According to FINRA, Tor Brokerage LLC was censured and fined $10,000 for failing to supervise and record approximately $4 million in private securities transactions on its books and records.

The firm was found in violation of its supervisory and recordkeeping obligations regarding private securities transactions. Two registered representatives associated with Tor Brokerage participated in the sale of membership interests in a limited liability company that was a part owner of the firm. The representatives also held membership interests in and were executives of the company. The representatives disclosed their employment with the company upon associating with the firm and received compensation of $5,000 per month plus a portion of any profits distributed.

The firm was aware of its representatives' participation in the private securities transactions, that they were receiving compensation from the company, and that they owned membership interests in the company. However, the firm erroneously concluded that the representatives were not receiving "selling compensation" in connection with the private securities transactions. Based on this flawed analysis, the firm did not supervise the transactions or record them on its books and records, and failed to reasonably enforce its own written supervisory procedures.

Private securities transactions, sometimes called "selling away," occur when registered representatives participate in securities transactions outside their firm's regular business. FINRA rules require representatives to provide prior written notice to their firm before participating in any private securities transaction, and if selling compensation will be received, the firm must approve the participation and supervise the transaction. The firm must also record approved transactions on its books and records. A lower fine was imposed after considering the firm's revenue and financial resources. Investors should be cautious about investments offered by their financial advisor outside of their firm, as these may lack proper supervision and investor protections. Always verify that your advisor's firm has approved and is supervising any outside investment opportunities.