South Florida Arbitration & Litigation Lawyer Blog
Stock Broker and Account Executive Fraud, Misrepresentation and Mismanagement FINRA Arbitration and Litigation Attorney, Russell L. Forkey, Esq.
February, 2012:
Merriman Capital, Inc. (CRD #18296, San Francisco, California) submitted a Letter of Acceptance, Waiver and Consent in which the firm was censured and fined $30,000. Without admitting or denying the findings, the firm consented to the described sanctions and to the entry of findings that it entered into an agreement with an unregistered individual to pay the individual 50 percent of gross fees it received in connection with sales of an issuer’s preferred stock. The firm paid the individual $1.5 million pursuant to the agreement, which constituted payment of a commission or fee to a non-member broker or dealer on terms and conditions the firm did not accord to the general public. The findings stated that the firm conducted deficient testing of its supervisory procedures because it did not include testing of its procedures pertaining to municipal securities, underwriting or market making, each of which constituted significant portions of the firm’s business, and did not test its procedures pertaining to changes of customer investment objectives or the supervision of producing managers. The findings also stated that with respect to each of the tests, the test identified a total failure in its procedures pertaining to branch office inspections but failed to make appropriate amendments in response to identified deficiencies in its supervisory procedures. The findings also included that the firm failed to ensure that a producing manager was appropriately supervised because it allowed its CEO’s customer account activity to be supervised by an individual who was not senior to or otherwise independent of him, and the firm never notified FINRA that it intended to rely on the Limited Size and Resources exception of NASD Rule 3012. FINRA found that the firm failed to timely update a registered representative’s Form U4 regarding an arbitration or settlement. FINRA also found that the firm received written complaints from customers and failed to timely report the customers’ complaints to FINRA. (FINRA Case #2009016162801).