOMERS. ALL OF APPLICANTSCLIENTS ARE INTRODUCED TO THIS COMPANY ON A FULLY DISCLOSEDBASIS. THE FIRM IS NOT A CLASS R BROKER DEALER






Firm Operations

Industry Arrangements (continued)

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

ACCOUNTS AND RECORDS OF APPLICANT ARE MAINTAINED BYBROADCORT CLEARING, WHICH HOLDS OR MAINTAINS FUNDS ANDSECURITIES OF APPLICANT AND ITS CUSTOMERS. ALL OF APPLICANTSCLIENTS ARE INTRODUCED TO THIS COMPANY ON A FULLY DISCLOSEDBASIS. THE FIRM IS NOT A CLASS R BROKER DEALER






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 not, 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.

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

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






Disclosure Events

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

Final On AppealPending

Regulatory Event 0 12 0






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 12

Reporting Source: Regulator

Allegations: SEC ADMIN RELEASE 34-86970 / SEPTEMBER 16, 2019: THE SECURITIESAND EXCHANGE COMMISSION DEEMS IT APPROPRIATE AND IN THEPUBLIC INTEREST THAT PUBLIC ADMINISTRATIVE AND CEASE-AND-DESISTPROCEEDINGS BE INSTITUTED AGAINST VANDHAM SECURITIES CORP.(VANDHAM OR RESPONDENT). ON THE BASIS OF THIS ORDER AND RESPONDENT'S OFFER, THECOMMISSION FINDS THAT FROM AT LEAST JANUARY 2016 THROUGH APRIL2017, VANDHAM WAS A REGISTERED BROKER-DEALER WHOSECUSTOMERS WERE PRIMARILY OTHER BROKER-DEALERS ENGAGED INTHE LIQUIDATION OF LARGE VOLUMES OF SHARES IN THINLY TRADED,LOW PRICED OVER-THE-COUNTER STOCKS HELD BY THEIR CUSTOMERS.VANDHAM DERIVED THE MAJORITY OF ITS REVENUE FROM THE TRADINGPROFITS IT GENERATED BY FACILITATING THE SALE OF SUCH SHARESINTO THE MARKET FOR TWO SUCH BROKER-DEALER CUSTOMERS,BROKER-DEALER A AND BROKER-DEALER B. WHILE DOING SO, VANDHAMREPEATEDLY VIOLATED THE FEDERAL SECURITIES LAWS IN THREEDIFFERENT WAYS. FIRST, VANDHAM VIOLATED RULE 203(B)(1) OFREGULATION SHO PROMULGATED UNDER THE EXCHANGE ACT. FOR ATLEAST SEVERAL THOUSAND SHORT SALES EXECUTED DURING THERELEVANT PERIOD, VANDHAM NEVER LOCATED SHARES OF THOSESTOCKS AS REQUIRED BY RULE 203(B)(1) OF REGULATION SHO. IN OTHERINSTANCES, VANDHAM ALSO VIOLATED RULE 15C2-11 UNDER THEEXCHANGE ACT WHILE FACILITATING THE LIQUIDATION OF LOW PRICEDSTOCKS FOR ITS BROKER-DEALER CUSTOMERS. IN SOME CASES,RATHER THAN PLACING SHORT SALES, VANDHAM FIRST PURCHASED THESHARES BEING SOLD BY ITS BROKER-DEALER CUSTOMERS FOR ITS OWNACCOUNT, CREATING A LONG POSITION, AND THEN SOLD THOSE SHARESINTO THE PUBLIC TRADING MARKET. IN ORDER TO SELL THE SHARES,VANDHAM OFTEN PUBLISHED OFFERS TO SELL THOSE SHARES AT ASPECIFIC PRICE ("QUOTATIONS") ON OTC LINK'S ELECTRONIC QUOTATIONSERVICE ("EQS"), WHICH WAS A RECOGNIZED QUOTATION MEDIUM.HOWEVER, VANDHAM VIOLATED RULE 15C2-11 WHEN IT PUBLISHEDTHESE QUOTATIONS, IN A QUOTATION MEDIUM, TO SELL ITS PRINCIPALPOSITION WITHOUT FIRST OBTAINING AND REVIEWING THE DOCUMENTSAND INFORMATION ABOUT THE ISSUERS THAT IT WAS REQUIRED BY RULE15C2-11TO OBTAIN AND REVIEW BEFORE PUBLISHING THOSEQUOTATIONS. FINALLY, ALTHOUGH VANDHAM WAS ENGAGED INFACILITATING HIGH VOLUME LIQUIDATIONS OF LOW PRICED, THINLYTRADED, OVER-THE-COUNTER STOCKS, VANDHAM DID NOT IMPLEMENTITS ANTI-MONEY LAUNDERING ("AML") POLICIES AND PROCEDURES SO ASTO REASONABLY ADDRESS THE RISKS OF ITS BUSINESS MODEL. DUE TOTHE DEFICIENCIES IN VANDHAM'S IMPLEMENTATION OF ITS AML POLICIESAND PROCEDURES DETAILED BELOW, VANDHAM FAILED TO ADEQUATELYINVESTIGATE ITS CUSTOMERS' TRANSACTIONS AND FAILED TO FILETIMELY SUSPICIOUS ACTIVITY REPORTS ("SARS") FOR NUMEROUSTRANSACTIONS THAT IT HAD REASON TO SUSPECT INVOLVED POSSIBLEFRAUDULENT ACTIVITY OR HAD NO BUSINESS OR APPARENT LAWFULPURPOSE. AS A RESULT, VANDHAM WILLFULLY VIOLATED SECTION 17(A)OF THE EXCHANGE ACT AND RULE 17A-8 THEREUNDER, RULE 15C2-11PROMULGATED UNDER THE EXCHANGE ACT, AND RULE 203(B)(1) OFREGULATION SHO PROMULGATED UNDER THE EXCHANGE ACT.

Current Status: Final






Allegations: SEC ADMIN RELEASE 34-86970 / SEPTEMBER 16, 2019: THE SECURITIESAND EXCHANGE COMMISSION DEEMS IT APPROPRIATE AND IN THEPUBLIC INTEREST THAT PUBLIC ADMINISTRATIVE AND CEASE-AND-DESISTPROCEEDINGS BE INSTITUTED AGAINST VANDHAM SECURITIES CORP.(VANDHAM OR RESPONDENT). ON THE BASIS OF THIS ORDER AND RESPONDENT'S OFFER, THECOMMISSION FINDS THAT FROM AT LEAST JANUARY 2016 THROUGH APRIL2017, VANDHAM WAS A REGISTERED BROKER-DEALER WHOSECUSTOMERS WERE PRIMARILY OTHER BROKER-DEALERS ENGAGED INTHE LIQUIDATION OF LARGE VOLUMES OF SHARES IN THINLY TRADED,LOW PRICED OVER-THE-COUNTER STOCKS HELD BY THEIR CUSTOMERS.VANDHAM DERIVED THE MAJORITY OF ITS REVENUE FROM THE TRADINGPROFITS IT GENERATED BY FACILITATING THE SALE OF SUCH SHARESINTO THE MARKET FOR TWO SUCH BROKER-DEALER CUSTOMERS,BROKER-DEALER A AND BROKER-DEALER B. WHILE DOING SO, VANDHAMREPEATEDLY VIOLATED THE FEDERAL SECURITIES LAWS IN THREEDIFFERENT WAYS. FIRST, VANDHAM VIOLATED RULE 203(B)(1) OFREGULATION SHO PROMULGATED UNDER THE EXCHANGE ACT. FOR ATLEAST SEVERAL THOUSAND SHORT SALES EXECUTED DURING THERELEVANT PERIOD, VANDHAM NEVER LOCATED SHARES OF THOSESTOCKS AS REQUIRED BY RULE 203(B)(1) OF REGULATION SHO. IN OTHERINSTANCES, VANDHAM ALSO VIOLATED RULE 15C2-11 UNDER THEEXCHANGE ACT WHILE FACILITATING THE LIQUIDATION OF LOW PRICEDSTOCKS FOR ITS BROKER-DEALER CUSTOMERS. IN SOME CASES,RATHER THAN PLACING SHORT SALES, VANDHAM FIRST PURCHASED THESHARES BEING SOLD BY ITS BROKER-DEALER CUSTOMERS FOR ITS OWNACCOUNT, CREATING A LONG POSITION, AND THEN SOLD THOSE SHARESINTO THE PUBLIC TRADING MARKET. IN ORDER TO SELL THE SHARES,VANDHAM OFTEN PUBLISHED OFFERS TO SELL THOSE SHARES AT ASPECIFIC PRICE ("QUOTATIONS") ON OTC LINK'S ELECTRONIC QUOTATIONSERVICE ("EQS"), WHICH WAS A RECOGNIZED QUOTATION MEDIUM.HOWEVER, VANDHAM VIOLATED RULE 15C2-11 WHEN IT PUBLISHEDTHESE QUOTATIONS, IN A QUOTATION MEDIUM, TO SELL ITS PRINCIPALPOSITION WITHOUT FIRST OBTAINING AND REVIEWING THE DOCUMENTSAND INFORMATION ABOUT THE ISSUERS THAT IT WAS REQUIRED BY RULE15C2-11TO OBTAIN AND REVIEW BEFORE PUBLISHING THOSEQUOTATIONS. FINALLY, ALTHOUGH VANDHAM WAS ENGAGED INFACILITATING HIGH VOLUME LIQUIDATIONS OF LOW PRICED, THINLYTRADED, OVER-THE-COUNTER STOCKS, VANDHAM DID NOT IMPLEMENTITS ANTI-MONEY LAUNDERING ("AML") POLICIES AND PROCEDURES SO ASTO REASONABLY ADDRESS THE RISKS OF ITS BUSINESS MODEL. DUE TOTHE DEFICIENCIES IN VANDHAM'S IMPLEMENTATION OF ITS AML POLICIESAND PROCEDURES DETAILED BELOW, VANDHAM FAILED TO ADEQUATELYINVESTIGATE ITS CUSTOMERS' TRANSACTIONS AND FAILED TO FILETIMELY SUSPICIOUS ACTIVITY REPORTS ("SARS") FOR NUMEROUSTRANSACTIONS THAT IT HAD REASON TO SUSPECT INVOLVED POSSIBLEFRAUDULENT ACTIVITY OR HAD NO BUSINESS OR APPARENT LAWFULPURPOSE. AS A RESULT, VANDHAM WILLFULLY VIOLATED SECTION 17(A)OF THE EXCHANGE ACT AND RULE 17A-8 THEREUNDER, RULE 15C2-11PROMULGATED UNDER THE EXCHANGE ACT, AND RULE 203(B)(1) OFREGULATION SHO PROMULGATED UNDER THE EXCHANGE ACT.






Initiated By: UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Principal Sanction(s)/ReliefSought:

Cease and Desist

Other Sanction(s)/ReliefSought:

Date Initiated: 09/16/2019

Docket/Case Number: 3-19453

Principal Product Type: Penny Stock(s)

Other Product Type(s):

SEC ADMIN RELEASE 34-86970 / SEPTEMBER 16, 2019: THE SECURITIESAND EXCHANGE COMMISSION DEEMS IT APPROPRIATE AND IN THEPUBLIC INTEREST THAT PUBLIC ADMINISTRATIVE AND CEASE-AND-DESISTPROCEEDINGS BE INSTITUTED AGAINST VANDHAM SECURITIES CORP.(VANDHAM OR RESPONDENT). ON THE BASIS OF THIS ORDER AND RESPONDENT'S OFFER, THECOMMISSION FINDS THAT FROM AT LEAST JANUARY 2016 THROUGH APRIL2017, VANDHAM WAS A REGISTERED BROKER-DEALER WHOSECUSTOMERS WERE PRIMARILY OTHER BROKER-DEALERS ENGAGED INTHE LIQUIDATION OF LARGE VOLUMES OF SHARES IN THINLY TRADED,LOW PRICED OVER-THE-COUNTER STOCKS HELD BY THEIR CUSTOMERS.VANDHAM DERIVED THE MAJORITY OF ITS REVENUE FROM THE TRADINGPROFITS IT GENERATED BY FACILITATING THE SALE OF SUCH SHARESINTO THE MARKET FOR TWO SUCH BROKER-DEALER CUSTOMERS,BROKER-DEALER A AND BROKER-DEALER B. WHILE DOING SO, VANDHAMREPEATEDLY VIOLATED THE FEDERAL SECURITIES LAWS IN THREEDIFFERENT WAYS. FIRST, VANDHAM VIOLATED RULE 203(B)(1) OFREGULATION SHO PROMULGATED UNDER THE EXCHANGE ACT. FOR ATLEAST SEVERAL THOUSAND SHORT SALES EXECUTED DURING THERELEVANT PERIOD, VANDHAM NEVER LOCATED SHARES OF THOSESTOCKS AS REQUIRED BY RULE 203(B)(1) OF REGULATION SHO. IN OTHERINSTANCES, VANDHAM ALSO VIOLATED RULE 15C2-11 UNDER THEEXCHANGE ACT WHILE FACILITATING THE LIQUIDATION OF LOW PRICEDSTOCKS FOR ITS BROKER-DEALER CUSTOMERS. IN SOME CASES,RATHER THAN PLACING SHORT SALES, VANDHAM FIRST PURCHASED THESHARES BEING SOLD BY ITS BROKER-DEALER CUSTOMERS FOR ITS OWNACCOUNT, CREATING A LONG POSITION, AND THEN SOLD THOSE SHARESINTO THE PUBLIC TRADING MARKET. IN ORDER TO SELL THE SHARES,VANDHAM OFTEN PUBLISHED OFFERS TO SELL THOSE SHARES AT ASPECIFIC PRICE ("QUOTATIONS") ON OTC LINK'S ELECTRONIC QUOTATIONSERVICE ("EQS"), WHICH WAS A RECOGNIZED QUOTATION MEDIUM.HOWEVER, VANDHAM VIOLATED RULE 15C2-11 WHEN IT PUBLISHEDTHESE QUOTATIONS, IN A QUOTATION MEDIUM, TO SELL ITS PRINCIPALPOSITION WITHOUT FIRST OBTAINING AND REVIEWING THE DOCUMENTSAND INFORMATION ABOUT THE ISSUERS THAT IT WAS REQUIRED BY RULE15C2-11TO OBTAIN AND REVIEW BEFORE PUBLISHING THOSEQUOTATIONS. FINALLY, ALTHOUGH VANDHAM WAS ENGAGED INFACILITATING HIGH VOLUME LIQUIDATIONS OF LOW PRICED, THINLYTRADED, OVER-THE-COUNTER STOCKS, VANDHAM DID NOT IMPLEMENTITS ANTI-MONEY LAUNDERING ("AML") POLICIES AND PROCEDURES SO ASTO REASONABLY ADDRESS THE RISKS OF ITS BUSINESS MODEL. DUE TOTHE DEFICIENCIES IN VANDHAM'S IMPLEMENTATION OF ITS AML POLICIESAND PROCEDURES DETAILED BELOW, VANDHAM FAILED TO ADEQUATELYINVESTIGATE ITS CUSTOMERS' TRANSACTIONS AND FAILED TO FILETIMELY SUSPICIOUS ACTIVITY REPORTS ("SARS") FOR NUMEROUSTRANSACTIONS THAT IT HAD REASON TO SUSPECT INVOLVED POSSIBLEFRAUDULENT ACTIVITY OR HAD NO BUSINESS OR APPARENT LAWFULPURPOSE. AS A RESULT, VANDHAM WILLFULLY VIOLATED SECTION 17(A)OF THE EXCHANGE ACT AND RULE 17A-8 THEREUNDER, RULE 15C2-11PROMULGATED UNDER THE EXCHANGE ACT, AND RULE 203(B)(1) OFREGULATION SHO PROMULGATED UNDER THE EXCHANGE ACT.

Resolution Date: 09/16/2019

Resolution:

Other Sanctions Ordered:

Sanction Details: RESPONDENT IS TO CEASE AND DESIST FROM COMMITTING OR CAUSINGANY VIOLATIONS AND ANY FUTURE VIOLATIONS OF RULE 203(B)(1) OFREGULATION SHO AND RULE 15C2-11 PROMULGATED UNDER THEEXCHANGE ACT, AND SECTION 17(A) OF THE EXCHANGE ACT AND RULE17A-8 PROMULGATED THEREUNDER, AND IS CENSURED. RESPONDENTSHALL, WITHIN TWENTY-ONE (21) DAYS OF THE ENTRY OF THIS ORDERPAY A CIVIL MONETARY PENALTY FOR $200,000.

Regulator Statement RESPONDENT HAS SUBMITTED AN OFFER OF SETTLEMENT (THE OFFER)WHICH THE COMMISSION HAS DETERMINED TO ACCEPT. IN VIEW OF THEFOREGOING, THE COMMISSION DEEMS IT APPROPRIATE IN THE PUBLICINTEREST TO IMPOSE THE SANCTIONS AGREED TO IN THERESPONDENT'S OFFER. ACCORDINGLY, IT IS HEREBY ORDERED THATRESPONDENT IS TO CEASE AND DESIST FROM COMMITTING OR CAUSINGANY VIOLATIONS AND ANY FUTURE VIOLATIONS OF RULE 203(B)(1) OFREGULATION SHO AND RULE 15C2-11 PROMULGATED UNDER THEEXCHANGE ACT, AND SECTION 17(A) OF THE EXCHANGE ACT AND RULE17A-8 PROMULGATED THEREUNDER, AND IS CENSURED. RESPONDENTSHALL, WITHIN TWENTY-ONE (21) DAYS OF THE ENTRY OF THIS ORDERPAY A CIVIL MONETARY PENALTY FOR $200,000.

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

No

Sanctions Ordered: CensureMonetary/Fine $200,000.00Cease and Desist/Injunction

Order





www.finra.org/brokercheck User GuidanceRESPONDENT HAS SUBMITTED AN OFFER OF SETTLEMENT (THE OFFER)WHICH THE COMMISSION HAS DETERMINED TO ACCEPT. IN VIEW OF THEFOREGOING, THE COMMISSION DEEMS IT APPROPRIATE IN THE PUBLICINTEREST TO IMPOSE THE SANCTIONS AGREED TO IN THERESPONDENT'S OFFER. ACCORDINGLY, IT IS HEREBY ORDERED THATRESPONDENT IS TO CEASE AND DESIST FROM COMMITTING OR CAUSINGANY VIOLATIONS AND ANY FUTURE VIOLATIONS OF RULE 203(B)(1) OFREGULATION SHO AND RULE 15C2-11 PROMULGATED UNDER THEEXCHANGE ACT, AND SECTION 17(A) OF THE EXCHANGE ACT AND RULE17A-8 PROMULGATED THEREUNDER, AND IS CENSURED. RESPONDENTSHALL, WITHIN TWENTY-ONE (21) DAYS OF THE ENTRY OF THIS ORDERPAY A CIVIL MONETARY PENALTY FOR $200,000.

Disclosure 2 of 12

i


Initiated By: FINRA




Docket/Case Number: 2014042136001

Principal Product Type: Equity - OTC


Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IN THECOURSE OF AN OTC SECURITIES ORDER PROTECTION REVIEWCONDUCTED BY DEPARTMENT OF MARKET REGULATION STAFF, ITACCEPTED AND HELD CUSTOMER ORDERS, AND FAILED TO EXECUTE ORIMMEDIATELY EXECUTE CUSTOMER ORDERS IN OTC SECURITIES UP TOTHE SIZE AND/OR AT THE SAME OR A BETTER PRICE THAT THE FIRMEXECUTED OR SATISFIED THE CUSTOMER ORDERS. IN ADDITION, INSEVERAL INSTANCES, THE FIRM FAILED TO EXECUTE CUSTOMER ORDERSIN OTC SECURITIES FULLY AND PROMPTLY. THE FINDINGS STATED THAT INTHE COURSE OF A SECOND OTC SECURITIES ORDER PROTECTIONREVIEW, THE FIRM ACCEPTED AND HELD CUSTOMER ORDERS, ANDFAILED TO EXECUTE OR IMMEDIATELY EXECUTE CUSTOMER ORDERS INOTC SECURITIES UP TO THE SIZE AND/OR AT THE SAME OR A BETTERPRICE THAT THE FIRM EXECUTED OR SATISFIED THE CUSTOMERORDERS.



Resolution: Acceptance, Waiver & Consent(AWC)





https://www.finra.org/rules-guidance/oversight-enforcement/finra-disciplinary-actions?search=2014042136001




Sanction Details: THE FIRM WAS CENSURED, FINED $17,500, AND MAKE RESTITUTION TOITS INVESTORS IN THE TOTAL COMBINED AMOUNT OF $734.22, PLUSINTEREST. FINES PAID IN FULL ON NOVEMBER 11, 2016.


No

Sanctions Ordered: CensureMonetary/Fine $17,500.00Disgorgement/Restitution

iReporting Source: Firm

Initiated By: FINRA






Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IN THECOURSE OF AN OTC SECURITIES ORDER PROTECTION REVIEWCONDUCTED BY DEPARTMENT OF MARKET REGULATION STAFF ITACCEPTED AND HELD CUSTOMER ORDERS AND FAILED TO EXECUTE ORIMMEDIATELY EXECUTE CUSTOMER ORDERS IN OTC SECURITIES UP TOTHE SIZE AND OR AT THE SAME OR BETTER PRICE THAT THE FIRMEXECUTED OR SATISFIED THE CUSTOMER ORDERS. IN ADDITION INSEVERAL INSTANCES THE FIRM FAILED TO EXECUTE CUSTOMER ORDERSIN OTC SECURITIES FULLY AND PROMPTLY. THE FINDINGS STATED THAT INTHE COURSE OF A SECOND OTC SECURITIES ORDER PROTECTIONREVIEW THE FIRM ACCEPTED AND HELD CUSTOMER ORDERS AND FAILEDTO EXECUTE OR IMMEDIATELY EXECUTE CUSTOMER ORDERS IN OTCSECURITIES UP TO THE SIZE AND OR AT THE SAME OR BETTER PRICETHAT THE FIRM EXECUTED OR SATISFIED THE CUSTOMER ORDERS.











Resolution:

Other Sanctions Ordered: THE FIRM WAS CENSURED, FINED 17,500 AND MAKE RESTITUTION TO ITSINVESTORS IN THE TOTAL COMBINED AMOUNT OF $734.22 PLUS INTEREST

Sanction Details: 17500.00 WAS PAID ON NOVEMBER 2016


Acceptance, Waiver & Consent(AWC)

Disclosure 3 of 12

i


Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT EXECUTEDSHORT SALE TRANSACTIONS IN REPORTABLE SECURITIES AND FAILED TOREPORT EACH OF THESE TRANSACTIONS TO THE OVER-THE-COUNTER(OTC) REPORTING FACILITY (OTCRF) WITH A SHORT SALE MODIFIER,FAILED TO REPORT THE CORRECT MARKET CENTER CODE TO THEFINRA/NASDAQ TRADE REPORTING FACILITY (FNTRF) IN LAST SALEREPORTS OF TRANSACTIONS IN ELIGIBLE SECURITIES, AND FAILED ON 21OCCASIONS TO PROVIDE WRITTEN NOTIFICATION DISCLOSING TO ITSCUSTOMER ITS CORRECT CAPACITY IN THE TRANSACTION. THE FINDINGSSTATED THAT THE FIRM TRANSMITTED TO THE ORDER AUDIT TRAILSYSTEM (OATS) REPORTS THAT CONTAINED INACCURATE, INCOMPLETE,OR IMPROPERLY FORMATTED DATA. SPECIFICALLY, THE REPORTSCONTAINED INACCURATE AND/OR OMITTED SPECIAL HANDLING CODES,CANCEL TYPE FLAGS, ACCOUNT TYPE CODES, ROUTE REPORTS, SHAREQUANTITIES, AND TIMESTAMPS. THE FIRM MADE AVAILABLE A REPORT ONTHE COVERED ORDERS IN NATIONAL MARKET SYSTEM SECURITIES THATIT RECEIVED FOR EXECUTION FROM ANY PERSON THAT INCLUDED FOURINSTANCES CONTAINING INCORRECT INFORMATION AS TO THE TOTALNUMBER OF COVERED SHARES. THE FIRM ACCEPTED AND HELDCUSTOMER ORDERS, AND FAILED TO EXECUTE OR IMMEDIATELYEXECUTE THE CUSTOMER ORDERS IN OTC SECURITIES UP TO THE SIZEAND AT THE SAME OR A BETTER PRICE THAT THE FIRM EXECUTED ORSATISFIED THE CUSTOMER ORDERS. IN SOME OF THESE INSTANCES, THEFIRM TRADED FOR ITS OWN ACCOUNT AT THE SAME OR BETTER PRICESTHAT WOULD HAVE SATISFIED THE CUSTOMER ORDERS. THE FINDINGSALSO STATED THAT THE FIRM FAILED TO ADEQUATELY ENFORCE ITSORDER PROTECTION WRITTEN SUPERVISORY PROCEDURES (WSPS) INCONDUCTING SUPERVISORY REVIEWS OF ITS EXECUTION OF ORDERS INOTC SECURITIES. THE FIRM FAILED TO REPORT TO THE TRADEREPORTING AND COMPLIANCE ENGINE (TRACE) SECONDARY MARKETTRANSACTIONS IN TRACE-ELIGIBLE CORPORATE DEBT SECURITIES IN ATIMELY MANNER. THE FINDINGS ALSO INCLUDED THAT THE FIRM FAILEDTO DISPLAY IMMEDIATELY CUSTOMER LIMIT ORDERS IN OTC SECURITIESIN ITS PUBLIC QUOTATION, WHEN EACH SUCH ORDER WAS AT A PRICETHAT WOULD HAVE IMPROVED THE FIRM'S BID OR OFFER IN EACH SUCHSECURITY; OR WHEN THE ORDER WAS PRICED EQUAL TO THE FIRM'S BIDOR OFFER FOR EACH SUCH SECURITY, AND THE SIZE OF THE ORDERREPRESENTED MORE THAN A DE MINIMIS CHANGE IN RELATION TO THESIZE ASSOCIATED WITH THE FIRM'S BID OR OFFER IN EACH SUCHSECURITY.







Initiated By: FINRA





Principal Product Type: Debt - Corporate

Other Product Type(s): OVER-THE-COUNTER SECURITIES

WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT EXECUTEDSHORT SALE TRANSACTIONS IN REPORTABLE SECURITIES AND FAILED TOREPORT EACH OF THESE TRANSACTIONS TO THE OVER-THE-COUNTER(OTC) REPORTING FACILITY (OTCRF) WITH A SHORT SALE MODIFIER,FAILED TO REPORT THE CORRECT MARKET CENTER CODE TO THEFINRA/NASDAQ TRADE REPORTING FACILITY (FNTRF) IN LAST SALEREPORTS OF TRANSACTIONS IN ELIGIBLE SECURITIES, AND FAILED ON 21OCCASIONS TO PROVIDE WRITTEN NOTIFICATION DISCLOSING TO ITSCUSTOMER ITS CORRECT CAPACITY IN THE TRANSACTION. THE FINDINGSSTATED THAT THE FIRM TRANSMITTED TO THE ORDER AUDIT TRAILSYSTEM (OATS) REPORTS THAT CONTAINED INACCURATE, INCOMPLETE,OR IMPROPERLY FORMATTED DATA. SPECIFICALLY, THE REPORTSCONTAINED INACCURATE AND/OR OMITTED SPECIAL HANDLING CODES,CANCEL TYPE FLAGS, ACCOUNT TYPE CODES, ROUTE REPORTS, SHAREQUANTITIES, AND TIMESTAMPS. THE FIRM MADE AVAILABLE A REPORT ONTHE COVERED ORDERS IN NATIONAL MARKET SYSTEM SECURITIES THATIT RECEIVED FOR EXECUTION FROM ANY PERSON THAT INCLUDED FOURINSTANCES CONTAINING INCORRECT INFORMATION AS TO THE TOTALNUMBER OF COVERED SHARES. THE FIRM ACCEPTED AND HELDCUSTOMER ORDERS, AND FAILED TO EXECUTE OR IMMEDIATELYEXECUTE THE CUSTOMER ORDERS IN OTC SECURITIES UP TO THE SIZEAND AT THE SAME OR A BETTER PRICE THAT THE FIRM EXECUTED ORSATISFIED THE CUSTOMER ORDERS. IN SOME OF THESE INSTANCES, THEFIRM TRADED FOR ITS OWN ACCOUNT AT THE SAME OR BETTER PRICESTHAT WOULD HAVE SATISFIED THE CUSTOMER ORDERS. THE FINDINGSALSO STATED THAT THE FIRM FAILED TO ADEQUATELY ENFORCE ITSORDER PROTECTION WRITTEN SUPERVISORY PROCEDURES (WSPS) INCONDUCTING SUPERVISORY REVIEWS OF ITS EXECUTION OF ORDERS INOTC SECURITIES. THE FIRM FAILED TO REPORT TO THE TRADEREPORTING AND COMPLIANCE ENGINE (TRACE) SECONDARY MARKETTRANSACTIONS IN TRACE-ELIGIBLE CORPORATE DEBT SECURITIES IN ATIMELY MANNER. THE FINDINGS ALSO INCLUDED THAT THE FIRM FAILEDTO DISPLAY IMMEDIATELY CUSTOMER LIMIT ORDERS IN OTC SECURITIESIN ITS PUBLIC QUOTATION, WHEN EACH SUCH ORDER WAS AT A PRICETHAT WOULD HAVE IMPROVED THE FIRM'S BID OR OFFER IN EACH SUCHSECURITY; OR WHEN THE ORDER WAS PRICED EQUAL TO THE FIRM'S BIDOR OFFER FOR EACH SUCH SECURITY, AND THE SIZE OF THE ORDERREPRESENTED MORE THAN A DE MINIMIS CHANGE IN RELATION TO THESIZE ASSOCIATED WITH THE FIRM'S BID OR OFFER IN EACH SUCHSECURITY.


Resolution:

Other Sanctions Ordered: INTEREST; UNDERTAKING: CONDUCT A COMPREHENSIVE REVIEW OF THEADEQUACY OF THE FIRM'S POLICIES, SYSTEMS AND PROCEDURES(WRITTEN AND OTHERWISE) REGARDING ORDER PROTECTION TOENSURE THAT THE FIRM HAS ADDRESSED ITS ORDER PROTECTIONOBLIGATIONS AND ITS SUPERVISORY VIOLATIONS


No









INTEREST; UNDERTAKING: CONDUCT A COMPREHENSIVE REVIEW OF THEADEQUACY OF THE FIRM'S POLICIES, SYSTEMS AND PROCEDURES(WRITTEN AND OTHERWISE) REGARDING ORDER PROTECTION TOENSURE THAT THE FIRM HAS ADDRESSED ITS ORDER PROTECTIONOBLIGATIONS AND ITS SUPERVISORY VIOLATIONS

Sanction Details: THE FIRM WAS CENSURED, FINED $62,500, REQUIRED TO PAY $300.60,PLUS INTEREST, IN RESTITUTION TO INVESTORS, AND UNDERTAKES TOCONDUCT A COMPREHENSIVE REVIEW OF THE ADEQUACY OF THE FIRM'SPOLICIES, SYSTEMS AND PROCEDURES (WRITTEN AND OTHERWISE)REGARDING ORDER PROTECTION TO ENSURE THAT THE FIRM HASADDRESSED ITS ORDER PROTECTION OBLIGATIONS AND ITSSUPERVISORY VIOLATIONS. FINE PAID IN FULL ON MAY 11, 2016.


Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT EXECUTEDSHORT SALE TRANSACTIONS IN REPORTABLE SECURITIES AND FAILED TOREPORT EACH OF THESE TRANSACTIONS TO THE OVER-THE-COUNTER(OTC) REPORTING FACILITY (OTCRF) WITH A SHORT SALE MODIFIER,FAILED TO REPORT THE CORRECT MARKET CENTER CODE TO THEFINRA/NASDAQ TRADE REPORTING FACILITY (FNTRF) IN LAST SALEREPORTS OF TRANSACTIONS IN ELIGIBLE SECURITIES, AND FAILED ON 21OCCASIONS TO PROVIDE WRITTEN NOTIFICATION DISCLOSING TO ITSCUSTOMER ITS CORRECT CAPACITY IN THE TRANSACTION. THE FINDINGSSTATED THAT THE FIRM TRANSMITTED TO THE ORDER AUDIT TRAILSYSTEM (OATS) REPORTS THAT CONTAINED INACCURATE, INCOMPLETE,OR IMPROPERLY FORMATTED DATA. SPECIFICALLY, THE REPORTSCONTAINED INACCURATE AND/OR OMITTED SPECIAL HANDLING CODES,CANCEL TYPE FLAGS, ACCOUNT TYPE CODES, ROUTE REPORTS, SHAREQUANTITIES, AND TIMESTAMPS. THE FIRM MADE AVAILABLE A REPORT ONTHE COVERED ORDERS IN NATIONAL MARKET SYSTEM SECURITIES THATIT RECEIVED FOR EXECUTION FROM ANY PERSON THAT INCLUDED FOURINSTANCES CONTAINING INCORRECT INFORMATION AS TO THE TOTALNUMBER OF COVERED SHARES. THE FIRM ACCEPTED AND HELDCUSTOMER ORDERS, AND FAILED TO EXECUTE OR IMMEDIATELYEXECUTE THE CUSTOMER ORDERS IN OTC SECURITIES UP TO THE SIZEAND AT THE SAME OR A BETTER PRICE THAT THE FIRM EXECUTED ORSATISFIED THE CUSTOMER ORDERS. IN SOME OF THESE INSTANCES, THEFIRM TRADED FOR ITS OWN ACCOUNT AT THE SAME OR BETTER PRICESTHAT WOULD HAVE SATISFIED THE CUSTOMER ORDERS. THE FINDINGSALSO STATED THAT THE FIRM FAILED TO ADEQUATELY ENFORCE ITSORDER PROTECTION WRITTEN SUPERVISORY PROCEDURES (WSPS) INCONDUCTING SUPERVISORY REVIEWS OF ITS EXECUTION OF ORDERS INOTC SECURITIES. THE FIRM FAILED TO REPORT TO THE TRADEREPORTING AND COMPLIANCE ENGINE (TRACE) SECONDARY MARKETTRANSACTIONS IN TRACE-ELIGIBLE CORPORATE DEBT SECURITIES IN ATIMELY MANNER. THE FINDINGS ALSO INCLUDED THAT THE FIRM FAILEDTO DISPLAY IMMEDIATELY CUSTOMER LIMIT ORDERS IN OTC SECURITIESIN ITS PUBLIC QUOTATION, WHEN EACH SUCH ORDER WAS AT A PRICETHAT WOULD HAVE IMPROVED THE FIRM'S BID OR OFFER IN EACH SUCHSECURITY; OR WHEN THE ORDER WAS PRICED EQUAL TO THE FIRM'S BIDOR OFFER FOR EACH SUCH SECURITY, AND THE SIZE OF THE ORDERREPRESENTED MORE THAN A DE MINIMIS CHANGE IN RELATION TO THESIZE ASSOCIATED WITH THE FIRM'S BID OR OFFER IN EACH SUCHSECURITY.







Initiated By: FINRA


Other


RELIEF SOUGHT



Principal Product Type: Debt - Corporate

Other Product Type(s): OVER-THE-COUNTER-SECURITIES

WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT EXECUTEDSHORT SALE TRANSACTIONS IN REPORTABLE SECURITIES AND FAILED TOREPORT EACH OF THESE TRANSACTIONS TO THE OVER-THE-COUNTER(OTC) REPORTING FACILITY (OTCRF) WITH A SHORT SALE MODIFIER,FAILED TO REPORT THE CORRECT MARKET CENTER CODE TO THEFINRA/NASDAQ TRADE REPORTING FACILITY (FNTRF) IN LAST SALEREPORTS OF TRANSACTIONS IN ELIGIBLE SECURITIES, AND FAILED ON 21OCCASIONS TO PROVIDE WRITTEN NOTIFICATION DISCLOSING TO ITSCUSTOMER ITS CORRECT CAPACITY IN THE TRANSACTION. THE FINDINGSSTATED THAT THE FIRM TRANSMITTED TO THE ORDER AUDIT TRAILSYSTEM (OATS) REPORTS THAT CONTAINED INACCURATE, INCOMPLETE,OR IMPROPERLY FORMATTED DATA. SPECIFICALLY, THE REPORTSCONTAINED INACCURATE AND/OR OMITTED SPECIAL HANDLING CODES,CANCEL TYPE FLAGS, ACCOUNT TYPE CODES, ROUTE REPORTS, SHAREQUANTITIES, AND TIMESTAMPS. THE FIRM MADE AVAILABLE A REPORT ONTHE COVERED ORDERS IN NATIONAL MARKET SYSTEM SECURITIES THATIT RECEIVED FOR EXECUTION FROM ANY PERSON THAT INCLUDED FOURINSTANCES CONTAINING INCORRECT INFORMATION AS TO THE TOTALNUMBER OF COVERED SHARES. THE FIRM ACCEPTED AND HELDCUSTOMER ORDERS, AND FAILED TO EXECUTE OR IMMEDIATELYEXECUTE THE CUSTOMER ORDERS IN OTC SECURITIES UP TO THE SIZEAND AT THE SAME OR A BETTER PRICE THAT THE FIRM EXECUTED ORSATISFIED THE CUSTOMER ORDERS. IN SOME OF THESE INSTANCES, THEFIRM TRADED FOR ITS OWN ACCOUNT AT THE SAME OR BETTER PRICESTHAT WOULD HAVE SATISFIED THE CUSTOMER ORDERS. THE FINDINGSALSO STATED THAT THE FIRM FAILED TO ADEQUATELY ENFORCE ITSORDER PROTECTION WRITTEN SUPERVISORY PROCEDURES (WSPS) INCONDUCTING SUPERVISORY REVIEWS OF ITS EXECUTION OF ORDERS INOTC SECURITIES. THE FIRM FAILED TO REPORT TO THE TRADEREPORTING AND COMPLIANCE ENGINE (TRACE) SECONDARY MARKETTRANSACTIONS IN TRACE-ELIGIBLE CORPORATE DEBT SECURITIES IN ATIMELY MANNER. THE FINDINGS ALSO INCLUDED THAT THE FIRM FAILEDTO DISPLAY IMMEDIATELY CUSTOMER LIMIT ORDERS IN OTC SECURITIESIN ITS PUBLIC QUOTATION, WHEN EACH SUCH ORDER WAS AT A PRICETHAT WOULD HAVE IMPROVED THE FIRM'S BID OR OFFER IN EACH SUCHSECURITY; OR WHEN THE ORDER WAS PRICED EQUAL TO THE FIRM'S BIDOR OFFER FOR EACH SUCH SECURITY, AND THE SIZE OF THE ORDERREPRESENTED MORE THAN A DE MINIMIS CHANGE IN RELATION TO THESIZE ASSOCIATED WITH THE FIRM'S BID OR OFFER IN EACH SUCHSECURITY.


Resolution:

Other Sanctions Ordered: INTEREST; UNDERTAKING: CONDUCT A COMPREHENSIVE REVIEW OF THEADEQUACY OF THE FIRM'S POLICIES, SYSTEMS AND PROCEDURES(WRITTEN AND OTHERWISE) REGARDING ORDER PROTECTION TOENSURE THAT THE FIRM HAS ADDRESSED ITS ORDER PROTECTIONOBLIGATIONS AND ITS SUPERVISORY VIOLATION

Sanction Details: THE FIRM WAS CENSURED, FINED $62,500, REQUIRED TO PAY $300.60,PLUS INTEREST, IN RESTITUTION TO INVESTORS, AND UNDERTAKES TOCONDUCT A COMPREHENSIVE REVIEW OF THE ADEQUACY OF THE FIRM'SPOLICIES, SYSTEMS AND PROCEDURES (WRITTEN AND OTHERWISE)REGARDING ORDER PROTECTION TO ENSURE THAT THE FIRM HASADDRESSED ITS ORDER PROTECTION OBLIGATIONS AND ITSSUPERVISORY VIOLATIONS.









Disclosure 4 of 12

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Initiated By: NASDAQ STOCK MARKET





Principal Product Type: Other

Other Product Type(s): NASDAQ SECURITIES

Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT FAILED TODISPLAY IMMEDIATELY 35 CUSTOMER LIMIT ORDERS IN NASDAQSECURITIES IN ITS PUBLIC QUOTATION, WHEN EACH SUCH ORDER WAS ATA PRICE THAT WOULD HAVE IMPROVED THE FIRM'S BID OR OFFER INEACH SUCH SECURITY; OR WHEN THE ORDER WAS PRICED EQUAL TOTHE FIRM'S BID OR OFFER AND THE NATIONAL BEST BID OR OFFER FOREACH SUCH SECURITY, AND THE SIZE OF THE ORDER REPRESENTEDMORE THAN A DE MINIMIS CHANGE IN RELATION TO THE SIZE ASSOCIATEDWITH THE FIRM'S BID OR OFFER IN EACH SUCH SECURITY. THE FINDINGSSTATED THAT THE CONDUCT CONSTITUTES VIOLATIONS OF RULE 604 OFREGULATION NMS. THE FINDINGS ALSO STATED THAT THE FIRM'SSUPERVISORY SYSTEM DID NOT PROVIDE FOR SUPERVISIONREASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITH RESPECT TOTHE APPLICABLE SECURITIES LAWS AND REGULATIONS, AND THE RULESOF NASDAQ CONCERNING LIMIT ORDER DISPLAY. THE FIRM'S NASDAQWSPS FAILED TO PROVIDE FOR ONE OR MORE OF THE FOUR MINIMUMREQUIREMENTS FOR ADEQUATE WSPS IN THE SUBJECT AREA OFNASDAQ LIMIT ORDER DISPLAY. THE CONDUCT CONSTITUTES VIOLATIONSOF NASDAQ RULES 3010 AND 2010A.



Resolution:


No







Other Sanctions Ordered: UNDERTAKING:

Sanction Details: THE FIRM WAS CENSURED, FINED $12,500, AND REQUIRED TO REVISE THEFIRM'S WSPS WITH RESPECT TO LIMIT ORDER DISPLAY CONCERNING THESPECIFIC IDENTIFICATION OF THE INDIVIDUAL(S) RESPONSIBLE FORSUPERVISION; (B) THE SUPERVISORY STEPS AND REVIEWS TO BE TAKENBY THE APPROPRIATE SUPERVISOR(S); (C) THE FREQUENCY OF SUCHREVIEWS; AND (D) HOW SUCH REVIEWS SHALL BE DOCUMENTED.


No

Sanctions Ordered: CensureMonetary/Fine $12,500.00





Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT FAILED TODISPLAY IMMEDIATELY 35 CUSTOMER LIMIT ORDERS IN NASDAQSECURITIES IN ITS PUBLIC QUOTATION, WHEN EACH SUCH ORDER WAS ATA PRICE THAT WOULD HAVE IMPROVED THE FIRM'S BID OR OFFER INEACH SUCH SECURITY; OR WHEN THE ORDER WAS PRICED EQUAL TOTHE FIRM'S BID OR OFFER AND THE NATIONAL BEST BID OR OFFER FOREACH SUCH SECURITY, AND THE SIZE OF THE ORDER REPRESENTEDMORE THAN A DE MINIMIS CHANGE IN RELATION TO THE SIZE ASSOCIATEDWITH THE FIRM'S BID OR OFFER IN EACH SUCH SECURITY. THE FINDINGSSTATED THAT THE CONDUCT CONSTITUTES VIOLATIONS OF RULE 604 OFREGULATION NMS. THE FINDINGS ALSO STATED THAT THE FIRM'SSUPERVISORY SYSTEM DID NOT PROVIDE FOR SUPERVISIONREASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITH RESPECT TOTHE APPLICABLE SECURITIES LAWS AND REGULATIONS, AND THE RULESOF NASDAQ CONCERNING LIMIT ORDER DISPLAY. THE FIRM'S NASDAQWSPS FAILED TO PROVIDE FOR ONE OR MORE OF THE FOUR MINIMUMREQUIREMENTS FOR ADEQUATE WSPS IN THE SUBJECT AREA OFNASDAQ LIMIT ORDER DISPLAY. THE CONDUCT CONSTITUTES VIOLATIONSOF NASDAQ RULES 3010 AND 2010A.








Other


RELIEF SOUGHT





Resolution:

Other Sanctions Ordered: UNDERTAKING

Sanction Details: THE FIRM WAS CENSURED, FINED $12,500, AND REQUIRED TO REVISE THEFIRM'S WSPS WITH RESPECT TO LIMIT ORDER DISPLAY CONCERNING THESPECIFIC IDENTIFICATION OF THE INDIVIDUAL(S) RESPONSIBLE FORSUPERVISION; (B) THE SUPERVISORY STEPS AND REVIEWS TO BE TAKENBY THE APPROPRIATE SUPERVISOR(S); (C) THE FREQUENCY OF SUCHREVIEWS; AND (D) HOW SUCH REVIEWS SHALL BE DOCUMENTED.



Disclosure 5 of 12

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Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT PROVIDEDBROKERAGE SERVICES AND ACCESS TO ITS DIRECT MARKET ACCESS(DMA) PLATFORM TO CUSTOMERS, ALL ASSIGNED TO THE SAME BROKEROF RECORD AT THE FIRM, WHO ALSO SERVED AS THE FIRM'S CHIEFOPERATING OFFICER (COO). THE FINDINGS STATED THAT DMA ALLOWS ACUSTOMER TO EXECUTE TRADES DIRECTLY INTO THE MARKET WITHOUTTHE NEED TO PLACE ORDERS WITH A BROKER AT THE FIRM. THE FIRMFAILED TO SUFFICIENTLY MONITOR FOR THE RISKS OF PERMITTING THECUSTOMERS - TWO OF WHOM, THE SEC HAD BARRED FROM THEINDUSTRY - TO USE THE FIRM'S DMA PLATFORM. DESPITE THE EXISTENCEOF RED FLAGS, WHICH MATCHED RED FLAGS IN THE FIRM'S AMLPROCEDURES, IN THE BACKGROUNDS OF THE CUSTOMERS, THEIRRELATIONSHIPS TO EACH OTHER, THEIR RELATIONSHIPS TO THE ISSUERSWHOSE PENNY STOCKS THEY SOLD, THEIR COMMUNICATIONS WITH THEFIRM, OR THEIR WIRING ACTIVITY, THE FIRM FAILED TO SUFFICIENTLYINVESTIGATE OR MONITOR THEIR ACTIVITY IN ORDER TO DETERMINEWHETHER THE FIRM NEEDED TO REPORT IT. THE AML OMISSIONS WEREDUE IN PART TO DEFICIENCIES IN THE FIRM'S AML PROCEDURES AND THEIMPLEMENTATION OF ITS SUSPICIOUS ACTIVITY MONITORING PROGRAM.THE FIRM'S AML PROCEDURES WERE NOT TAILORED TO ITS BUSINESSMODEL. MOREOVER, THE AML COMPLIANCE OFFICER AND THESUPERVISOR OF THE DMA PROGRAM EACH ASSUMED THE OTHER WASMONITORING WIRE ACTIVITY AND THE FIRM IMPROPERLY RELIED TO ALARGE EXTENT ON ITS CLEARING AGENT FOR THE REVIEW OF INCOMINGSTOCK QUESTIONNAIRES FOR AML COMPLIANCE PURPOSES. AS ARESULT, THESE AREAS WERE NOT ADEQUATELY MONITORED AND THUSTHE FIRM DID NOT INVESTIGATE WHETHER CERTAIN SUSPICIOUSTRANSACTIONS NEEDED TO BE REPORTED. THE FINDINGS ALSO STATEDTHAT THE FIRM SOLD OVER 250 MILLION SHARES OF PENNY STOCKS FORAN ENTITY, BASED IN THE CAYMAN ISLANDS, FOR PROCEEDS OFAPPROXIMATELY $39 MILLION. THE FIRM EARNED CLOSE TO $500,000 INCOMMISSIONS ON THOSE TRADES. AT THE TIME THAT EACH OF THEBLOCKS OF PENNY STOCKS WERE BEING LIQUIDATED, THE SECURITIESWERE THE SUBJECT OF INTERNET TOUTING CAMPAIGNS. THE FIRM'SWRITTEN SUPERVISORY PROCEDURES DID NOT ADDRESS HANDLING OFSALES OF LOW PRICED SECURITIES IN DELIVERY VERSUS PAYMENT (DVP)ACCOUNTS AND THE SECTION 5 AND OTHER POTENTIAL ISSUES THATMAY ARISE IN SUCH TRANSACTIONS. THE FIRM HAD NO SYSTEM IN PLACEAND FAILED TO CONDUCT A REASONABLE INQUIRY TO ENSURE THAT THESHARES BEING SOLD WERE FREELY TRADABLE AND THAT THE SALES DIDNOT CONSTITUTE A DISTRIBUTION IN VIOLATION OF SECTION 5 AND ITSIMPLEMENTING REGULATIONS. THE FIRM'S WRITTEN AML PROCEDURESDID NOT ADDRESS THE ISSUES PRESENTED BY DVP ACCOUNTS AND THEIMPLEMENTATION OF ITS PROCEDURES WAS INADEQUATE TO DEAL WITHTHE ACTIVITY IN ITS DVP ACCOUNTS. AS A RESULT, THE FIRM DID NOTCONDUCT ANY REVIEW TO DETERMINE WHETHER ANY OF THEPOTENTIALLY SUSPICIOUS TRADING ACTIVITY OF THE CUSTOMERWARRANTED FURTHER INVESTIGATION TO DETERMINE IF A SUSPICIOUSACTIVITY REPORT SHOULD BE FILED.







Initiated By: FINRA


Other


N/A





WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT PROVIDEDBROKERAGE SERVICES AND ACCESS TO ITS DIRECT MARKET ACCESS(DMA) PLATFORM TO CUSTOMERS, ALL ASSIGNED TO THE SAME BROKEROF RECORD AT THE FIRM, WHO ALSO SERVED AS THE FIRM'S CHIEFOPERATING OFFICER (COO). THE FINDINGS STATED THAT DMA ALLOWS ACUSTOMER TO EXECUTE TRADES DIRECTLY INTO THE MARKET WITHOUTTHE NEED TO PLACE ORDERS WITH A BROKER AT THE FIRM. THE FIRMFAILED TO SUFFICIENTLY MONITOR FOR THE RISKS OF PERMITTING THECUSTOMERS - TWO OF WHOM, THE SEC HAD BARRED FROM THEINDUSTRY - TO USE THE FIRM'S DMA PLATFORM. DESPITE THE EXISTENCEOF RED FLAGS, WHICH MATCHED RED FLAGS IN THE FIRM'S AMLPROCEDURES, IN THE BACKGROUNDS OF THE CUSTOMERS, THEIRRELATIONSHIPS TO EACH OTHER, THEIR RELATIONSHIPS TO THE ISSUERSWHOSE PENNY STOCKS THEY SOLD, THEIR COMMUNICATIONS WITH THEFIRM, OR THEIR WIRING ACTIVITY, THE FIRM FAILED TO SUFFICIENTLYINVESTIGATE OR MONITOR THEIR ACTIVITY IN ORDER TO DETERMINEWHETHER THE FIRM NEEDED TO REPORT IT. THE AML OMISSIONS WEREDUE IN PART TO DEFICIENCIES IN THE FIRM'S AML PROCEDURES AND THEIMPLEMENTATION OF ITS SUSPICIOUS ACTIVITY MONITORING PROGRAM.THE FIRM'S AML PROCEDURES WERE NOT TAILORED TO ITS BUSINESSMODEL. MOREOVER, THE AML COMPLIANCE OFFICER AND THESUPERVISOR OF THE DMA PROGRAM EACH ASSUMED THE OTHER WASMONITORING WIRE ACTIVITY AND THE FIRM IMPROPERLY RELIED TO ALARGE EXTENT ON ITS CLEARING AGENT FOR THE REVIEW OF INCOMINGSTOCK QUESTIONNAIRES FOR AML COMPLIANCE PURPOSES. AS ARESULT, THESE AREAS WERE NOT ADEQUATELY MONITORED AND THUSTHE FIRM DID NOT INVESTIGATE WHETHER CERTAIN SUSPICIOUSTRANSACTIONS NEEDED TO BE REPORTED. THE FINDINGS ALSO STATEDTHAT THE FIRM SOLD OVER 250 MILLION SHARES OF PENNY STOCKS FORAN ENTITY, BASED IN THE CAYMAN ISLANDS, FOR PROCEEDS OFAPPROXIMATELY $39 MILLION. THE FIRM EARNED CLOSE TO $500,000 INCOMMISSIONS ON THOSE TRADES. AT THE TIME THAT EACH OF THEBLOCKS OF PENNY STOCKS WERE BEING LIQUIDATED, THE SECURITIESWERE THE SUBJECT OF INTERNET TOUTING CAMPAIGNS. THE FIRM'SWRITTEN SUPERVISORY PROCEDURES DID NOT ADDRESS HANDLING OFSALES OF LOW PRICED SECURITIES IN DELIVERY VERSUS PAYMENT (DVP)ACCOUNTS AND THE SECTION 5 AND OTHER POTENTIAL ISSUES THATMAY ARISE IN SUCH TRANSACTIONS. THE FIRM HAD NO SYSTEM IN PLACEAND FAILED TO CONDUCT A REASONABLE INQUIRY TO ENSURE THAT THESHARES BEING SOLD WERE FREELY TRADABLE AND THAT THE SALES DIDNOT CONSTITUTE A DISTRIBUTION IN VIOLATION OF SECTION 5 AND ITSIMPLEMENTING REGULATIONS. THE FIRM'S WRITTEN AML PROCEDURESDID NOT ADDRESS THE ISSUES PRESENTED BY DVP ACCOUNTS AND THEIMPLEMENTATION OF ITS PROCEDURES WAS INADEQUATE TO DEAL WITHTHE ACTIVITY IN ITS DVP ACCOUNTS. AS A RESULT, THE FIRM DID NOTCONDUCT ANY REVIEW TO DETERMINE WHETHER ANY OF THEPOTENTIALLY SUSPICIOUS TRADING ACTIVITY OF THE CUSTOMERWARRANTED FURTHER INVESTIGATION TO DETERMINE IF A SUSPICIOUSACTIVITY REPORT SHOULD BE FILED.








N/A


Resolution:


Sanction Details: FINE PAID ON 5/4/2015.


No




Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT, PROVIDEDBROKERAGE SERVICES AND ACCESS TO ITS DIRECT MARKET ACCESSPLATFORM TO CUSTOMERS TWO OF WHOM WERE BARRED FROM THEINDUSTRY FOR A PERIOD OF FOUR YEARS BY THE SEC. THE FIRM FAILEDTO SUFFICIENTLY MONITOR THEIR ACTIVITY IN ORDER TO DETERMINEWHETHER THE FIRM NEEDED TO REPORT IT. THE FIRM'S AMLPROCEDURES WERE NOT TAILORED TO ITS BUSINESS MODEL.MOREOVER, THE AML COMPLIANCE OFFICER AND THE SUPERVISOR OFTHE DMA PROGRAM EACH ASSUMED THAT THE OTHER WAS MONITORINGWIRE ACTIVITY AND THE FIRM IMPROPERLY RELIED TO A LARGE EXTENTON ITS CLEARING AGENT FOR THE REVIEW OF INCOMING STOCKQUESTIONAIRRES FOR AML COMPLIANCE PURPOSES. AS A RESULT,THESE AREAS WERE NOT ADEQUATELY MONITORED AND THUS THE FIRMDID NOT INVESTIGATE PROPERLY, WHETHER CERTAIN POTENTIALLYSUSPICIOUS TRANSACTIONS NEEDED TO BE REPORTED. THE FIRMSWRITTEN SUPERVISORY PROCEDURES DID NOT ADDRESS HANDLING OFSALES OF LOW PRICED SECURITIES IN DVP ACCOUNTS AND THE SECTION5 AND OTHER ISSUES THAT MAY ARISE IN SUCH TRANSACTIONS. THEFIRM FAILED TO CONDUCT A REASONABLE INQUIRY TO ENSURE THAT THESHARES BEING SOLD WERE FREELY TRADEABLE AND THAT ANY SALESDID NOT CONSTITUTE A DISTRIBUTION IN VIOLATION OF SECTION 5 ANDITS IMPLEMENTING REGULATIONS. THE FIRM FAILED TO CONDUCT AREASONABLE INQUIRY TO ENSURE THAT THE SHARES BEING SOLD WEREFREELY TRADABLE AND DID NOT CONSTITUTE A DISTRIBUTION. THEFIRMS AML PROCEDURES DID NOT ADDRESS THE ISSUES PRESENTED BYDVP ACCOUNTS AS A RESULT, THE FIRM DID NOT PROPERLY MONITORWHETHER ANY OF THE SUSPICIOUS TRADING ACTIVITY OF THECUSTOMERS WARRANTED FURTHER REVIEW.







Initiated By: FINRA


Censure


MONETARY FINE





WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT, PROVIDEDBROKERAGE SERVICES AND ACCESS TO ITS DIRECT MARKET ACCESSPLATFORM TO CUSTOMERS TWO OF WHOM WERE BARRED FROM THEINDUSTRY FOR A PERIOD OF FOUR YEARS BY THE SEC. THE FIRM FAILEDTO SUFFICIENTLY MONITOR THEIR ACTIVITY IN ORDER TO DETERMINEWHETHER THE FIRM NEEDED TO REPORT IT. THE FIRM'S AMLPROCEDURES WERE NOT TAILORED TO ITS BUSINESS MODEL.MOREOVER, THE AML COMPLIANCE OFFICER AND THE SUPERVISOR OFTHE DMA PROGRAM EACH ASSUMED THAT THE OTHER WAS MONITORINGWIRE ACTIVITY AND THE FIRM IMPROPERLY RELIED TO A LARGE EXTENTON ITS CLEARING AGENT FOR THE REVIEW OF INCOMING STOCKQUESTIONAIRRES FOR AML COMPLIANCE PURPOSES. AS A RESULT,THESE AREAS WERE NOT ADEQUATELY MONITORED AND THUS THE FIRMDID NOT INVESTIGATE PROPERLY, WHETHER CERTAIN POTENTIALLYSUSPICIOUS TRANSACTIONS NEEDED TO BE REPORTED. THE FIRMSWRITTEN SUPERVISORY PROCEDURES DID NOT ADDRESS HANDLING OFSALES OF LOW PRICED SECURITIES IN DVP ACCOUNTS AND THE SECTION5 AND OTHER ISSUES THAT MAY ARISE IN SUCH TRANSACTIONS. THEFIRM FAILED TO CONDUCT A REASONABLE INQUIRY TO ENSURE THAT THESHARES BEING SOLD WERE FREELY TRADEABLE AND THAT ANY SALESDID NOT CONSTITUTE A DISTRIBUTION IN VIOLATION OF SECTION 5 ANDITS IMPLEMENTING REGULATIONS. THE FIRM FAILED TO CONDUCT AREASONABLE INQUIRY TO ENSURE THAT THE SHARES BEING SOLD WEREFREELY TRADABLE AND DID NOT CONSTITUTE A DISTRIBUTION. THEFIRMS AML PROCEDURES DID NOT ADDRESS THE ISSUES PRESENTED BYDVP ACCOUNTS AS A RESULT, THE FIRM DID NOT PROPERLY MONITORWHETHER ANY OF THE SUSPICIOUS TRADING ACTIVITY OF THECUSTOMERS WARRANTED FURTHER REVIEW.


Resolution:


Sanction Details: $75000.00 FINE

Firm Statement CORRECTIVE ACTION STATEMENTTHIS STATEMENT DOES NOT CONSTITUTE FACTUAL OR LEGAL FINDINGSBY FINRA, NOR DOES IT REFLECT THE VIEWS OF FINRA OR ITS STAFF.IN CONNECTION WITH FINRA MATTER 2010023218602, VANDHAMSECURITIES CORP HAS AMENDED ITS POLICIES AND PROCEDURES ASFOLLOWSTHE FIRM HAS DISCONTINUED ALL DMA PROGRAMSTHE FIRM HAS INSTITUTED A HEIGHTENED REVIEW PROGRAM FORCUSTOMERS WITH PRIOR REGULATORY ISSUES.THE FIRM HAS INCORPORATED IN ITS AML PROGRAM, PROCEDURES THATARE CURRENTLY PART OF THE FIRMS WRITTEN SUPERVISORYPROCEDURESTHE FIRM IS EXPANDING ITS AML PROCEDURES, INCLUDING ADDITIONALRED FLAGS, THE USE OF EXCEPTION REPORTS IF AVAILABLE, ANDEXPANDING ITS DUE DILIGENCE FOR POTENTIALLY SUSPICIOUS TRADINGTHE FIRM WILL CLARIFY THE SUPERVISORY SYSTEM TO CLEARLY DEFINETHE ROLES OF THE SUPERVISORS TO AVOID CONFUSION AND OVERLAPTHE FIRM IS AMENDING ITS WIRE POLICY TO PROVIDE FOR ADDITIONALREVIEWS AND SUPERVISORY SIGNOFFSTHE FIRM IS REVISING ITS POLICIES ON RECEIVING CERTIFICATEDEPOSITS OF PINKSHEETS AND OTC BULLETIN BOARD SECURITIES. THEUPDATED POLICIES PROVIDE FOR ADDITIONAL SURVEILLANCE VIAQUESTIONNAIRES AND DOCUMENTATION OF INQUIRIES.









CORRECTIVE ACTION STATEMENTTHIS STATEMENT DOES NOT CONSTITUTE FACTUAL OR LEGAL FINDINGSBY FINRA, NOR DOES IT REFLECT THE VIEWS OF FINRA OR ITS STAFF.IN CONNECTION WITH FINRA MATTER 2010023218602, VANDHAMSECURITIES CORP HAS AMENDED ITS POLICIES AND PROCEDURES ASFOLLOWSTHE FIRM HAS DISCONTINUED ALL DMA PROGRAMSTHE FIRM HAS INSTITUTED A HEIGHTENED REVIEW PROGRAM FORCUSTOMERS WITH PRIOR REGULATORY ISSUES.THE FIRM HAS INCORPORATED IN ITS AML PROGRAM, PROCEDURES THATARE CURRENTLY PART OF THE FIRMS WRITTEN SUPERVISORYPROCEDURESTHE FIRM IS EXPANDING ITS AML PROCEDURES, INCLUDING ADDITIONALRED FLAGS, THE USE OF EXCEPTION REPORTS IF AVAILABLE, ANDEXPANDING ITS DUE DILIGENCE FOR POTENTIALLY SUSPICIOUS TRADINGTHE FIRM WILL CLARIFY THE SUPERVISORY SYSTEM TO CLEARLY DEFINETHE ROLES OF THE SUPERVISORS TO AVOID CONFUSION AND OVERLAPTHE FIRM IS AMENDING ITS WIRE POLICY TO PROVIDE FOR ADDITIONALREVIEWS AND SUPERVISORY SIGNOFFSTHE FIRM IS REVISING ITS POLICIES ON RECEIVING CERTIFICATEDEPOSITS OF PINKSHEETS AND OTC BULLETIN BOARD SECURITIES. THEUPDATED POLICIES PROVIDE FOR ADDITIONAL SURVEILLANCE VIAQUESTIONNAIRES AND DOCUMENTATION OF INQUIRIES.

Disclosure 6 of 12

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Allegations: SEC RULE 604 OF REGULATION NMS - VANDHAM SECURITIES CORP.FAILED TO DISPLAY IMMEDIATELY CUSTOMER LIMIT ORDERS IN NASDAQSECURITIES IN ITS PUBLIC QUOTATION, WHEN EACH SUCH ORDER WAS ATA PRICE THAT WOULD HAVE IMPROVED THE FIRM'S BID OR OFFER INEACH SUCH SECURITY; OR WHEN THE ORDER WAS PRICED EQUAL TOTHE FIRM'S BID OR OFFER AND THE NATIONAL BEST BID OR OFFER FOREACH SUCH SECURITY, AND THE SIZE OF THE ORDER REPRESENTEDMORE THAN A DE MINIMIS CHANGE IN RELATION TO THE SIZE ASSOCIATEDWITH THE FIRM'S BID OR OFFER IN EACH SUCH SECURITY.



Resolution:



No

Sanctions Ordered: Monetary/Fine $5,000.00








Sanction Details: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE DESCRIBED SANCTION AND TO THE ENTRY OF FINDINGS;THEREFORE, THE FIRM IS FINED $5,000.




Other






Allegations: SEC RULE 604 OF REGULATION NMS. VANDHAM SECURITIES CORP FAILEDTO DISPLAY IMMEDIATELY CUSTOMER LIMIT ORDERS IN NASDAQSECURITIES IN ITS PUBLIC QUOTATION WHEN EACH SUCH ORDER WAS ATA PRICE THAT WOULD HAVE IMPROVED THE FIRMS BID OR OFFER IN EACHSUCH SECURITY. OR WHEN THE ORDER WAS PRICED EQUAL TO THEFIRMS BID OR OFFER AND THE NATIONAL BEST BID OR OFFER FOR EACHSUCH SECURITY AND THE SIZE OF THE ORDER REPRESENTED MORETHAN A DE MINIMIS CHANGE IN RELATION TO THE SIZE ASSOCIATED WITHTHE FIRMS BID OR OFFER IN EACH SECURITY



Resolution:


Sanction Details: $5000.00 FINE AGAINST APPLICANT, PAYMENT PROGRAM



Disclosure 7 of 12

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Initiated By: FINRA




Other Product Type(s): TRACE-ELIGIBLE SECURITIES, UNSPECIFIED SECURITIES, NATIONALMARKET SYSTEM SECURITIES, NASDAQ SECURITIES

Allegations: SEC RULES 605, 606 OF REGULATION NMS, FINRA RULES 2010, 6380A,7330, NASD RULES 2110, 2111(A), 2111(B), 2320, 6230(B), 6230(C)(6),6230(C)(8), 6955(A), INTERPRETATIVE MATERIAL 2110-2 - VANDHAMSECURITIES CORP. FAILED TO EXECUTE ORDERS FULLY AND PROMPTLY.IN TRANSACTIONS FOR OR WITH A CUSTOMER, THE FIRM FAILED TO USEREASONABLE DILIGENCE TO ASCERTAIN THE BEST INTER-DEALERMARKET AND BUY OR SELL IN SUCH MARKET SO THAT THE RESULTANTPRICE TO ITS CUSTOMER WAS AS FAVORABLE AS POSSIBLE UNDERPREVAILING MARKET CONDITIONS. THE FIRM ACCEPTED AND HELDCUSTOMER MARKET ORDERS, TRADED FOR ITS OWN ACCOUNT ATPRICES THAT WOULD HAVE SATISFIED THE CUSTOMER MARKET ORDERS,AND FAILED TO IMMEDIATELY THEREAFTER EXECUTE THE CUSTOMERMARKET ORDERS UP TO THE SIZE AND AT THE SAME PRICE AT WHICH ITTRADED FOR ITS OWN ACCOUNT AT A BETTER PRICE. THE FIRM FAILED TOREPORT TO THE TRADE REPORTING AND COMPLIANCE ENGINE (TRACE)TRANSACTIONS IN TRACE-ELIGIBLE SECURITIES IT WAS REQUIRED TOREPORT; FAILED TO REPORT TO TRACE THE CORRECT CONTRA-PARTY'SIDENTIFIER FOR TRANSACTIONS IN TRACE-ELIGIBLE SECURITIES; ANDFAILED TO REPORT TO TRACE THE CORRECT TIME OF TRADE EXECUTIONFOR TRANSACTIONS IN TRACE-ELIGIBLE SECURITIES. THE FIRM MADEAVAILABLE REPORTS ON THE COVERED ORDERS IN NATIONAL MARKETSYSTEM SECURITIES IT RECEIVED FOR EXECUTION FROM ANY PERSONWHICH INCLUDED INCORRECT INFORMATION AS TO THE AVERAGEREALIZED SPREADS, THE AVERAGE EFFECTIVE SPREADS, THE AT-THE-QUOTE AVERAGE SPREAD, THE EXECUTION VENUES AND CAPACITY FORITS NON-DIRECTED ORDER FLOW. THE FIRM TRANSMITTED REPORTS TOTHE ORDER AUDIT TRAIL SYSTEM (OATS) THAT CONTAINED INACCURATETIMESTAMPS, OMITTED OR INACCURATE ACCOUNT TYPE CODES, ANDOMITTED ROUTED ORDER IDS. THE FIRM FAILED TOCONTEMPORANEOUSLY OR PARTIALLY EXECUTE CUSTOMER LIMITORDERS IN NASDAQ SECURITIES AFTER IT TRADED EACH SUBJECTSECURITY FOR ITS OWN MARKET-MAKING ACCOUNT AT A PRICE THATWOULD HAVE SATISFIED EACH CUSTOMER'S LIMIT ORDER. THE FIRMINCORRECTLY REPORTED THE SECOND LEG OF RISKLESS PRINCIPALTRANSACTIONS AS "AGENT" TO THE FINRA/NASDAQ TRADE REPORTINGFACILITY (FNTRF) AND INCORRECTLY REPORTED PRINCIPALTRANSACTIONS AS "AGENT" TO THE OTC REPORTING FACILITY.










Other Product Type(s): TRACE-ELIGIBLE SECURITIES, UNSPECIFIED SECURITIES, NATIONALMARKET SYSTEM SECURITIES, NASDAQ SECURITIES


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 $70,000 AND ORDERED TOPAY A TOTAL COMBINED AMOUNT OF $2,346.46, PLUS INTEREST, INRESTITUTION TO INVESTORS. A REGISTERED PRINCIPAL OF THE FIRMSHALL SUBMIT SATISFACTORY PROOF OF PAYMENT OF THE RESTITUTION,OR OF REASONABLE AND DOCUMENTED EFFORTS UNDERTAKEN TOEFFECT RESTITUTION TO FINRA NO LATER THAN 120 DAYS AFTERACCEPTANCE OF THIS AWC. ANY UNDISTRIBUTED RESTITUTION ANDINTEREST SHALL BE FORWARDED TO THE APPROPRIATE ESCHEAT,UNCLAIMED PROPERTY OR ABANDONED PROPERTY FUND FOR THESTATE IN WHICH THE CUSTOMER LAST RESIDED. $70,000.00 FINE PAID INFULL ON 12/25/12.


No




Allegations: SEC RULES605,606 OF REGULATION NMS, FINRA RULES 2010, 6380A, 7330,NASD RULES 2110, 2111(A)2111 (B), 2320, 6230(B) 6230(C)(6) 6230(C)(8)6955(A) IM 2110-2- VANDHAM SECURITIES CORP FAILED TO EXECUTEORDERS FULLY AND PROMPTLY IN TRANSACTIONS FOR OR WITH ACUSTOMER, THE FIRM FAILED TO USE REASONABLE DILIGENCE TOASCERTAIN THE BEST INTER-DEALER MARKET AND BUY OR SELL IN SUCHMARKET SO THAT THE RESULTANT PRICE TO ITS CUSTOMER WAS ASFAVORABLE AS POSSIBLE UNDER PREVAILING MARKET CONDITIONS, THEFIRM ACCEPTED AND HELD CUSTOMER MARKET ORDERS TRADED FORITS OWN ACCOUNT AT PRICES THAT WOULD HAVE SATISFIED THECUSTOMER MARKET ORDERS, AND FAILED TO IMMEDIATELY THEREAFTEREXECUTE THE CUSTOMER MARKET ORDERS UP TO THE SIZE AND AT THESAME PRICE AT WHICH IT TRADED FOR ITS OWN ACCOUNT AT A BETTERPRICE. THE FIRM FAILED TO REPORT TO THE TRADE REPORTING ANDCOMPLIANCE ENGINE (TRACE) TRANSACTIONS IN TRACE ELIGIBLESECURITIES IT WAS REQUIRED TO REPORT, FAILED TO REPORT TO TRACETHE CORRECT CONTRA PARTY'S IDENTIFIER FOR TRANSACTIONS INTRACE ELIGIBLE SECURITIES AND FAILED TO REPORT TO TRACE THECORRECT TIME OF TRADE EXECUTION FOR TRANSACTIONS IN TRACEELIGIBLE SECURITIES. THE FIRM MADE AVAILABLE REPORTS ON THECOVERED ORDERS IN NATIONAL MARKET SYSTEM SECURITIES ITRECEIVED FOR EXECUTION FROM ANY PERSON WHICH INCLUDEDINCORRECT INFORMATION AS TO THE REALIZED SPREADS, THA AVERAGEEFFECTIVE SPREADS THE AT THE QUOTE AVERAGE SPREAD, THEEXECUTION VENUES AND CAPACITY FOR ITS NON DIRECTED ORDERFLOW. THE FIRM TRANSMITTED REPORTS TO THE ORDER AUDIT TRAILSYSTEM THAT CONTAINED INACCURATE TIMESTAMPS, OMMITTED ORINACCURATE ACCOUNT TYPE CODES, AND OMITTED ROUTED ORDER ID'S.THER FIRM FAILED TO CONTEMPORANEOUSLY OR PARTIALLY EXECUTECUSTOMER LIMIT ORDERS IN NASDAQ SECURITIES AFTER IT TRADEDEACH SUBJECT SECURITY FOR ITS OWN MARKET MAKING ACCOUNT AT APRICE THAT WOULD HAVE SATISFIED EACH CUSTOMER LIMIT ORDER. THEFIRM INCORRECTLY REPORTED THE SECOND LEG OF RISKLESSPRINCIPAL TRANSACTIONS AS AGENT TOFINRA AND INCORRECTLYREPORTED PRINCIPAL TRANSACTIONS AS AGENT TO THE OTCREPORTING FACILITY







Initiated By: FINRA


Other





Other Product Type(s): EQUITY LISTED

SEC RULES605,606 OF REGULATION NMS, FINRA RULES 2010, 6380A, 7330,NASD RULES 2110, 2111(A)2111 (B), 2320, 6230(B) 6230(C)(6) 6230(C)(8)6955(A) IM 2110-2- VANDHAM SECURITIES CORP FAILED TO EXECUTEORDERS FULLY AND PROMPTLY IN TRANSACTIONS FOR OR WITH ACUSTOMER, THE FIRM FAILED TO USE REASONABLE DILIGENCE TOASCERTAIN THE BEST INTER-DEALER MARKET AND BUY OR SELL IN SUCHMARKET SO THAT THE RESULTANT PRICE TO ITS CUSTOMER WAS ASFAVORABLE AS POSSIBLE UNDER PREVAILING MARKET CONDITIONS, THEFIRM ACCEPTED AND HELD CUSTOMER MARKET ORDERS TRADED FORITS OWN ACCOUNT AT PRICES THAT WOULD HAVE SATISFIED THECUSTOMER MARKET ORDERS, AND FAILED TO IMMEDIATELY THEREAFTEREXECUTE THE CUSTOMER MARKET ORDERS UP TO THE SIZE AND AT THESAME PRICE AT WHICH IT TRADED FOR ITS OWN ACCOUNT AT A BETTERPRICE. THE FIRM FAILED TO REPORT TO THE TRADE REPORTING ANDCOMPLIANCE ENGINE (TRACE) TRANSACTIONS IN TRACE ELIGIBLESECURITIES IT WAS REQUIRED TO REPORT, FAILED TO REPORT TO TRACETHE CORRECT CONTRA PARTY'S IDENTIFIER FOR TRANSACTIONS INTRACE ELIGIBLE SECURITIES AND FAILED TO REPORT TO TRACE THECORRECT TIME OF TRADE EXECUTION FOR TRANSACTIONS IN TRACEELIGIBLE SECURITIES. THE FIRM MADE AVAILABLE REPORTS ON THECOVERED ORDERS IN NATIONAL MARKET SYSTEM SECURITIES ITRECEIVED FOR EXECUTION FROM ANY PERSON WHICH INCLUDEDINCORRECT INFORMATION AS TO THE REALIZED SPREADS, THA AVERAGEEFFECTIVE SPREADS THE AT THE QUOTE AVERAGE SPREAD, THEEXECUTION VENUES AND CAPACITY FOR ITS NON DIRECTED ORDERFLOW. THE FIRM TRANSMITTED REPORTS TO THE ORDER AUDIT TRAILSYSTEM THAT CONTAINED INACCURATE TIMESTAMPS, OMMITTED ORINACCURATE ACCOUNT TYPE CODES, AND OMITTED ROUTED ORDER ID'S.THER FIRM FAILED TO CONTEMPORANEOUSLY OR PARTIALLY EXECUTECUSTOMER LIMIT ORDERS IN NASDAQ SECURITIES AFTER IT TRADEDEACH SUBJECT SECURITY FOR ITS OWN MARKET MAKING ACCOUNT AT APRICE THAT WOULD HAVE SATISFIED EACH CUSTOMER LIMIT ORDER. THEFIRM INCORRECTLY REPORTED THE SECOND LEG OF RISKLESSPRINCIPAL TRANSACTIONS AS AGENT TOFINRA AND INCORRECTLYREPORTED PRINCIPAL TRANSACTIONS AS AGENT TO THE OTCREPORTING FACILITY

Resolution: Acceptance, Waiver & Consent(AWC)







Resolution:


Sanction Details: $70,000.00 FINE$2346.46 RESTITUTION



Disclosure 8 of 12

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Initiated By: FINRA






Other Product Type(s): REPORTABLE SECURITIES

Allegations: NASD RULE 6130(D) - VANDHAM SECURITIES CORP. FAILED TO REPORT TOTHE NASD/NASDAQ TRADE REPORTING FACILITY THE CORRECT SYMBOLINDICATING WHETHER TRANSACTIONS WERE BUY, SELL, SELL SHORT,SELL SHORT EXEMPT OR CROSS IN REPORTABLE SECURITIESTRANSACTIONS.



Resolution:



No









Sanction Details: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE DESCRIBED SANCTION AND TO THE ENTRY OF FINDINGS;THEREFORE, THE FIRM IS FINED $5,000.


Initiated By: FINRA






Other Product Type(s): REPORTABLE SECURITIES

Allegations: NASD RULE 6130(D)-VANDHAM SECURITIES CORP. FAILED TO REPORT TOTHE NASD/NASDAQ TRADE REPORTING FACILITY THE CORRECT SYMBOLINDICATING WHETHER THE TRANSACTIONS WERE BUY, SELL, SELLSHORT, SELL SHORT EXEMPT OR CROSS IN REPORTABLE SECURITIESTRANSACTIONS.



Resolution:


Sanction Details: WIYHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE DESCRIBED SANCTION AND TO THE ENTRY OF FINDINGS;THEREFORE, THE FIRM IS FINED $5,000.



Disclosure 9 of 12

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Allegations: NASD RULES 2110, 3010 - VANDHAM SECURITIES CORP.'S WRITTENSUPERVISORY PROCEDURES FAILED TO ACCURATELY DESIGNATE THEAPPROPRIATELY REGISTERED PRINCIPAL(S) WITH AUTHORITY TO CARRYOUT SUPERVISORY RESPONSIBILITIES WITH RESPECT TO ITS TRADINGDESK.







Initiated By: FINRA





Principal Product Type: No Product


Allegations: NASD RULES 2110, 3010 - VANDHAM SECURITIES CORP.'S WRITTENSUPERVISORY PROCEDURES FAILED TO ACCURATELY DESIGNATE THEAPPROPRIATELY REGISTERED PRINCIPAL(S) WITH AUTHORITY TO CARRYOUT SUPERVISORY RESPONSIBILITIES WITH RESPECT TO ITS TRADINGDESK.


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 FINED $5,000 AND REQUIRED TO REVISE ITSWRITTEN SUPERVISORY PROCEDURES WITH RESPECT TO ITS TRADINGDESK WITHIN 30 BUSINESS DAYS OF ACCEPTANCE OF THIS AWC BY THENAC.


No




Allegations: WRITTEN SUPERVISORY PROCEDURES FAILED TO ACCURATELYDESIGNATE THE APPROPRIATELY REGISTERED PRINCIPAL(S) WITHAUTHORITY TO CARRY OUT SUPERVISORY RESPONSIBILITIES WITHRESPECT TO ITS TRADING DESK.







Initiated By: FINRA





Principal Product Type: No Product



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 FINED $5,000 AND REQUIRED TO REVISE ITSWRITTEN SUPERVISORY PROCEDURES WITH RESPECT TO ITS TRADINGDESK WITHIN 30 BUSINESS DAYS OF ACCEPTANCE OF THIS AWC BY THENAC.



Disclosure 10 of 12

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Allegations: SEC RULE 15C2-11 AND NASD RULES 2110, 3010 AND 6640: ON JULY 18,2005, IN THREE INSTANCES, THE FIRM PUBLISHED A QUOTATION FOR OTCEQUITY SECURITIES, OR DIRECTLY OR INDIRECTLY, SUBMITTED SUCHQUOTATIONS FOR PUBLICATION IN A QUOTATION MEDIUM, THAT IS ON THEPINK SHEETS AND DID NOT HAVE IN ITS RECORDS THE DOCUMENTATIONREQUIRED BY SEC RULES 15C2-11(A) ("PARAGRAPH (A) INFORMATION")AND BASE UPON A REVIEW OF THE PARAGRAPH A INFORMATION, DID NOTHAVE A REASONABLE BASIS UNDER THE CIRCUMSTANCES FORBELIEVING THAT: (I) THE PARAGRAPH (A) INFORMATION WAS ACCURATEIN ALL MATERIAL RESPECTS AND (II) THE SOURCES OF THE PARAGRAPH(A) INFORMATION WERE RELIABLE. THE QUOTATIONS DID NOTREPRESENT A CUSTOMER'S INDICATION OF UNSOLICITED INTEREST. INEACH INSTANCE DESCRIBED ABOVE, THE FIRM FAILED TO FILE A FORM211 WITH FINRA AT LEAST THREE BUSINESS DAYS BEFORE THEQUOTATION WAS PUBLISHED OR DISPLAYED IN A QUOTATION MEDIUM. INADDITION, THE FIRM'S SUPERVISORY SYSTEM DID NOT PROVIDE FORSUPERVISION REASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITHRESPECT TO APPLICABLE SECURITIES LAWS AND REGULATIONSCONCERNING SEC RULE 15C2-11 AND NASD RULE 6640. MOREOVER, THEFIRM FAILED TO ENFORCE ITS WRITTEN SUPERVISORY PROCEDURESWHICH SPECIFIED THAT THE HEAD OF TRADING WILL REVIEW, INITIAL ANDRETAIN THE DAILY LISTS OF PINK SHEET QUOTATION.







Initiated By: FINRA







SEC RULE 15C2-11 AND NASD RULES 2110, 3010 AND 6640: ON JULY 18,2005, IN THREE INSTANCES, THE FIRM PUBLISHED A QUOTATION FOR OTCEQUITY SECURITIES, OR DIRECTLY OR INDIRECTLY, SUBMITTED SUCHQUOTATIONS FOR PUBLICATION IN A QUOTATION MEDIUM, THAT IS ON THEPINK SHEETS AND DID NOT HAVE IN ITS RECORDS THE DOCUMENTATIONREQUIRED BY SEC RULES 15C2-11(A) ("PARAGRAPH (A) INFORMATION")AND BASE UPON A REVIEW OF THE PARAGRAPH A INFORMATION, DID NOTHAVE A REASONABLE BASIS UNDER THE CIRCUMSTANCES FORBELIEVING THAT: (I) THE PARAGRAPH (A) INFORMATION WAS ACCURATEIN ALL MATERIAL RESPECTS AND (II) THE SOURCES OF THE PARAGRAPH(A) INFORMATION WERE RELIABLE. THE QUOTATIONS DID NOTREPRESENT A CUSTOMER'S INDICATION OF UNSOLICITED INTEREST. INEACH INSTANCE DESCRIBED ABOVE, THE FIRM FAILED TO FILE A FORM211 WITH FINRA AT LEAST THREE BUSINESS DAYS BEFORE THEQUOTATION WAS PUBLISHED OR DISPLAYED IN A QUOTATION MEDIUM. INADDITION, THE FIRM'S SUPERVISORY SYSTEM DID NOT PROVIDE FORSUPERVISION REASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITHRESPECT TO APPLICABLE SECURITIES LAWS AND REGULATIONSCONCERNING SEC RULE 15C2-11 AND NASD RULE 6640. MOREOVER, THEFIRM FAILED TO ENFORCE ITS WRITTEN SUPERVISORY PROCEDURESWHICH SPECIFIED THAT THE HEAD OF TRADING WILL REVIEW, INITIAL ANDRETAIN THE DAILY LISTS OF PINK SHEET QUOTATION.


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 $7,500 AND REQUIRED TOREVISE ITS WRITTEN SUPERVISORY PROCEDURES WITH RESPECT TOAPPLICABLE SECURITIES LAWS AND REGULATIONS CONCERNING SECRULE 15C2-11 AND NASD RULE 6640.


No









Initiated By: FINRA


Censure






Allegations: VIOLATIONS OF SEC RULE 15C2-11, FINRA RULES 2110, 3010, 6640,INADEQUATE WRITTEN SUPERVISORY PROCEDURES AND SUPERVISION.



Resolution:


Sanction Details: A FINE OF $7,500.00 WAS PAID IN FULL, WRITTEN SUPERVISORYPROCEDURES HAVE BEEN UPDATED.

Firm Statement THE FIRM UNINTENTIONALLY MISCODED THREE TRADE REPORTS WHICHLED TO A VIOLATION OF SEC RULE 15C2-11 AND FINRA RULES 6640, 2110AND 3010.



Disclosure 11 of 12

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Allegations: SEC RULES 10B-10, 17A-3, 17A-4, 606, NASD RULES 2110, 3010, 3110, 4632,6130, 6130(D), 6620, 6955(A) - RESPONDENT FIRM FAILED TO CORRECTLYREPORT RISKLESS PRINCIPAL TRANSACTIONS THROUGH THE NASDAQMARKET CENTER (F/K/A ACT) (NMC) IN LAST SALE REPORTS OFTRANSACTIONS IN ELIGIBLE SECURITIES AND FAILED TO REPORT THECORRECT SYMBOL INDICATING WHETHER THE FIRM EXECUTEDTRANSACTIONS IN ELIGIBLE SECURITIES IN A PRINCIPAL OR AGENCYCAPACITY. THE FINDINGS STATED THAT THE FIRM FAILED TO CORRECTLYREPORT TO THE NMC AS MEDIA REPORTED TRANSACTIONS ON PRINCIPALTRANSACTIONS IN ELIGIBLE SECURITIES AND FAILED TO REPORT TO THENMC THE CORRECT SYMBOL INDICATING WHETHER THE FIRM EXECUTEDTRANSACTIONS IN OTCBB AND OTC EQUITY SECURITIES IN A PRINCIPALOR AGENCY CAPACITY. THE FINDINGS ALSO STATED THAT THE FIRMFAILED TO PROVIDE WRITTEN NOTIFICATION DISCLOSING TO ITSCUSTOMERS THE MARKUP OR MARKDOWN AND FAILED TO PROVIDEWRITTEN NOTIFICATION DISCLOSING TO ITS CUSTOMER ITS CORRECTCAPACITY IN THE TRANSACTION. THE FINDINGS ALSO INCLUDED THATTHE FIRM REPORTED ONE TRANSACTION THROUGH THE NMC WITH THEINCORRECT MODIFIER; FAILED TO REPORT THE CANCELLATION OF ONETRANSACTION IN ELIGIBLE SECURITIES AND FAILED TO REPORT THECORRECT SHORT SALE INDICATOR IN TRANSACTIONS IN ELIGIBLESECURITIES. NASD FOUND THAT THE FIRM FAILED TO SUBMIT EXECUTIONREPORTS TO OATS AND TRANSMITTED TO OATS REPORTS THATCONTAINED INACCURATE, INCOMPLETE AND IMPROPERLY FORMATTEDDATA. NASD ALSO FOUND THAT THE FIRM FAILED TO PROVIDE WRITTENNOTIFICATION DISCLOSING TO ITS CUSTOMERS THAT THE TRANSACTIONWAS EXECUTED AT AN AVERAGE PRICE; WHEN IT ACTED AS PRINCIPALFOR ITS OWN ACCOUNT, FAILED TO DISCLOSE THE CORRECT REPORTEDTRADE PRICE; AND FAILED TO MAKE PUBLICLY AVAILABLE FOR A PERIODOF TIME, A REPORT ON ITS ROUTING OF NON-DIRECTED ORDERS INCOVERED SECURITIES DURING THAT TIME. ALLEGATIONS CONTINUE INCOMMENTS.







Initiated By: NASD






Other Product Type(s): UNSPECIFIED TYPE OF SECURITIES

SEC RULES 10B-10, 17A-3, 17A-4, 606, NASD RULES 2110, 3010, 3110, 4632,6130, 6130(D), 6620, 6955(A) - RESPONDENT FIRM FAILED TO CORRECTLYREPORT RISKLESS PRINCIPAL TRANSACTIONS THROUGH THE NASDAQMARKET CENTER (F/K/A ACT) (NMC) IN LAST SALE REPORTS OFTRANSACTIONS IN ELIGIBLE SECURITIES AND FAILED TO REPORT THECORRECT SYMBOL INDICATING WHETHER THE FIRM EXECUTEDTRANSACTIONS IN ELIGIBLE SECURITIES IN A PRINCIPAL OR AGENCYCAPACITY. THE FINDINGS STATED THAT THE FIRM FAILED TO CORRECTLYREPORT TO THE NMC AS MEDIA REPORTED TRANSACTIONS ON PRINCIPALTRANSACTIONS IN ELIGIBLE SECURITIES AND FAILED TO REPORT TO THENMC THE CORRECT SYMBOL INDICATING WHETHER THE FIRM EXECUTEDTRANSACTIONS IN OTCBB AND OTC EQUITY SECURITIES IN A PRINCIPALOR AGENCY CAPACITY. THE FINDINGS ALSO STATED THAT THE FIRMFAILED TO PROVIDE WRITTEN NOTIFICATION DISCLOSING TO ITSCUSTOMERS THE MARKUP OR MARKDOWN AND FAILED TO PROVIDEWRITTEN NOTIFICATION DISCLOSING TO ITS CUSTOMER ITS CORRECTCAPACITY IN THE TRANSACTION. THE FINDINGS ALSO INCLUDED THATTHE FIRM REPORTED ONE TRANSACTION THROUGH THE NMC WITH THEINCORRECT MODIFIER; FAILED TO REPORT THE CANCELLATION OF ONETRANSACTION IN ELIGIBLE SECURITIES AND FAILED TO REPORT THECORRECT SHORT SALE INDICATOR IN TRANSACTIONS IN ELIGIBLESECURITIES. NASD FOUND THAT THE FIRM FAILED TO SUBMIT EXECUTIONREPORTS TO OATS AND TRANSMITTED TO OATS REPORTS THATCONTAINED INACCURATE, INCOMPLETE AND IMPROPERLY FORMATTEDDATA. NASD ALSO FOUND THAT THE FIRM FAILED TO PROVIDE WRITTENNOTIFICATION DISCLOSING TO ITS CUSTOMERS THAT THE TRANSACTIONWAS EXECUTED AT AN AVERAGE PRICE; WHEN IT ACTED AS PRINCIPALFOR ITS OWN ACCOUNT, FAILED TO DISCLOSE THE CORRECT REPORTEDTRADE PRICE; AND FAILED TO MAKE PUBLICLY AVAILABLE FOR A PERIODOF TIME, A REPORT ON ITS ROUTING OF NON-DIRECTED ORDERS INCOVERED SECURITIES DURING THAT TIME. ALLEGATIONS CONTINUE INCOMMENTS.


Resolution:


No









Sanction Details: WITHOUT ADMITTING OR DENYING THE FINDINGS, VANDHAM SECURITIESCORP., CONSENTED TO THE DESCRIBED SANCTIONS AND TO THE ENTRYOF FINDINGS, THEREFORE, THE FIRM WAS CENSURED, FINED $30,000 ANDREQUIRED TO REVISE ITS WRITTEN SUPERVISORY PROCEDURESCONCERNING DISCLOSURE OF ORDER ROUTING INFORMATION,RISKLESS PRINCIPAL TRADE REPORTING, TRADE REPORTING OF SALESTRANSACTIONS, SOFT DOLLAR ACCOUNTS AND TRADING AND BOOKSAND RECORDS REQUIREMENTS.

Regulator Statement ALLEGATION CONTINUED: IN ADDITION, NASD DETERMINED THAT THEFIRM FAILED TO SHOW THE CORRECT ORDER RECEIPT TIME, TIME OFEXECUTION, PRICE OF EXECUTION AND THE TERMS AND CONDITIONS ONTHE MEMORANDUM OF BROKERAGE ORDERS AND FAILED TO PRESERVEFOR A PERIOD OF NOT LESS THAN THREE YEARS, THE FIRST TWO IN ANACCESSIBLE PLACE, THE MEMORANDUM OF THREE BROKERAGEORDERS. MOREOVER, NASD FOUND THAT THE FIRM'S SUPERVISORYSYSTEM DID NOT PROVIDE FOR SUPERVISION REASONABLY DESIGNEDTO ACHIEVE COMPLIANCE WITH RESPECT TO THE APPLICABLESECURITIES LAWS, REGULATION AND NASD RULES CONCERNINGDISCLOSURE OF ORDER ROUTING INFORMATION, RISKLESS PRINCIPALTRADE REPORTING, TRADE REPORTING OF SALES TRANSACTIONS, SOFTDOLLAR ACCOUNTS AND TRADING AND BOOKS AND RECORDSREQUIREMENTS.



Initiated By: NASD





Other Product Type(s): UNSPECIFIED TYPE OF SECURITIES

Allegations: VANDHAM SECURITIES WAS FINED $30,000 FOR TRADE REPORTING ANDRECORD KEEPING RULE VIOLATIONS THAT WERE A REUSLT OFSOFTWARE ERROR. AS A CONSEQUENCE OTHER AREAS OF REPORTINGSUCH OATS, ORDER ROUTING, CAPACITY AND MARK UP/MARK DOWNINFORMATION WERE EFFECTED.










Resolution:


Sanction Details: WITHOUT ADMITTING OR DENYING THE FINDINGS, VANDHAM SECURITIESCORP., CONSENTED TO THE DESCRIBED SANCTIONS AND TO THE ENTRYOF FINDINGS, THEREFORE. THE FIRM WAS CENSURED, FINED $30,000 ANDREQUIRED TO REVISE ITS WRITTEN SUPERVISORY PROCEDURESCONCERNING DISCLOSURE OF ORDER ROUTING INFORMATION,RISKLESS PRINCIPAL TRADE REPORTING, TRADE REPORTING OF SALESTRANSACTIONS, SOFT DOLLAR ACCOUNTS AND TRADING BOOKS ANDRECORDS REQUIREMENTS. IN ADDITION, NASD DETERMINED THAT THEFIRM FAILED TO SHOW THE CORRECT ORDER RECEIPT TIME, TIME OFEXECUTION, PRICE OF EXECUTION, AND THE TERMS AND CONDITIONS ONTHE MEMORANDUM OF BROKERAGE ORDERS AND FAILED TO PRESERVEFOR A PERIOD OF NOT LESS THAN THREE YEARS. THE FIRST TWO IN ANACCESIBLE PLACE, THE MEMORANDUM OF THREE BROKERAGE ORDERS.MOREOVER, NASD FOUND THAT THE FIRM'S SUPERVISORY SYSTEM DIDNOT PROVIDE FOR SUPERVISION REASONABLY DESIGNED TO ACHEIVECOMPLIANCE WITH RESPECT TO THE APPLICABLE SECURITIES LAWS,REGULATION AND NASD RULES CONCERNING DISCLOSURE OF ORDERROUTING INFORMATION, RISKLESS PRINCIPAL TRADE REPORTING, TRADEREPORTING OF SALES TRANSACTIONS, SOFT DOLLAR ACCOUNTS ANDTRADING BOOKS AND RECORDS REQUIREMENTS

Firm Statement VANDHAM SECURITIES WAS FINED $30,000 FOR TRADE REPORTING ANDRECORD KEEPING RULE VIOLATIONS THAT WERE A REUSLT OFSOFTWARE ERROR. AS A CONSEQUENCE OTHER AREAS OF REPORTINGSUCH OATS, ORDER ROUTING, CAPACITY AND MARK UP/MARK DOWNINFORMATION WERE EFFECTED.



Disclosure 12 of 12

i


Allegations: NASD CONDUCT RULE 2110 AND NASD MARKETPLACE RULE 6620(A) -VANDHAM SECURITIES CORP. FAILED, WITHIN 90 SECONDS AFTEREXECUTION, TO TRANSMIT THROUGH AUTOMATED CONFIRMATIONTRANSACTION SERVICE ("ACT") 109 LAST SALE REPORTS OFTRANSACTIONS IN OTC EQUITY SECURITIES. OF THE 109 TRANSACTIONS,THE FIRM, FAILED WITHIN 90 SECONDS AFTER EXECUTION, TO TRANSMITTHROUGH ACT 78 LAST SALE REPORTS OF TRANSACTIONS IN OTCEQUITY SECURITIES AND FAILED TO DESIGNATE THROUGH ACT SUCHLAST SALE REPORTS AS LATE.







Initiated By: NASD




Docket/Case Number: CMS040220





Resolution:


Sanction Details: WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, VANDHAMSECURITIES CORP. CONSENTED TO THE DESCRIBED SANCTION AND TOTHE ENTRY OF FINDINGS; THEREFORE, THE FIRM IS FINED $5,000.


No











Initiated By: NASD


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



Docket/Case Number: CMS040220



NASD CONDUCT RULE 2110 AND NASD MARKETPLACE RULE 6620(A) -VANDHAM SECURITIES CORP. FAILED, WITHIN 90 SECONDS AFTEREXECUTION, TO TRANSMIT THROUGH AUTOMATED CONFIRMATIONTRANSACTION SERVICE ("ACT") 109 LAST SALE REPORTS OFTRANSACTIONS IN OTC EQUITY SECURITIES. OF THE 109 TRANSACTIONS,THE FIRM, FAILED WITHIN 90 SECONDS AFTER EXECUTION, TO TRANSMITTHROUGH ACT 78 LAST SALE REPORTS OF TRANSACTIONS IN OTCEQUITY SECURITIES AND FAILED TO DESIGNATE THROUGH ACT SUCHLAST SALE REPORTS AS LATE.


Resolution:

Other Sanctions Ordered: NONE

Sanction Details: THE FIRM PAID A FINE OF $5,000 ON JANUARY 12, 2005.

Firm Statement WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, VANDHAMSECURITIES CORP. CONSENTED TO THE DESCRIBED SANCTION AND TOTHE ENTRY OF FINDINGS. THE FIRM WAS FINED $5,000








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