Dawson James Securities, Inc. of Boca Raton, Florida submitted a Letter of Acceptance, Waiver and Consent in which the firm consented to, but did not admit to or deny, the described sanctions and the entry of the Financial Industry Regulatory Authority’s (FINRA) findings that it “failed to establish and implement an adequate system to determine whether a former registrant’s disclosed outside business was properly characterized as an outside business activity or whether it should be treated as an outside securities activity subject to the requirements of NASD Rule 3040.”
Dawson James Securities, Inc. (Dawson James) has been a FINRA member since 2004 with five branch locations centered around its main headquarters in Boca Raton, Florida. In January 2011, a former Dawson James registrant disclosed an outside business activity (retail furniture store) for which he was sole owner. Dawson James approved this outside business activity. In April 2011, the former registrant disclosed that the business was a holding company involved in real estate and financial lending. In addition, he disclosed that he would be working with a Dawson James customer and would be compensated by a year-end dividend.
In January 2012, the former Dawson James registrant made a third disclosure regarding the same company. He now indicated that the business was involved in commercial property and mineral rights and that he would be providing consulting services. The disclosure also indicated that the former registrant was significantly compensated (approximately $100,000) but was still approved by a Dawson James registrant. FINRA found that Dawson James didn’t “identify this potential red flag regarding the outside business activity and failed to identify material changes from the April 2011 disclosure to the January 2012 disclosure. Dawson James Securities was fined $30,000 for FINRA’s findings.
Supervision within a brokerage firm can take many different forms, and management’s failure on any front, can create grounds for a claim. Among other areas, management should have appropriate supervisory processes in place for the regular review of investor accounts, quality checks to see that the right products are being recommended and delivered to investors, and audits to ensure continual compliance with federal and state securities laws, securities industry rules and regulations, as well as the brokerage firm’s own policies and procedures.
Have you suffered losses in your Dawson James Securities account? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation. 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 visit our website, www.secatty.com , post a comment, call (800) 732-2889, or email Mr. Pearce at email@example.com for answers to any of your questions about this blog post and/or any related matter.