According to FINRA, BrokerBank Securities, Inc. was expelled from FINRA membership and Philip Paul Wright was barred from association with any FINRA member in all capacities on August 18, 2023.

FINRA found that the firm and Wright, acting as the firm's majority owner, CEO, Chief Compliance Officer, and Financial and Operational Principal, contracted with an unregistered person to introduce his former customers to the firm. In exchange, they agreed to pay this unregistered person 90 percent of all commissions generated from those customers' transactions for two years, and 30 percent for the following two years. Because the unregistered person had a prior disciplinary history, Wright determined the firm would not sponsor his registration with FINRA.

The unregistered person introduced customers to the firm who made securities purchases totaling more than $1.8 million. Wright identified himself as the registered representative for these customers' accounts, but had no actual role in completing subscription agreements or opening accounts. Instead, Wright sent required documents to the unregistered person, who communicated with customers and coordinated execution of the documents.

The situation worsened when the unregistered person became statutorily disqualified from conducting any securities business by virtue of a FINRA suspension. Despite being aware of this regulatory action, the firm and Wright did not submit a required Membership Continuance Application and permitted him to continue engaging in securities business. The firm paid $101,598 to the unregistered person in compensation, including $19,125 while he was statutorily disqualified and suspended.

Additionally, Wright failed to respond to FINRA's requests for information and documents related to the quantity and suitability of securities purchased by firm customers, compensation paid to individuals, supervision of suitability of investments, due diligence conducted, and whether the firm's written supervisory procedures were reasonably designed to comply with FINRA rules.

Investors should understand that firms must ensure all persons conducting securities business are properly registered and qualified. Allowing unregistered or disqualified individuals to conduct securities activities undermines regulatory protections designed to protect investors. The failure to respond to regulatory requests further demonstrates a lack of commitment to regulatory compliance and investor protection.