Bad Brokers

According to FINRA, Charles Scott Burford Sr. of Dallas, Texas was fined $10,000 and suspended from association with any FINRA member firm in all capacities for six months for executing unauthorized trades and facilitating unauthorized withdrawals in a deceased customer's account.

Burford has app...

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According to FINRA, Charles Scott Burford Sr. of Dallas, Texas was fined $10,000 and suspended from association with any FINRA member firm in all capacities for six months for executing unauthorized trades and facilitating unauthorized withdrawals in a deceased customer's account.

Burford has appealed the SEC decision to the U.S. Court of Appeals for the Fifth Circuit, and the sanctions are not in effect pending that review.

FINRA found that Burford did not submit his customer's death certificate to his member firm until over 14 months after the customer's death. During this time, Burford executed trades and facilitated withdrawals from the account based on instructions from the customer's widow.

When Burford finally submitted the death certificate—only because it was necessary for the widow, as named beneficiary, to take a required minimum distribution—he failed to inform the firm that the customer's account had remained open and active. Burford then continued executing additional trades and withdrawals.

In total, Burford executed nine sales transactions totaling nearly $130,000 and facilitated eight withdrawals totaling nearly $85,000 at the widow's request.

The situation only came to light when Burford learned that the customer's daughter planned to contest the will. Burford then asked the firm to freeze the account but still did not disclose his improper transactions until the daughter's attorney warned that the firm might be liable.

This case illustrates the problems that arise when proper procedures are not followed after a customer's death. Accounts of deceased persons require special handling, and representatives cannot simply take instructions from family members without proper authorization and firm notification.

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According to FINRA, Venugopal Ramakrishnappa Reddy of Frisco, Texas was assessed a deferred fine of $5,000 and suspended from association with any FINRA member firm in all capacities for six months for participating in private securities transactions without providing prior notice to his member firm...

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According to FINRA, Venugopal Ramakrishnappa Reddy of Frisco, Texas was assessed a deferred fine of $5,000 and suspended from association with any FINRA member firm in all capacities for six months for participating in private securities transactions without providing prior notice to his member firm.

FINRA rules require registered representatives to notify their firms before participating in securities transactions outside their regular employment. This requirement, often called the private securities transaction rule or selling away rule, exists to ensure firms can supervise all securities activities of their representatives.

Reddy and a partner formed an investment fund and affiliated entities to raise capital for investment in early-stage technology companies. Reddy disclosed his role as co-owner and co-manager to his firm, including that the entities would engage in investment-related activities and offer fund interests to investors.

The firm approved Reddy's involvement as an outside business activity (OBA). However, the approval was for the OBA, not for participating in specific securities transactions.

Subsequently, 36 accredited investors committed $9.2 million to the fund and affiliated entities. Reddy participated in transactions involving nine of these investors and approximately $5 million by helping solicit investments and executing subscription agreements.

The distinction between OBA approval and private securities transaction approval matters. While the firm knew about Reddy's role in the entities, it did not receive the required notice before each securities transaction, which would have allowed proper supervision.

The suspension runs from August 4, 2025 through February 3, 2026. After the firm became aware of the transactions, its CEO signed forms documenting approval, but proper prior notice had not been provided.

Investors should verify that any investment offerings presented by a registered representative have been approved by their firm.

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According to FINRA, ESF Equity, LP of San Clemente, California was expelled from FINRA membership on July 22, 2025, for failure to provide information or keep information current pursuant to FINRA Rule 9552.

FINRA Rule 9552 authorizes FINRA to suspend or cancel the membership of a firm that fails...

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According to FINRA, ESF Equity, LP of San Clemente, California was expelled from FINRA membership on July 22, 2025, for failure to provide information or keep information current pursuant to FINRA Rule 9552.

FINRA Rule 9552 authorizes FINRA to suspend or cancel the membership of a firm that fails to provide information or documents requested by FINRA, or fails to keep required information current. An expulsion is the most severe action against a firm—it means the firm can no longer conduct securities business.

When firms fail to respond to regulatory inquiries or maintain required information, regulators cannot effectively oversee their operations. This undermines investor protection and the integrity of the securities markets.

The expulsion of ESF Equity, LP means the firm is no longer authorized to engage in securities business. Any customers of the firm should have received notification about the expulsion and instructions for transferring their accounts to another broker-dealer.

Investors who had accounts with ESF Equity, LP should verify that their assets have been properly transferred and that all account records are complete. If you experience any issues related to the firm's expulsion, contact FINRA's investor complaint center.

This case demonstrates that FINRA's information requirements are not optional. Firms that fail to cooperate with regulatory oversight face serious consequences, up to and including expulsion from the industry.

Before opening an account with any broker-dealer, investors should check the firm's registration status and regulatory history through FINRA BrokerCheck. A firm's disciplinary history can provide important information about its compliance culture.

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According to FINRA, Percival Financial Partners, LTD. of Columbia, Maryland had its FINRA membership cancelled on July 22, 2025, for failure to pay FINRA dues, fees, and other charges pursuant to FINRA Rule 9553.

FINRA membership requires firms to pay various dues and fees that support regulatory...

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According to FINRA, Percival Financial Partners, LTD. of Columbia, Maryland had its FINRA membership cancelled on July 22, 2025, for failure to pay FINRA dues, fees, and other charges pursuant to FINRA Rule 9553.

FINRA membership requires firms to pay various dues and fees that support regulatory operations. When firms fail to meet these financial obligations, FINRA can suspend or cancel their membership.

The cancellation of Percival Financial Partners' membership means the firm is no longer authorized to conduct securities business as a FINRA member. This affects the firm's ability to operate and serve customers.

Investors who had accounts with Percival Financial Partners should have received notification about the membership cancellation and instructions for transferring their accounts. Customer assets held in securities accounts are typically protected by SIPC (Securities Investor Protection Corporation) coverage, which provides limited protection if a brokerage firm fails.

If you were a customer of Percival Financial Partners and have not received information about your account, contact FINRA's investor complaint center for assistance.

While failure to pay fees may seem like an administrative matter, it can indicate broader financial difficulties at a firm. Firms that cannot meet their regulatory obligations may also struggle to meet obligations to customers.

This case serves as a reminder that investors should periodically verify their broker-dealer's regulatory status. FINRA BrokerCheck provides current information about firm registration and any regulatory actions. Changes in a firm's status can affect customers, and staying informed helps investors protect their interests.

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According to FINRA, First Commonwealth Securities Corporation of Atlanta, Georgia was suspended from May 12, 2025 through July 16, 2025, for failure to provide information or keep information current pursuant to FINRA Rule 9552.

Unlike expulsions, which permanently remove firms from FINRA members...

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According to FINRA, First Commonwealth Securities Corporation of Atlanta, Georgia was suspended from May 12, 2025 through July 16, 2025, for failure to provide information or keep information current pursuant to FINRA Rule 9552.

Unlike expulsions, which permanently remove firms from FINRA membership, suspensions are temporary and can be lifted when the firm comes into compliance. In this case, the suspension was lifted on July 16, 2025, indicating that First Commonwealth Securities Corporation addressed the information deficiencies that led to the suspension.

During the suspension period, the firm was prohibited from conducting securities business. Customers may have experienced disruptions in service or been required to work with the firm's clearing firm for certain transactions.

FINRA Rule 9552 suspensions serve as an enforcement mechanism to compel compliance with information requirements. Firms must provide requested information and keep regulatory filings current. When they fail to do so, suspension creates significant business pressure to come into compliance.

The fact that the suspension was lifted suggests that First Commonwealth Securities Corporation ultimately provided the required information. However, the suspension itself remains part of the firm's regulatory record and is visible to investors through FINRA BrokerCheck.

Investors should be aware that regulatory suspensions, even temporary ones, may indicate compliance issues at a firm. While a lifted suspension means the firm has addressed the immediate problem, it is worth considering the firm's overall regulatory history when making decisions about where to hold accounts.

Current customers of First Commonwealth Securities Corporation can now conduct business as normal following the lifting of the suspension.

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According to FINRA, Intesa Sanpaolo IMI Securities Corp. was censured and fined $125,000 for multiple reporting and supervisory failures that persisted over an extended period.

The firm was found to have inaccurately reported its execution capacity on over 7,000 TRACE-eligible transactions. When ...

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According to FINRA, Intesa Sanpaolo IMI Securities Corp. was censured and fined $125,000 for multiple reporting and supervisory failures that persisted over an extended period.

The firm was found to have inaccurately reported its execution capacity on over 7,000 TRACE-eligible transactions. When the firm transitioned to an agency booking model for its non-member affiliate, it failed to communicate this change properly to its fixed income desk. As a result, the firm incorrectly reported transactions in corporate debt and U.S. Treasury securities as principal capacity when they should have been reported as agency capacity. These errors represented 100 percent of the firm's corporate debt and Treasury reports during the relevant period.

Additionally, due to human error, the firm failed to report over 4,000 non-member affiliate transactions to TRACE, constituting 50 percent of the reports it was required to submit. The firm also issued more than 11,000 customer trade confirmations that omitted security prices due to a coding error.

The violations revealed systemic supervisory deficiencies at the firm. FINRA found that the firm did not establish, maintain, and enforce adequate written supervisory procedures to ensure compliance with trade confirmation disclosure requirements. Notably, the firm had no process to review customer confirmations for accuracy or completeness.

This case underscores the critical importance of proper transaction reporting to TRACE, which provides transparency to the corporate bond market. Investors should be aware that accurate trade reporting helps ensure fair pricing and market integrity. When firms fail in these basic compliance obligations, it can undermine confidence in market data and pricing. The firm ultimately corrected its systems and reporting procedures after discovering these errors through internal review and FINRA inquiry.

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According to FINRA, Barclays Capital Inc. was censured and fined $325,000 for failing to establish and maintain an adequate supervisory system for employee outside brokerage accounts, resulting in significant compliance gaps during the COVID-19 pandemic.

When the firm's offices closed in March 20...

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According to FINRA, Barclays Capital Inc. was censured and fined $325,000 for failing to establish and maintain an adequate supervisory system for employee outside brokerage accounts, resulting in significant compliance gaps during the COVID-19 pandemic.

When the firm's offices closed in March 2020 due to the pandemic, resulting delays and organizational changes created a substantial backlog of unreviewed or missing account statements. Rather than promptly addressing this backlog, the firm allowed the problem to persist. From July 2021 through June 2022, Barclays failed to either collect or timely review approximately 8,200 account statements from roughly 700 employee-held outside brokerage accounts—representing about half of all outside accounts for which the firm did not receive an electronic data feed.

During this period of inadequate supervision, firm employees executed 161 trades in these outside accounts without first obtaining required preclearance. These unauthorized trades went undetected due to the backlog of unreviewed and missing statements. The failure to monitor employee trading in outside accounts creates significant risks, as employees may engage in conflicts of interest, front-running, or other prohibited trading practices.

FINRA rules require firms to receive duplicate statements or confirmations for employee accounts held at other broker-dealers and to review these accounts regularly. These requirements help prevent insider trading, conflicts of interest, and other misconduct.

Barclays ultimately remediated its supervisory deficiencies by modifying its review system, establishing electronic feeds for a significant percentage of outside accounts, and implementing a system for employees to upload statements for accounts without electronic feeds. The firm also completed a comprehensive remedial review of the backlog. This case demonstrates that firms cannot allow operational challenges, even those caused by extraordinary circumstances, to excuse fundamental supervisory obligations that protect market integrity.

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According to FINRA, Navaid Financial Services, Inc. was censured and fined $35,000 for failing to include required Non-Transaction-Based Compensation (NTBC) indicators when reporting municipal securities transactions.

The firm reported municipal securities transactions with customers to the MSRB'...

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According to FINRA, Navaid Financial Services, Inc. was censured and fined $35,000 for failing to include required Non-Transaction-Based Compensation (NTBC) indicators when reporting municipal securities transactions.

The firm reported municipal securities transactions with customers to the MSRB's Real-Time Transaction Reporting System (RTRS) that did not include a mark-up, markdown, or commission. Despite executing these transactions without compensation, the firm failed to include the required NTBC indicator on any of these reports because it was unaware of the requirement. The NTBC indicator is critical for market transparency, as it informs other market participants and regulators that no compensation was charged for the transaction.

Beyond the reporting failures, FINRA found systemic supervisory deficiencies at the firm. Navaid failed to establish and maintain written supervisory procedures reasonably designed to ensure compliance with MSRB Rule G-14, which governs municipal securities transaction reporting. The firm lacked any procedures related to the accuracy of its RTRS reporting generally, and specifically had no procedures addressing the NTBC indicator requirement. In practice, the firm did not review its RTRS reporting for accuracy with respect to the NTBC indicator.

Municipal securities reporting requirements exist to provide transparency in the municipal bond market, which helps ensure fair pricing for investors. When firms fail to report accurately, it can distort market data and potentially harm investors who rely on that information for investment decisions.

Following FINRA's findings, the firm implemented a process for reviewing RTRS reporting to ensure accuracy and proper inclusion of the NTBC indicator for applicable transactions. The firm also amended its written supervisory procedures to mandate regular review of MSRB reporting. This case illustrates the importance of firms staying informed about all reporting requirements and establishing robust supervisory systems to ensure ongoing compliance, even for technical reporting obligations that may seem minor but serve important market transparency functions.

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According to FINRA, J. Alden Associates, Inc. was censured and fined $40,000 for conducting a securities business while failing to maintain required minimum net capital during five separate periods, along with related record-keeping violations.

The firm's net capital deficiencies stemmed from two...

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According to FINRA, J. Alden Associates, Inc. was censured and fined $40,000 for conducting a securities business while failing to maintain required minimum net capital during five separate periods, along with related record-keeping violations.

The firm's net capital deficiencies stemmed from two distinct problems. First, the firm failed to compute its net capital using the accrual method of accounting as required by SEC rules. Specifically, J. Alden improperly recorded commissions receivable and payable on dates other than the closing date of transactions. This fundamental accounting error resulted in inaccurate net capital calculations. Second, the firm failed to provide its financial and operations principal (FINOP) with timely, complete, and accurate information that impacted the firm's financial position, leading to three additional periods of net capital deficiency.

Compounding these violations, the firm failed to file a timely same-day notification for a net capital deficiency it identified. As a result, FINRA and the SEC were unaware of the deficiency until it was discovered during a FINRA examination. This notification failure prevented regulators from taking appropriate action to protect investors.

The firm's improper accounting methodology also caused it to prepare and maintain inaccurate books and records. By recording transaction payables and receivables on incorrect dates, the firm's general ledger and trial balances contained inaccurate revenue, asset, and liability figures. These record-keeping errors significantly hindered regulatory monitoring of the firm's financial condition.

Net capital requirements are among the most fundamental protections in the securities industry. They ensure that broker-dealers maintain sufficient liquid assets to meet their obligations to customers and other creditors. When firms operate below minimum net capital requirements, they pose risks to customers and market integrity.

FINRA found that J. Alden failed to establish and enforce adequate written supervisory procedures for compliance with net capital and record-keeping rules. The procedures provided no guidance on when the FINOP should compute net capital beyond monthly calculations. The firm ultimately updated its accounting processes to use the proper accrual method.

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According to FINRA, Moomoo Financial Inc. (formerly Futu Inc.) was censured, fined $125,000, and required to undertake remedial measures for failing to report thousands of customer options positions to the Large Options Positions Report (LOPR) and for inadequate supervision of LOPR reporting obligat...

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According to FINRA, Moomoo Financial Inc. (formerly Futu Inc.) was censured, fined $125,000, and required to undertake remedial measures for failing to report thousands of customer options positions to the Large Options Positions Report (LOPR) and for inadequate supervision of LOPR reporting obligations.

The firm's written supervisory procedures contained significant gaps regarding LOPR reporting. The procedures did not specify how often a supervisor should assess or report options positions, nor did they provide for any supervisory review to ensure reporting accuracy and completeness. Until March 2023, Moomoo had no system or process in place to identify or report customer options positions held in omnibus accounts to the LOPR. An omnibus account is a single account that holds positions for multiple underlying customers, and proper position reporting from these accounts is essential for market surveillance.

The firm's failure to identify and report positions in omnibus accounts meant that thousands of reportable options positions went unreported to FINRA. The LOPR is a critical regulatory tool that provides FINRA with visibility into large options positions that could pose risks to market integrity or indicate potential manipulative activity. When firms fail to report these positions, it undermines regulators' ability to surveil the options markets effectively.

After implementing a tool to identify and report customer options positions from omnibus accounts, the firm experienced a separate reporting failure. Moomoo deleted expiring option positions from its LOPR reports, which was incorrect. Only after FINRA alerted the firm to this issue did it cease deleting those positions.

Even after implementing its LOPR reporting system, the firm's operating procedures remained deficient. The procedures did not indicate how often LOPR reporting steps should be taken or provide for any supervisory review of the reporting process or data accuracy.

For investors, this case highlights the importance of firms having robust systems to track and report large positions. These reporting requirements help regulators monitor for market manipulation and excessive risk-taking. The firm's remedial undertaking should help ensure proper LOPR reporting going forward.

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