Firm kicked out, person punished – Finra
Craig Michael Biddick and Mission Securities Corporation. The firm was kicked out of FINRA, and Biddick was told he couldn’t work with any other FINRA member in any way. Customers were also told that the company and Biddick had to pay them a total of $38,946.06 plus interest. After an appeal of a decision made by the Office of Hearing Officers (OHO), the National Adjudicatory Council (NAC) put the sanctions in place.
The penalties were given because the firm and Biddick were found to have misused and changed customer securities. The NAC said in its findings that the firm and Biddick transferred securities from customers’ accounts to the firm’s account without the customers’ permission or knowledge. They then sold some of the shares and used some of the money to pay for the firm’s operating costs.
The Securities and Exchange Commission (SEC) has been asked to review this decision, but the bar and expulsion are still in place until the appeal is heard.
Firms are fined and individuals are punished
Register Financial Associates, Inc. and George Robert Register submitted an Offer of Settlement in which the firm was fined $50,000 and Register was fined $15,000 and banned from working with any FINRA member as a principal or supervisor for 30 days. Without admitting or denying the accusations, the firm and Register agreed to the penalties listed and to the entry of findings that the firm let a person work as a research analyst without having the right licenses.
The firm gave a subject company a draft of a section of a research report that had a research summary, rating, and price target before it was published. The draft was not given to the firm’s legal or compliance staff. The findings also said that the firm did not monitor or limit the trading of stock picks by research analysts, who traded in violation of the limits set for analysts by NASD® Rule 2711(g) and did not keep records showing when newsletters were published before 2005.
The findings also showed that the firm’s research analysts did not disclose their financial interests in stock picks and left out important facts that made the stock pick section of research reports misleading.
FINRA found that the firm didn’t say in the stock pick sections of its research reports how the price target was set and what the risks were of getting to that price target. FINRA also found that the firm and Register lied about being in compliance with NASD Rule 2711, and that the firm did not make the certifications required by SEC Regulation AC for its stock pick sections that the opinions expressed accurately reflected the personal opinions of the research analysts.
FINRA also found that the company didn’t have a principal look over, sign, and date its published research reports before using them or sending them to FINRA’s Advertising Regulation Department, whichever came first.
FINRA also found that the firm didn’t have written supervisory procedures for research reports that were given to the public, and it didn’t pay attention to warning signs that stock pick sections could be considered research reports. FINRA also found that the firm didn’t set up, keep up, or enforce written supervisory procedures for its newsletter. This is because the firm didn’t have any written supervisory procedures for research reports that were given to the public.
Also, FINRA found that Register didn’t do his job as a supervisor well and never did anything to make sure his firm was following FINRA rules. This is because he didn’t keep an eye on the trading or ownership of stock picks by the firm’s research analysts, put no limits on whether they could trade or own securities when they were listed as stock picks, and let research analysts publish their picks.
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