FSC Securities Corporation has been fined $200,000 by the Financial Industry Regulatory Authority (FINRA) for failing to supervise third-party check requests in connection with an employee’s fraudulent investment fund memberships, which ultimately caused the investors to suffer significant losses.
According to FINRA, FSC Securities failed to establish, maintain and enforce an appropriate supervisory system to review third-party check requests related to 15 customers’ accounts. These customers were sold memberships in an unapproved fund (the PFG Fund) by a registered representative of the firm who submitted 23 Letters of Authorization (LOAs), authorizing the issuance of approximately $1.6 million in third-party checks from FSC Securities accounts to a bank account controlled by the ill-fated fund. The PFG fund ultimately collapsed and lost millions of dollars due to speculative trading and other investments. Continue Reading