Dakota Securities International Inc. has been expelled from Financial Industry Regulatory Authority (FINRA) membership according to an Office of Hearing Officers Hearing Panel Decision containing findings that the firm failed to supervise its vice president Bruce M. Zipper and enabled Zipper to associate with the firm despite FINRA having disqualified him. Department of Enforcement v. Dakota Securities International Inc. Disciplinary Proceeding No. 2016047565702 (June 18, 2018).
According to the Hearing Panel Decision, Zipper associated with the firm during a period that FINRA suspended him from associating with any FINRA member in any capacity. Zipper’s conduct was found by FINRA to be violative of FINRA Rule 2010 as well as Section 3(b) of Article III of FINRA’s By-Laws.
The Decision stated that the firm’s allowance of Zipper to associate with the firm was violative of FINRA Rules 2010 and 8311. Apparently, the firm was cognizant that Zipper persisted in associating with the firm during his suspension. Particularly, Zipper engaged in business affairs on the firm’s behalf, instructed vendors of the firm to perform services, and even executed trades in a customer’s account. The Decision revealed that the firm failed to address the situation and stop Zipper’s misconduct.
FINRA’s Hearing Panel also determined that Zipper misstated the broker responsible for effecting at least six hundred eighty trades in a customer’s account. The firm and Zipper were found to have deliberately falsified those records; conduct violative of FINRA Rules 2010 and 4511.
The Decision then noted that the firm did not create and implement a reasonable supervisory protocol for ensuring Zipper had not associated with Dakota during the period that he was suspended. The firm reportedly admitted that it failed to pick up on red flags concerning Zipper’s misconduct; neglected to review Zipper’s correspondence during Zipper’s suspension; and failed to reasonably supervise the establishment of the firm’s records and book concerning broker identification on trades placed in customer accounts. FINRA’s Hearing Panel determined that the firm’s conduct was violative of FINRA Rules 2010 and 3110 in this respect.
FINRA Public Disclosure additionally reveals that a customer initiated investment related arbitration claim concerning Zipper’s conduct was settled for $50,000.00 in damages supported by accusations that stock trades were executed in the customer’s account that were not suitable for the customer. FINRA Arbitration No. 14-03006 (Feb. 24, 2015).
Zipper’s registration with Dakota Securities International Inc. was terminated on October 2, 2017. In addition to expelling Dakota Securities, FINRA barred Zipper from associating with any FINRA member in any capacity.
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