The Financial Industry Regulatory Authority (FINRA) fined Oppenheimer & Co. Inc. $1.575 million and ordered the firm to pay $1.85 million to customers for failing to report required information to FINRA, failing to produce documents in discovery to customers who filed arbitrations and for not applying applicable sales charge waivers to customers, according to the action.
“It’s important for firms to ensure their supervisory programs are designed to comply with FINRA reporting requirements, and that their procedures provide adequate direction to their employees to make required filings,” Brad Bennett, FINRA’s executive vice president and chief of enforcement, said in a statement. “FINRA uses this information to identify and initiate investigations of firms and associated persons that pose a risk to investors.”
FINRA found that over a span of several years, Oppenheimer failed to timely report to FINRA more than 350 required filings including securities-related regulatory findings, disciplinary actions taken by Oppenheimer against its employees, and settlements of securities-related arbitration and litigation claims.
In addition, FINRA found that between 2010 and 2013, Oppenheimer failed to produce relevant documents during discovery to seven arbitration claimants who alleged Oppenheimer failed to supervise former registered representative Mark Hotton. As part of its action, FINRA is ordering Oppenheimer to provide the seven claimants with copies of the respective documents that were not produced, and payments totaling more than $700,000.
FINRA also found that Oppenheimer failed to reasonably supervise the application of sales charge waivers to eligible mutual fund sales. The firm relied on its financial advisors to determine the applicability of sales charge waivers, but failed to maintain adequate written policies or procedures to assist financial advisors in making this determination. As a result of FINRA’s action, Oppenheimer has paid eligible customers $1.14 million in remediation to customers who qualified for, but did not receive, applicable mutual fund sales charge waivers.
SEC Charges Renewable Energy Company, CEO and Others With Defrauding Investors
The Securities and Exchange Commission filed fraud charges against four individuals and others who allegedly profited by defrauding investors in a cash-strapped California-based renewable energy company.
Patrick Carter, the founder and CEO of 808 Renewable Energy Corp. was charged along with the company, chief operating officer Peter Kirkbride, sales representatives Martin Kinchloe and Thomas Flowers, and three other firms: 808 Investments LLC, West Coast Commodities LLC, and T.A. Flowers LLC.
According to the SEC, the fraud began in 2009 and lasted at least five years, raising more than $30 million from hundreds of investors.
Flowers and T.A. Flowers LLC offered to settle the SEC’s action without admitting or denying the allegations against them. Under the settlement, which is subject to court approval, they will agree to full injunctive relief, disgorgement plus prejudgment interest of $1.4 million, penny-stock bars, and a $160,000 penalty assessed against Flowers.
Jury’s Verdict Sides with SEC in Insider Trading Case Against Pharmaceutical Exec and Friend
A former executive at pharmaceutical company InterMune Inc and a British restaurant owner were found liable on Monday on the SEC’s charges made two years ago.
The SEC filed its complaint on Oct. 30, 2014, alleging that Sasan Sabrdaran, the former director of drug safety risk management at Brisbane, Calif.-based InterMune Inc., tipped Farhang Afsarpour with confidential details.
Afsarpour used the confidential information to illegally earn for himself and his friends over $1 million from Intermune trading “at the expense of ordinary investors who played by the rules,” according to Andrew Ceresney, director of the SEC’s Division of Enforcement.
“This jury verdict reaffirms our commitment to aggressively root out and prosecute insider trading schemes in order to protect the integrity of our markets,” Ceresney said in a statement on Monday.
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