Five Broker-Dealers Fined by FINRA
Five broker-dealers received fines totaling $385,000 by theFinancial Industry Regulatory Authority (FINRA). The fines are the result of the alleged illegal sale of more
than 8 billion shares of penny stock that the broker-dealers sold on behalf
of their customers.
Fagenson & Co., Inc., of New York, Olympus Securities, LLC, of Montville, NJ, Equity Station, Inc., of Boca Raton, FL, Alpine Securities Corporation, of Salt Lake City, UT, and RBC Capital Markets Corporation, of New York were all fined for the sale of the unregistered securities.
It was reported that the majority of the illegal sales involved Universal Express Inc. The Securities and Exchange Commission (SEC) had already taken a significant enforcement action in regards to Universal Express’s unregistered stock.
According to FINRA, these firms’ customers deposited large blocks of thinly traded securities in certificate form and then liquidated the positions right away. FINRA also discovered that the sales took place in light of the fact that the SEC filed a complaint in 2004 citing that Universal Express had issued approximately 500 million shares of unregistered securities.
Members of Universal Express’ management team were also charged with issuing false press releases and other misleading statements concerning the sale of the unregistered stock. The company was fined $10 million.
The broker-dealers were accused of failing to determine if the securities could be sold without violating federal registration requirements.
“The failure to detect and prevent these sales creates serious risks to the unsuspecting customers who purchased these unregistered securities,” said James S. Shorris, FINRA Executive Vice President and Executive Director of Enforcement.