Capitol Securities Management, Inc. (CSM) of Glen Allen, Virginia submitted a Letter of Acceptance, Waiver and Consent to the Financial Industry Regulatory Authority (FINRA) for several alleged supervisory failures and unsuitable purchases of Reverse Convertible Notes (RCN’s). CSM has been a FINRA member since 1985 and has over 60 branch offices including its main headquarters in Glen Allen, Virginia.
FINRA found, between January 2008 and August 2011, a registered representative for CSM recommended and executed 24 unsuitable purchases of customizable RCN’s totally approximately $4 million. FINRA alleged that the eight clients affected were not suitable candidates for these RCN purchases due to their risk tolerance, age, and financial experience. By executing these transactions, CSM, through a registered representative, failed to maintain and enforce proper supervisory procedures.