Bad Brokers

According to FINRA, Amy Leanne Marx has been suspended from association with any FINRA member firm for failure to comply with an arbitration award pursuant to FINRA Rule Series 9554.

The suspension began on February 3, 2025. The underlying arbitration case was FINRA Arbitration Case #24-01739. Th...

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According to FINRA, Amy Leanne Marx has been suspended from association with any FINRA member firm for failure to comply with an arbitration award pursuant to FINRA Rule Series 9554.

The suspension began on February 3, 2025. The underlying arbitration case was FINRA Arbitration Case #24-01739. The suspension will continue until the award is satisfied or an agreement is reached with the claimant.

FINRA Rule 9554 suspensions are an important enforcement mechanism that gives practical effect to arbitration awards. Without consequences for non-payment, the arbitration process would be significantly weakened as a remedy for harmed investors.

What Investors Can Learn: Investors who prevail in arbitration should promptly report non-payment to FINRA to initiate the Rule 9554 process. The suspension mechanism creates professional consequences that often motivate payment. However, investors should maintain realistic expectations about collection timelines and consider consulting with an attorney about additional remedies.

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According to FINRA, Daniella R. Rand has been suspended from association with any FINRA member firm for failure to comply with an arbitration award pursuant to FINRA Rule Series 9554.

The suspension began on February 5, 2025. The underlying arbitration case was FINRA Arbitration Case #22-01664. U...

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According to FINRA, Daniella R. Rand has been suspended from association with any FINRA member firm for failure to comply with an arbitration award pursuant to FINRA Rule Series 9554.

The suspension began on February 5, 2025. The underlying arbitration case was FINRA Arbitration Case #22-01664. Until the individual pays the award or reaches an agreement with the claimant, the suspension prevents any association with FINRA member firms.

The case number indicates the arbitration was filed in 2022 and an award has been issued but not paid. This timeline illustrates that the path from arbitration filing to award enforcement can span multiple years.

What Investors Can Learn: Investors considering filing an arbitration claim should understand the typical timeline. Cases can take a year or more to reach a hearing and decision, and collection of awards may take additional time. Despite these challenges, arbitration remains an important remedy for investors who have been harmed by broker misconduct.

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According to FINRA, Ruben Trujillo has been suspended from association with any FINRA member firm for failure to comply with an arbitration award pursuant to FINRA Rule Series 9554.

The suspension began on February 7, 2025. The underlying arbitration case was FINRA Arbitration Case #24-01938. The...

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According to FINRA, Ruben Trujillo has been suspended from association with any FINRA member firm for failure to comply with an arbitration award pursuant to FINRA Rule Series 9554.

The suspension began on February 7, 2025. The underlying arbitration case was FINRA Arbitration Case #24-01938. The suspension will remain in effect until the individual satisfies the arbitration award or reaches an agreement with the claimant.

Compliance with arbitration awards is essential for maintaining investor confidence in the dispute resolution process. When brokers fail to pay, it not only harms the specific investor who won the award but also undermines the broader system of investor protection.

What Investors Can Learn: FINRA arbitration provides investors with a forum to pursue claims against brokers and firms for various types of misconduct, including unsuitable recommendations, unauthorized trading, churning, and fraud. While collecting awards can sometimes be challenging, the Rule 9554 process helps by preventing non-paying brokers from continuing to work in the industry.

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According to FINRA, Apex Clearing Corporation has been fined $3.2 million for violations related to its fully paid securities lending program. This is the first time FINRA has charged a firm with violating FINRA Rule 4330, which establishes permissible use of customers' securities to ensure customer...

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According to FINRA, Apex Clearing Corporation has been fined $3.2 million for violations related to its fully paid securities lending program. This is the first time FINRA has charged a firm with violating FINRA Rule 4330, which establishes permissible use of customers' securities to ensure customer protection.

Apex operated a fully paid securities lending program for introducing firms, which in turn offered their customers the opportunity to participate. From January 2019 through June 2023, Apex entered into securities loans with introduced customers without having reasonable grounds to believe that the loans were appropriate for those customers—because those customers did not receive any loan fee for lending their shares.

In fully paid securities lending, a broker-dealer borrows a customer's securities and typically lends them to a third party in exchange for a daily borrowing fee, which is shared among the clearing firm, the introducing firm, and the customer. However, in this case, customers were exposed to significant risks—including potentially higher taxation, loss of SIPC protection during loans, and loss of voting rights—without receiving any compensation.

The firm also distributed documents to introducing broker-dealers that were sent to over 5 million retail investors containing misrepresentations about compensation investors would receive. Four introducing firms enrolled approximately 5 million investors, with approximately 17 percent having securities borrowed by Apex.

FINRA previously ordered four introducing firms whose customers participated in Apex's program to pay a combined $2.6 million, including over $1 million in restitution to harmed customers.

What Investors Can Learn: Before enrolling in any securities lending program, carefully review the terms to understand what compensation you will receive and what risks you are assuming. If a program exposes you to risks without providing corresponding benefits, it may not be appropriate for you.

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According to FINRA, Southeast Investments, N.C., Inc. and its associated person Frank Harmon Black were fined a total of $73,500, payable jointly and severally, for significant supervisory failures related to business communications.

The case centers on the firm's failure to establish and maintai...

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According to FINRA, Southeast Investments, N.C., Inc. and its associated person Frank Harmon Black were fined a total of $73,500, payable jointly and severally, for significant supervisory failures related to business communications.

The case centers on the firm's failure to establish and maintain a reasonable supervisory system. Specifically, FINRA found that Black and the firm failed to establish, maintain, and enforce reasonably designed written supervisory procedures (WSPs) to ensure the retention of business-related emails. Additionally, they failed to preserve business-related emails as required by securities regulations.

This matter has a complex procedural history. In December 2023, the Securities and Exchange Commission (SEC) affirmed FINRA's findings regarding the supervisory failures. However, the SEC set aside FINRA's findings that the respondents had testified falsely during an on-the-record interview about branch office inspections and produced fabricated documents. Those matters were remanded to FINRA, and on June 25, 2025, the National Adjudicatory Council (NAC) dismissed those remanded causes of action.

It's important to note that Black and the firm have appealed the SEC's decision to the U.S. Court of Appeals for the Fourth Circuit, and the sanctions are not currently in effect pending that review.

For investors, this case highlights the critical importance of proper recordkeeping in the securities industry. Broker-dealers are required to maintain comprehensive records of their business communications, including emails. These requirements exist to protect investors by ensuring that regulators can effectively examine firm activities and that customers have access to documentation if disputes arise.

When evaluating a broker or firm, investors should consider whether the firm has a history of recordkeeping violations, as such failures can indicate broader compliance issues. Proper supervision and documentation are fundamental to investor protection in the securities industry.

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According to FINRA, Silver Oak Securities, Incorporated was censured and fined $65,000 for failing to maintain a reasonably designed supervisory system for consolidated reports provided to customers.

The findings revealed that two of the firm's registered representatives manually created and dist...

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According to FINRA, Silver Oak Securities, Incorporated was censured and fined $65,000 for failing to maintain a reasonably designed supervisory system for consolidated reports provided to customers.

The findings revealed that two of the firm's registered representatives manually created and distributed at least 117 consolidated reports to customers. However, the firm failed to maintain copies of 91 of these reports. Even more concerning, the firm could not determine how many consolidated reports its registered representatives had provided to customers overall.

FINRA found that the firm did not conduct any supervisory review of consolidated reports until after FINRA announced its intention to conduct a firm examination. This reactive approach to compliance, rather than proactive supervision, represents a significant failure in the firm's obligations to its customers.

Consolidated reports are important documents that provide customers with a comprehensive view of their investment holdings, often across multiple accounts or custodians. Because these reports can influence investment decisions, it is essential that they be accurate and that firms maintain proper oversight of their creation and distribution.

The lack of proper supervision creates risks for investors. Without adequate review, consolidated reports could contain errors or misleading information that might lead customers to make uninformed investment decisions. The firm's inability to even track how many reports were distributed demonstrates a fundamental breakdown in its compliance infrastructure.

Following the FINRA action, the firm revised its written supervisory procedures to address these deficiencies. For investors, this case serves as a reminder to carefully review any consolidated reports they receive and to ask questions if the information appears inconsistent with their understanding of their holdings.

Investors should be aware that while consolidated reports can be helpful planning tools, they require proper oversight by the firms that produce them. When selecting a financial advisor or firm, it may be worth inquiring about their procedures for creating and reviewing such reports.

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According to FINRA, Network 1 Financial Securities Inc. was censured, fined $50,000, and required to comply with certain undertakings for failing to reasonably supervise a sales representative's activity relating to a private placement offering.

The findings revealed that the firm allowed its rep...

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According to FINRA, Network 1 Financial Securities Inc. was censured, fined $50,000, and required to comply with certain undertakings for failing to reasonably supervise a sales representative's activity relating to a private placement offering.

The findings revealed that the firm allowed its representative to send correspondence and institutional communications to investors regarding a company, even though the firm had unresolved concerns about one of the company's assets. These concerns ultimately led the firm to decline further participation in the offering, yet communications continued to go out to investors.

More troubling, FINRA found that the firm distributed correspondence and institutional communications containing erroneous and misleading information. The materials claimed that the private placement was "contractually collateralized by debt-free blue-chip artwork" and included exaggerated statements about the company's intended business. The advertising summary and accompanying slide deck also failed to disclose key risks of the offering, including the issuer's limited operating history and the novel nature of its proposed exchange.

Private placements are securities offerings that are exempt from SEC registration and are typically available only to accredited investors. Because these investments are not subject to the same disclosure requirements as publicly traded securities, investors rely heavily on the accuracy of the information provided by broker-dealers.

This case illustrates the dangers of inadequate supervision in private placement sales. When firms fail to properly review communications about complex investment products, investors may receive incomplete or misleading information that could significantly impact their investment decisions.

For investors considering private placements, this case underscores the importance of conducting thorough due diligence. Investors should carefully review all offering documents, ask questions about risks that may not be prominently disclosed, and be skeptical of claims that seem too good to be true. The promise of "debt-free blue-chip artwork" as collateral, for instance, should prompt careful investigation into the actual nature and value of such assets.

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According to FINRA, XP Investments US, LLC was censured and fined $185,000 for overstating its advertised trade volume on Bloomberg's market data platform in approximately 3,300 instances by approximately 446 million shares.

The issue arose from how the firm configured its order management system...

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According to FINRA, XP Investments US, LLC was censured and fined $185,000 for overstating its advertised trade volume on Bloomberg's market data platform in approximately 3,300 instances by approximately 446 million shares.

The issue arose from how the firm configured its order management system (OMS). The firm set up its OMS to automatically advertise trading volume through Bloomberg, including volume from orders entered through a third-party trading platform. However, when a trader manually changed an order previously entered through that third-party platform, the OMS advertised the trading volume for both the original order and the modified order, effectively double-counting the volume.

FINRA also found that the firm failed to establish and maintain a supervisory system, including written supervisory procedures, reasonably designed to achieve compliance with FINRA Rule 5210, which governs the publication of transactions and quotations. The firm had no supervisory system for reviewing the accuracy of its trade volume advertisements on Bloomberg and performed no such reviews.

Accurate reporting of trade volume is essential for market integrity. Investors and other market participants rely on volume data to make informed trading decisions, assess market liquidity, and evaluate securities. When firms overstate their trading volume, it can create a misleading picture of market activity and potentially influence other participants' behavior.

The firm eventually remediated the issue when it replaced its OMS and subsequently implemented a supervisory review process to assess the accuracy of its trade volume advertisements. The firm also updated its written supervisory procedures to include a description of these reviews.

For investors, this case highlights the importance of accurate market data and the need for firms to have robust systems in place to ensure compliance with reporting requirements. While individual investors may not directly monitor advertised trade volumes, the integrity of market data affects overall market quality and investor confidence.

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According to FINRA, SG Americas Securities, LLC was censured and fined $275,000 for multiple failures in reporting transactions to FINRA's Trade Reporting and Compliance Engine (TRACE).

The firm's violations were extensive. First, it inaccurately reported transactions in TRACE-eligible securities...

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According to FINRA, SG Americas Securities, LLC was censured and fined $275,000 for multiple failures in reporting transactions to FINRA's Trade Reporting and Compliance Engine (TRACE).

The firm's violations were extensive. First, it inaccurately reported transactions in TRACE-eligible securities without the required "No Remuneration" (NR) indicator. In multi-leg transactions where the firm executed offsetting transactions with a customer and a non-member affiliate at the same price without receiving remuneration, the firm was required to include the NR indicator but failed to do so due to a coding error during a system change.

Second, the firm failed to include the required Non-Member Affiliate Principal Transaction (NMAPT) indicator and inaccurately reported its capacity in certain trades. When both the firm and a non-member affiliate acted in a principal capacity in same-day transactions at the same price in the same security, the NMAPT indicator was required but not included. The firm also incorrectly reported acting in an agency capacity when it actually acted as principal.

Third, the firm failed to correctly identify covered depository institution contra-parties by their Market Participant Identifier (MPID) in multi-leg transactions involving a non-member affiliate that was a covered depository institution.

FINRA found that the firm failed to establish, maintain, and enforce a supervisory system and written supervisory procedures reasonably designed to achieve compliance with TRACE reporting obligations. The firm had no supervisory system to review reporting accuracy regarding NR and NMAPT indicators, executing capacity, or contra-parties. The firm's procedures also failed to address supervision of TRACE reporting.

TRACE reporting provides transparency in the fixed income markets and helps ensure fair pricing for investors. When firms fail to report accurately, it undermines the integrity of market data that investors and regulators rely upon. The firm subsequently remediated its systems and revised its supervisory procedures.

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According to FINRA, Drivewealth, LLC was censured and fined $100,000 for failing to take timely action on 1,206 customer requests to transfer securities positions and money balances to another broker-dealer.

The issue stemmed from the firm's omnibus clearing arrangement. Drivewealth had an agreem...

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According to FINRA, Drivewealth, LLC was censured and fined $100,000 for failing to take timely action on 1,206 customer requests to transfer securities positions and money balances to another broker-dealer.

The issue stemmed from the firm's omnibus clearing arrangement. Drivewealth had an agreement with a clearing firm to handle customer account transfers through the Automated Customer Account Transfer Service (ACATS) because Drivewealth itself was not eligible to process such transfers directly. Under this arrangement, the clearing firm did not know the identity of individual customers or the specific positions and balances in their accounts.

The firm and its clearing partner established a process with specific deadlines for Drivewealth to provide the necessary customer information for transfer requests. However, Drivewealth failed to expedite outgoing full transfer requests in accordance with these procedures. This failure caused the ACATS system to purge those transfer requests, leaving customers unable to move their accounts as requested.

The right to transfer assets between broker-dealers is a fundamental investor protection. When customers decide to move their accounts, whether due to better services, lower fees, or any other reason, they have a right to expect that transfer to be processed promptly. Delays in account transfers can prevent investors from taking advantage of market opportunities or consolidating their holdings as they see fit.

FINRA rules require member firms to expedite customer account transfers within established timeframes. These requirements exist specifically to prevent the kind of delays that occurred in this case, which can harm customers and undermine confidence in the securities industry.

Ultimately, Drivewealth terminated its agreement with the clearing firm and began timely processing its own ACATS requests. For investors, this case serves as a reminder that they have rights regarding account transfers and should follow up if transfers are not completed within expected timeframes.

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