Alpine Securities Corporation a securities broker dealer headquartered in Salt Lake City Utah has been charged by Financial Industry Regulatory Authority (FINRA) in a Complaint alleging that (1) Alpine charged unfair commissions and prices to customers who held investment accounts with the firm (2) Alpine misused securities and converted customers’ assets and (3) Alpine effected transactions in customer accounts without their permission. Letter of Acceptance Waiver and Consent No. 2019061232601 (July 25, 2019).
According to the Complaint, Alpine incurred serious financial problems which it aimed to address through both charging customers arbitrary and exorbitant fees and converting customers’ funds and securities. Supposedly, by August of 2018, customers were being charged $5,000.00 each month for an supposed account fee. The Complaint stated that this monthly fee was about sixty thousand percent higher than what the firm used to charged customers. Allegedly, the fees had been used by the firm as a façade which enabled the firm to convert securities held by its customers.
The Complaint stated that substantial debits had been incurred by customers as a result of the $5,000.00 monthly fee imposed by Alpine. FINRA alleged that the firm began telling customers that their securities would be transferred to the firm’s proprietary account if not liquidated so that the customers would satisfy the excessive debits. Allegedly, a total of $950,000.00 in securities held by customers had been moved by the firm to its proprietary accounts to address these debits – and that was just in June of 2019.
The Complaint stated that by 2019, the firm determined, without customers’ input, that if a customer held a securities position that did not exceed $1,500.00 in value, it was worth practically nothing. The firm supposedly instructed customers that it was entitled to buy each supposedly worthless position for one penny. Consequently, since March of 2019, about $910,000.00 in supposedly worthless securities had been relocated to the firm’s proprietary account or otherwise purchased by the firm. FINRA stated that the firm’s conduct in this regard constituted the conversion of customers’ securities for the benefit of the firm. Allegedly, millions of shares of securities were stolen by the firm.
Moreover, the Compliant stated that customers were only made aware of Alpine’s purchase of the supposedly worthless securities after the firm executed the transactions. FINRA claimed that on June 11, 2019, a letter dated May 31, 2019 was sent to customers by the firm which stated that customers’ positions containing market values of $1,500.00 or less were worthless in the company’s opinion, and therefore the positions were taken from customers’ accounts through worthless security transactions. The Complaint alleged that the customers neither knew nor authorized Alpine’s activities. Customers were allegedly withheld notice until ten days after the firm effected those unauthorized transactions.
The Complaint further stated that Alpine later determined that some of its customer accounts were somehow abandoned. Because of the firm’s conclusion of the abandonment of the customers’ accounts, the customers’ assets were relocated to the firm’s accounts. FINRA alleged that at no point were the securities actually abandoned.
Eventually, many Alpine customers attempted to contact the firm concerning the allegedly unauthorized transactions in their accounts. However, the firm was seemingly unresponsive and had closed down. Supposedly, there was no way for customers to gain access to their accounts using Alpine’s web services. Instead, customers were only able to reach out to the firm through e-mail. Even still, Alpine supposedly failed to explain what it did with customers’ securities or otherwise confirm the status of their accounts. Customers were supposedly left in the dark about the extent of the firm’s conversion and unauthorized transactions.
FINRA further alleged that Alpine has been looted since 2019. Specifically, the Complaint alleged that a total of $2,800,000.00 has been withdrawn from the firm without any authorization from FINRA; conduct violative of FINRA Rules 2010 and 4110(c). The firm purportedly claimed that these withdrawals were somehow related to its payment of debts to affiliates including Alpine Securities Holding Corporation and SCAP 9, LLC. Particularly, FINRA alleged that in March of 2019, $400,000.00 in monthly fees were paid to Alpine Securities Holding Corporation from Alpine Securities Corporation. Alpine Holding Company was reportedly paid 120% interest on the amount that Alpine Securities Corporation borrowed. These figures seemingly far exceeded the $75,000.00 a month and 36% interest payments which pertained to the same line of credit which Alpine Securities Corporation maintained with Alpine Securities Holding Corporation. Additionally, the firm reportedly withdrew funds to pay more than $600,000.00 to SCAP 9, LLC – its affiliate landlord – for supposed maintenance charges.
FINRA stated that customers of Alpine are in peril of losing all of their securities and funds held with the firm. The Complaint, which contains six causes of action, alleges that the firm’s conduct was violative of FINRA Rules 2010, 2150, 2121 and 4110(c).
