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.
Additionally, FINRA found that CSM failed to implement an adequate Anti-money Laundering (AML) and Customer Identification Program (CIP). FINRA found several red flags in seven of their clients’ accounts and found that CSM failed to verify the identification for seven accounts. In over 400 transactions, FINRA also found, that the CSM representative was collecting excessive commissions totaling approximately $32,784.13.
Without admitting or denying the FINRA findings, CSM agreed to the FINRA sanctions and was ordered to pay a $470,000 fine. CSM was also ordered to pay restitution in the amount of $226,448.90 for the clients affected by their representative.
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 Capitol Securities Management 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, such as Capitol Securities Management 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 Capitol Securities Management, which should consistently oversee its employees in order to prevent stockbroker misconduct.
Have you suffered losses in your Capitol Securities Management investment account due to your stockbroker’s misconduct? 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 40 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 firstname.lastname@example.org, 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.