Brookstone Securities, Inc. (Lakeland, FL) was censured, fined $1,000,000 and required to pay, jointly and severally with Christopher Dean Kline (Baraboo, Wisconsin) and Antony Lee Turbeville (Lakeland, FL) $1,620,100 plus prejudgment interest in restitution to their respective customers. Kline and Turbeville were barred from association with any FINRA member in any capacity. David William Locy (Overland Park, Kansas) was fined $25,000, barred from association with any FINRA member in any supervisory or principal capacity and suspended from association with any FINRA member in any capacity for two years. FINRA found that the firm, acting through Turbeville and Kline, fraudulently made material misrepresentations of fact and omitted material facts that misled senior and retired customers regarding the risks associated with CMOs, in willful violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.
Monex Securities, Inc. (Houston, TX) submitted an AWC in which the firm was censured, fined $25,000, and required to pay $9,678.52 plus interest in restitution to investors. FINRA found that the firm sold corporate bonds to customers and failed to sell such bonds at a price that was fair, taking into consideration all relevant circumstances, including market conditions with regard to each bond at the time of the transaction, the expense involved, and that the firm was entitled to a profit.
The Strategic Financial Alliance, Inc. (Atlanta, GA) submitted an AWC in which the firm was censured, fined $30,000 and required to submit a written certification that it has adopted and implemented supervisory systems and written procedures reasonably designed for the review and supervision of consolidated reports. FINRA found that the firm failed to establish, maintain, and enforce a reasonable supervisory system and WSPs for the review and supervision of consolidated account reports produced by registered representatives and provided to its customers. Some firm registered representatives used at least nine different systems, including Microsoft Excel, to prepare and distribute consolidated reports to customers. Many of these systems allowed for manual entries. About 1,500 of the firm’s customers received some form of consolidated report quarterly, semi-annually, or on demand during face-to-face meetings. The firm did not have any supervisory procedures addressing the use and supervision of consolidated reports. While the firm issued a compliance communication to its registered representatives about consolidated reports, it inadequately addressed the verification of valuation information provided to customers, and failed to ensure full and accurate disclosure of the source of such valuation information. Further, the firm failed to maintain any documentation showing that consolidated reports were properly reviewed and maintained as customer correspondence. In some cases, consolidated reports the firm’s registered representatives created included inadequate disclosure language and in other cases failed to include any disclosure language.
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