Daryl Eugene Allison, of Lubbock, Texas, a stockbroker and former president of Caprock Securities, Inc., has been fined $10,000.00 and fined from associating with any Financial Industry Regulatory Authority (FINRA) member in any principal capacity based upon consenting to findings that, inter alia, Allison failed to supervise registered representatives’ closed end fund sales to customers. Letter of Acceptance, Waiver and Consent, No. 2014039096601 (Dec. 19, 2016).
According to the AWC, between November of 2012 and July of 2014, two of the firm’s registered representatives’ closed end funds offers and sales had not been supervised by Allison. Apparently, the offers and sales, which were made to nine Caprock customers, were rife with red flags which Allison ignored or did not identify. The red flags suggested that the closed end fund transactions may not have been suitable for customers that the representatives sold the products to.
The AWC further indicated that Caprock had written supervisory procedures which called for exception reports to be reviewed, as the reports were capable of identifying problematic trading taking place in the accounts of customers. Notwithstanding, Allison reportedly failed to enforce the policies. Accordingly, FINRA found that Allison’s conduct was violative of FINRA Rule 2010 and NASD Rule 3010(a) and (b).
Allison has been censured and fined by regulators on four prior occasions. Particularly, Allison received a censure and $3,000.00 fine according to an Offer of Settlement accepted by FINRA containing findings that Allison did not provide customers a repayment based upon a securities offering which did not meet a required contingency amount. No. TEX-589 (June 9, 1988). Allison was found by FINRA to have violated Securities Exchange Act of 1934 Section 10(b) and 15(c), as well as SEC Rules 15c2-4 and 10b-9.
Subsequently, Allison received a censure and $7,500.00 fine by FINRA based upon consenting to findings that he did not enforce written supervisory procedures of a FINRA member firm. Letter of Acceptance, Waiver and Consent, No. C06970013 (July 8, 1997). Further, Allison’s securities registration was suspended by Texas State Securities Board for not properly maintaining account statements of customers, and for allowing an unregistered representative to make securities offers and sales. Case No. IC09-SUS-23 (Oct. 8, 2009).
Finally, Allison was fined $6,000.00 and received a suspension of his principal capacities by FINRA based upon consenting to findings that he did not adequately supervise the activities of two of the registered representatives of his firm. Letter of Acceptance, Waiver and Consent, No. 2009017068502 (Nov. 7, 2011). Allison was found by FINRA to have violated NASD Rules 3010 and 2110.
FINRA Public Disclosure reveals that on April 16, 1990, a customer initiated investment related arbitration claim involving Allison’s conduct was settled for $14,000.00 in damages based upon allegations that Allison engaged in deceptive trade practices, breached his fiduciary duty to the customer, and negligently handled the customer’s account.
Additionally, on May 3, 1999, a customer was awarded $10,212.50 in damages according to an investment related arbitration claim concerning Allison’s conduct, based upon allegations that Allison breached his fiduciary duty to the customer, conducted business in a manipulative and negligent manner, and made misrepresentations to the customer concerning a Sovereign Credit Corporation promissory note.
Allison’s registration with Caprock Securities, Inc. ended on November 10, 2015. Since Mary 12, 2015, he had been registered with Lowell & Company, Inc.
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