During the past several years, many investment companies have closed branches or have closed completely. One Los Angeles-based company will feel some pain for a while over regulatory problems with its former Long Island offices.
Westpark Capital, Inc., has been ordered to pay $100,000 in fines and $300,000 in restitution to those customers impacted by several alleged failures, says the Financial Industry Regulatory Association (FINRA). The problems for Westpark derive from its Long Island operations in which it is alleged that brokers churned their customers' accounts and made both unauthorized and unsuitable trades.
The allegations include failures between 2006-2007 to: (1) establish and maintain an adequate system for supervising its brokers, including failures to monitor customer account activities despite former disciplinary records and customer complaints on suitability and authorization; (2) monitor excessive trading; and, (3) supervise managers with either little experience or prior disciplinary histories.
The firm will not only pay monetary fines, but is also dealing with suspensions of a former Chief Compliance Officer who is suspended for four months and is set to pay a $5,000 fine as well as its current Chief Operations Officer who is suspended for three months as a principal and set to pay a $20,000 fine.
Apparently, Westpark hired brokers that already had disciplinary histories themselves or had worked for broker-dealers that had such records. Some of these broker-dealers had even been expelled by the securities industry.
FINRA's Executive Vice President and Executive Director of Enforcement, James S. Shorris had some harsh words for the firm's hiring and operational practices saying that they failed to "recognize and respond adequately to both broker and customer account-related issues" which "resulted in significant customer harm."
Specific complaints and actions involving individual brokers in these cases are available for review on FINRA's website.
Related Web Resources
For more information on broker status, visit the BrokerCheck® service on the FINRA website.
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