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Finance 500 Fined for Supervisory Failures

Finance 500, Inc. of Irvine, California, and Robert Lansing Hicks, of Orange, California, submitted a Letter of Acceptance, Waiver and Consent (AWC) to the Financial Industry Regulatory Authority (FINRA) for allegedly failing to establish and implement an anti-money laundering (AML) program and numerous supervisory failures.

FINRA found that between 2005 and 2014, Robert Hicks, who was Finance 500’s owner President, Chief Executive Officer, Chief Compliance Officer and designated Anti-Money Laundering Compliance Officer, and Finance 500 failed to implement and enforce adequate supervisory policies in order to oversee the market making activities of low-priced stocks, sales of unregistered low-priced securities, the review and retention of emails, and the implementation and delegation of supervisory responsibilities.

Additionally, FINRA’s findings state that Finance 500 had inadequate procedures for monitoring its suspicious trading activity. The firm’s daily trade blotter captured the equity transactions, but failed to capture any information about the customer. Moreover, FINRA found that Finance 500 opened at least 300 accounts without properly verifying the account holders’ identities, a violation of proper compliance with the firm’s Customer Identification Program (CIP).

Without admitting or denying the FINRA findings, Finance 500 and Robert Hicks agreed to the FINRA sanctions in which the firm was censured and fined $400,000, of which $25,000 is joint and several with Mr. Hicks. Mr. Hicks was also suspended from association with any FINRA member in any principal capacity for nine (9) months. The suspension is in effect from January 4, 2016 through October 3, 2016.

Stockbrokers have been known to engage in many types of practices which violate industry and firm rules, practices, and procedures. In order to protect customers from stockbroker misconduct, FINRA rules require broker-dealers such as Finance 500 to establish and implement a reasonable supervisory system. The implementation of the rules require supervisors to monitor employees to ensure they comply with federal and state securities laws, securities industry rules and regulations, and the firm’s own policies and procedures. If broker dealers and/or their supervisors do not establish and implement these protective measures, they may be liable to investors for damages which flow from the misconduct. As a result, investors who have suffered losses because of their stockbroker’s unlawful or prohibited conduct can file a claim to recover damages against broker dealers like Finance 500, which should consistently oversee its employees in order to prevent stockbroker misconduct.

Have you suffered losses in your Finance 500 investment account due to your stockbroker’s misconduct or the brokerage firm’s failure to supervise? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation. Mr. Pearce is accepting clients with valid claims against stockbrokers for unsuitable recommendations, misrepresentations, and/or other unauthorized and prohibited conduct.

The most important of investors’ rights is the right to be informed! This Investors’ Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over 35 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities, and investment law issues. The lawyers at our law firm are devoted to protecting investors’ rights throughout the United States and internationally! Please post a comment, call (800) 732-2889, send Mr. Pearce an email at pearce@rwpearce.com, and/or visit our website at www.secatty.com for answers to any of your questions about this blog post and/or any related matter.