The Financial Industry Regulatory Authority (FINRA) started disciplinary proceedings against Arizona-based First Financial Equity Corp. (FFEC) and its chief compliance officer, for failed broker supervision. In its proceedings FINRA stated that the brokerage firm had supervisory deficiencies for more than three years, including failure to monitor a representative who was suspected of charging excessive commissions.
FFEC is accused of failing to establish an adequate supervisory system, failing to establish written procedures, and failing to follow existing procedures already in place between 2010 and 2013.
One FFEC representative allegedly charged a couple nearly $68,000 in commission – had he charged the standard $35 per transaction, the total would have amounted to only $5,900. Instead, FFEC and its COO, Melissa Strouse, did not require approval for discretionary transactions or conduct monthly reviews to identify possible churning or other inappropriate behavior.
FFEC also is accused of misrepresenting its supervisory system to FINRA. Each year, brokerage firms are required to report that their supervisory procedures manuals are up to date and indicate how activities are supervised. In 2010 and 2011, FINRA stated that FFEC submitted inadequate certifications in 2010 and 2011, and failed to submit anything for 2012 and 2013.
The company is also charged with miscalculating the threshold under which some producing managers are to be held to a higher standard of supervision.
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If you invested with First Financial Equity Corporation, you may have certain legal rights that require your immediate attention.
Contact an experienced Los Angeles securities fraud attorney today for a consultation to discuss your rights and options.