Sign of the Financial Industry Regulatory Authority

Andes Capital Group LLC a securities broker dealer headquartered in Chicago Illinois has been censured and fined $15,000.00 by Financial Industry Regulatory Authority (FINRA) supported by findings that Andes Capital Group failed to supervise its stockbroker’s private securities transactions. Letter of Acceptance Waiver and Consent No. 2019064979901 (Aug. 25, 2021).

According to the AWC, in August of 2018, Andes Capital Group was made aware from one of its stockbrokers that he would be making an investment through a special purpose vehicle. When he made this disclosure to the securities broker dealer, he called it a passive investment. Andes Capital Group then learned from the stockbroker that he would be pooling investments not just for himself but also for his friends and others.

There was no point that the stockbroker asked to discuss with Andes Capital Group what those investments consisted of. Andes Capital Group just approved the activity and did not take any steps to supervise the stockbroker’s activities. The securities broker dealer also did not make mention of this activity on the stockbroker’s Form U4.

The regulator indicated that a limited liability company had been created by the stockbroker in reference to the outside investments. The stockbroker controlled the company as general partner and managed this LLC. The interests of that LLC were sold to investors for a total of $1,495,438.00.

FINRA noted that there were written supervisory procedures that Andes Capital Group maintained which called for its review of private securities transactions and its recording and supervision of those transactions. The stockbroker was engaging in a special purpose vehicle involving the investments of himself and others. Procedures were not enforced by Andes Capital Group to assess whether the stockbroker was selling away. The securities broker dealer violated FINRA Rules 2010, 3110 and 3280(c).