TAG | firm failed to report suspicious activity in brokerage
On May 8th., 2013, FINRA, the Financial Industry Regulatory Authority Inc. fined three financial companies $900,000 in total, for failing to stop money laundering and other suspicious transactions, and officials at the firms were fined a total of $100,000.
“Today’s actions reinforce FINRA’s continued focus on firms’ ability to identify and respond to potential misuse and abuse of the markets,” said Brad Bennett, FINRA executive vice president and chief of enforcement. “Firms must have adequate anti-money-laundering and supervisory systems in place to detect and report suspicious transactions.”
FINRA fined Atlas One Financial Group LLC $350,000 and its former chief compliance officer, Napoleon Arturo Aponte, $25,000 and suspended him for three months. Also, FINRA fined Firstrade Securities Inc. $300,000, and World Trade Financial Corp. $250,000. World Trade Financial, president and owner Rodney Michel was fined $35,000 and suspended for four months, and chief compliance officer Frank Brickell was fined $40,000 and suspended for nine months. Minority owner Jason Adams was fined $5,000 and suspended for three months.
The firms and officials settled with FINRA without admitting or denying the charges.
FINRA claimed that Atlas One failed to detect suspicious activities in several accounts between February 2007 and May 2011. The Justice Department had opened a money-laundering investigation in 2007 on six accounts controlled by one customer, according to FINRA. Atlas One did not look into any other accounts — with the same Costa Rican mailing address — that were not involved in the Justice review. FINRA claimed Firstrade failed to detect suspicious trading activity by Chinese issuers.
World Trade Financial and its executives were fined for not implementing and enforcing a supervisory system for a penny stock operation that generated more than $61 million between March 2009 and August 2011.
If you or a family member have sustained investment losses due to your stock broker or financial advisor’s recommendations, call Soreide Law Group for a free consultation on how to potentially recover your losses at 888-760-6552.
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The following article was found on FINRA’s website:
Tradespot Markets Inc. (CRD #29683, Davie, Florida) and Mark Bedros Beloyan (CRD #1392748, Registered Principal, Davie, Florida)
submitted an Offer of Settlement in which the firm was censured and fined $25,000, and Beloyan was suspended from association with any FINRA member in any capacity for one month and suspended from association with any FINRA member in any principal capacity for an additional month. In light of Beloyan’s financial status, 2 Disciplinary and other FINRA Actions October 2011 FINRA did not impose any monetary sanctions upon him.
Without admitting or denying the allegations, the firm and Beloyan consented to the described sanctions and to the entry of findings that the firm, through Beloyan, sold over one billion shares of a low-priced stock that was neither registered with the Securities and Exchange Commission (SEC) nor exempt from registration. The findings stated that the firm, through Beloyan, its Chief Compliance Officer, failed to establish and maintain a supervisory system, including written supervisory procedures (WSPs), reasonably designed to ensure compliance with Section 5 of the Securities Act of 1933, the applicable rules and regulations regarding the distribution of unregistered and non-exempt securities.
These findings also stated that the firm, through Beloyan, the firm’s Anti-Money Laundering (AML) Compliance Officer (AMLCO), failed to implement or enforce the firm’s AML program by failing to identify suspicious activity, properly investigate it, and report it through Form SAR-SF, as appropriate. The findings also included that the suspicious activity consisted of deposits of billions of shares of the low-priced stock of issuers in certificate form into accounts controlled by a person with a regulatory and criminal history, liquidated those shares generally soon after their deposit, and wired of the sales proceeds out of the accounts soon after liquidation.
The article states that FINRA found that despite the suspicious nature of a company’s activity in a stock, the suspicious nature of the activity of the company’s sole owner’s non-qualified account and his regulatory and criminal history, the firm, through Beloyan, failed to conduct the necessary due diligence to determine whether they were participating in a scheme to evade registration requirements, and generally relied exclusively on the firm’s clearing firm to determine whether the subject shares of stock were registered or exempt, and did not acquire a copy of the relevant stock certificates or documents regarding the owner’s acquisition of the shares, thereby participating in the illicit distribution of more than 1 billion shares of unregistered and non-exempt stock. FINRA also found that despite the presence of risk indicators and the appearance of the activity at issue on exception reports, the firm, through Beloyan, either failed to identify or chose to ignore the suspicious activity, and thus failed to investigate and report the activity in contravention of federal laws, NASD/FINRA rules and the firm’s AML policies and procedures. In addition, FINRA determined that the firm, through Beloyan, should have detected the suspicious nature of the activity, investigated the activity and reported it through a Form SAR-SF. Moreover, the firm, through Beloyan, failed to establish and maintain a supervisory system, including WSPs, reasonably designed to ensure compliance with Section 5, and failed to establish and maintain procedures regarding the distribution of such securities in connection with its clearing firm’s acceptance of the delivery of shares of stock in certificate form and customers’ subsequent sale of the same; the firm’s WSPs did not require an inquiry into whether deposited shares of stock were registered with the SEC or exempt.
The suspension in any capacity was in effect from September 6, 2011, through October 5, 2011. The suspension in any principal capacity is in effect from September 6, 2011, through November 5, 2011. (FINRA Case #2009017590801)
Securities Attorney, Lars Soreide, of Soreide Law, PLLC, has represented clients nationwide. If you or a family member have experienced a loss through Tradespot Markets, Inc., and/or Mark Bedros Beloyan of Davie, FL, call a Securities Arbitration Lawyer for a free consultation on how to potentially recover your losses. To speak with an attorney, call 888-760-6552, or visit www.securitieslawyer.com.
Soreide Law Group, PLLC., representing investors nationwide before FINRA the Financial Industry Regulatory Authority.
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