According to FINRA, BrokerBank Securities, Inc. and Philip Paul Wright were named respondents in a complaint alleging that the firm, acting through Wright, permitted an unregistered individual to engage in securities business through the firm by participating in the sale of bonds and preferred shares of a single issuer to the firm's retail customers.
The complaint alleges that the unregistered individual engaged in securities business by and through the firm while he was not registered with FINRA in any capacity, and he was permitted to do so by the firm and Wright. The complaint also alleges that the firm and Wright permitted the unregistered individual to associate with the firm while he was statutorily disqualified. Statutory disqualification typically results from serious misconduct such as criminal convictions, regulatory bars, or findings of fraud, and disqualified individuals are prohibited from associating with FINRA member firms without special approval.
The complaint further alleges that the firm, acting through Wright, paid the unregistered individual compensation totaling more than $100,000 derived from commissions generated by his customers' purchases of securities through the firm while he was not registered with FINRA. Additionally, the complaint alleges that Wright, as the firm's custodian of records, failed to provide information and documents requested by FINRA in connection with its investigation of all sales of the securities through the firm, including those purchased by the unregistered individual's customers.
Investors should understand that allowing unregistered individuals to conduct securities business circumvents fundamental investor protections including registration examinations, background checks, and supervision requirements. The allegations are particularly serious because they involve an individual who was statutorily disqualified, meaning he had a regulatory history that would have prevented him from working in the industry. The firm allegedly paid this individual over $100,000 in commissions while he was conducting unregistered securities business.
