EFG Capital International Corp. (CRD #40118, Miami, Florida)

Recently, the Financial Industry Regulatory Authority announced that EFG Capital International Corp. entered into an Acceptance, Waiver and Consent in which the firm was censured, fined $800,000 and required to adopt and implement supervisory systems and written procedures reasonably designed to achieve compliance with the requirements of FINRA Rule 3110. Without admitting or denying the findings, the firm consented to the sanctions and to the entry of findings that it failed to establish and implement an adequate supervisory system, including WSPs, or anti-money laundering (AML) program related to two material areas of its international business model. The findings stated that the firm did not adequately assess, supervise or mitigate the business risks associated with its payment of transaction-based compensation to non-registered individuals or entities, and potentially suspicious outgoing wire transfer activity occurring in accounts of dual customers of the firm and its Swiss bank affiliate. The findings also stated that as part of its international business model, the firm entered into transaction referral agreements under which a foreign individual or entity, called a “foreign introducer,” referred specific transactions to the firm in exchange for a percentage of the firm’s mark-up or commission on the referred transactions. However, the firm’s supervisory system was unreasonable because it failed to assess whether it had sufficient information about the foreign introducer, or its ability to legally satisfy its obligations under an agreement, to conclude that the firm’s payment of transaction-based compensation to the foreign introducer was permissible under U.S. law.

In addition, the firm failed to follow its own WSPs regarding the referral agreement. Importantly, the firm failed to identify several red flags related to the ownership of the foreign introducer and failed to follow-up on red flags regarding the unexpectedly large number and size of the referred transactions. The findings also included that the firm’s AML system and procedures did not identify whether the foreign introducers with which it did business were high-risk entities or engaged in high-risk activities and did not adequately review the foreign introducer’s referred transactions or wire transactions for red flags and patterns of suspicious activity. Separately, many of the firm’s high net worth customers were dual customers of the firm and its Swiss bank affiliate, where all of these customers’ money movement activity occurred and the activity was subjected to automated monitoring for Swiss AML purposes. The firm typically had operational involvement in outgoing money movements entered into by these customers and reviewed such transactions at the time they were made for potential AML red flags. However, the firm’s overall AML program was insufficient to identify and investigate potentially suspicious patterns of outgoing wire transfer activity in the Swiss bank accounts of the firm’s dual customers that should have raised AML red flags requiring further investigation by it and potentially the filing of suspicious activity reports. (FINRA Case #2015046020002).

Contact Us:

With extensive courtroom, arbitration and mediation experience and an in-depth understanding of elder abuse, exploitation and securities law, our firm provides all of our clients with the personal service they deserve. Handling cases worth $25,000 or more, we represent clients throughout Florida and across the United States, as well as for foreign individuals that invested in U.S. banks or brokerage firms. Contact us to arrange your free initial consultation.

At the Boca Raton Law Office of Russell L. Forkey, we represent clients throughout South and Central Florida, including Fort Lauderdale, West Palm Beach, Boca Raton, Sunrise, Plantation, Coral Springs, Deerfield Beach, Pompano Beach, Delray, Boynton Beach, Hollywood, Lake Worth, Royal Palm Beach, Manalapan, Jupiter, Gulf Stream, Wellington, Fort Pierce, Stuart, Palm City, Jupiter, Miami, Orlando, Maitland, Winter Park, Altamonte Springs, Lake Mary, Heathrow, Melbourne, Palm Bay, Cocoa Beach, Vero Beach, Daytona Beach, Deland, New Smyrna Beach, Ormand Beach, Broward County, Palm Beach County, Dade County, Orange County, Seminole County, Martin County, Brevard County, Indian River County, Volusia County and Monroe County, Florida. The law office of Russell L. Forkey also represents South American, Canadian and other foreign residents that do business with U.S. financial institutions, investment advisors, brokerage and precious metal firms.

The monthly disciplinary information is referenced on the FINRA site generally in alphabetical order. This post relates to the following company or individuals. If the reader would like to review the entire FINRA release or the broker-check information concerning this matter, you can follow these highlighted links:

July 2014 Disciplinary and Other FINRA Actions

Broker Check: http://www.finra.org/Investors/ToolsCalculators/BrokerCheck/

Capital Path Securities, LLC and William John Davis submitted an Offer of Settlement in which the firm was censured and fined $175,000 of which $25,000 is joint and several with Davis. Davis was suspended from association with any FINRA member in any principal capacity for three months. Without admitting or denying the allegations, the firm and Davis consented to the sanctions and to the entry of findings that it, acting through Davis, its AML compliance officer and president, demonstrated an ongoing pattern of noncompliance with AML rules. The findings stated that the firm and Davis failed to enforce its written AML program to ensure compliance with the Bank Secrecy Act. Davis failed to identify multiple transactions in customer accounts, which triggered many of the “red flags” identified in the firm’s AML procedures. Among other things, these customers maintained multiple accounts, had securities-related disciplinary histories, engaged in suspicious penny stock trades and conducted qustionable third-party wire activity. To see a full copy of the release relative to this matter, please follow the above highlighted link. FINRA Case No. 2011025869201.

Contact Us:

With extensive courtroom, arbitration and mediation experience and an in-depth understanding of elder abuse, exploitation and securities law, our firm provides all of our clients with the personal service they deserve. Handling cases worth $25,000 or more, we represent clients throughout Florida and across the United States, as well as for foreign individuals that invested in U.S. banks or brokerage firms. Contact us to arrange your free initial consultation.

At the Fort Lauderdale Law Office of Russell L. Forkey, we represent clients throughout South and Central Florida, including Fort Lauderdale, West Palm Beach, Boca Raton, Sunrise, Plantation, Coral Springs, Deerfield Beach, Pompano Beach, Delray, Boynton Beach, Hollywood, Lake Worth, Royal Palm Beach, Manalapan, Jupiter, Gulf Stream, Wellington, Fort Pierce, Stuart, Palm City, Jupiter, Miami, Orlando, Maitland, Winter Park, Altamonte Springs, Lake Mary, Heathrow, Melbourne, Palm Bay, Cocoa Beach, Vero Beach, Daytona Beach, Deland, New Smyrna Beach, Ormand Beach, Broward County, Palm Beach County, Dade County, Orange County, Seminole County, Martin County, Brevard County, Indian River County, Volusia County and Monroe County, Florida. The law office of Russell L. Forkey also represents South American, Canadian and other foreign residents that do business with U.S. financial institutions, investment advisors, brokerage and precious metal firms.