In recent enforcement actions, FINRA censured Morgan Stanley Smith Barney and fined it $1 million for failures to supervise its Former Financial Advisor Program, and censured and fined Traditional Asiel Securities on failures to close out fail-to-deliver positions.
In addition, the Secretary of the Commonwealth of Massachusetts charged a Newton couple with fraud in a real estate investment scheme.
FINRA Fines Morgan Stanley Smith Barney $1 Million
FINRA censured Morgan Stanley Smith Barney and fined it $1 million on failures to supervise its Former Financial Advisor Program.
According to the agency, the firm did not have adequate written supervisory procedures to supervise the payment of continuing commissions to retired representatives. It also failed to find extensive noncompliance with requirements to create and maintain documentation.
While the firm paid more than $100 million in commissions to retired registered representatives, because of its documentation failures, it had no way to determine whether the retired representatives were acting as unregistered brokers and whether its payments were in compliance.
The firm neither admitted nor denied the sanctions.
Couple Charged With Fraud by Massachusetts
Eileen and Lawrence Schwartz of Newton, Massachusetts, and the investment advisory firm E. S. Schwartz & Co. (ESSC) were charged by William Galvin, secretary of the commonwealth, with fraudulent activities, dishonest and unethical business practices in offering investors real estate ventures they created.
Among the ventures were three that invested in Miami condominiums, bringing in $695,000 from ESSC clients. The Schwartzes, who had no experience in Miami real estate investing, chose not to let clients know that.