E.J. Sterling LLC (now known as Allied Millennial Partners LLC) a brokerage firm headquartered in New York New York has been censured by FINRA based upon the firm’s consent to findings that the firm failed to adequately supervise its business to detect and stop unsuitable trades from being executed in customers’ investment accounts. Letter of Acceptance Waiver and Consent No. 2015043310801 (Apr. 27, 2018).
According to the AWC, the firm was subject of a FINRA examination in reference to the firm’s trading activity between January of 2014 and July of 2016. Apparently, FINRA discovered that excessive trading occurred in thirty-three of the customers’ accounts, where cost-to-equity ratios in those accounts ranged from twenty percent to one hundred fifty-four percent and turnover rates ranged between twenty and one hundred forty.
The firm’s Chief Compliance Officer, SC, reportedly utilized exception reports to determine when trading appeared to be excessive in customer accounts. The AWC stated that in situations where SC would detect excessive trading, he would occasionally send activity letters to customers so that customers could confirm that they understood and consented to the amount of trading in their accounts. Apparently; however, SC failed to inform FINRA about the criteria he utilized to determine when to send those activities letters.
The AWC stated that SC’s activity letters revealed that the customer’s response was required within thirty days, otherwise the customer’s account transactions could be limited to liquidations. Apparently, a sample of forty-one accounts had been reviewed by FINRA staff where activity letters were disseminated to customers; however, approximately half of the customers who failed to respond by the thirty-day deadline did not receive any restrictions on the trading in their accounts.
FINRA concluded that the firm’s supervisory failures caused the firm not to identify the excessive trading in customer accounts. Consequently, FINRA found the firm’s conduct violative of FINRA Rules 2010 and 3110 as well as National Association of Securities Dealers (NASD) Rule 3010.
The information contained herein has been obtained from reliable sources however may not be accurate and is not guaranteed by us. Readers are encouraged to undertake their own independent investigation and evaluation of the relevant facts. All claims and allegations are subject to adjudication, decisions may be subject to appeal, and no inference is intended, nor should any inference be made from any information contained herein from any source.
This posting and the information on our website is for general information purposes only. This content should be not considered legal advice, and any responses, comments, e-mails, other communications do not form any attorney client relationship. Attorney Advertisement. See Important Disclaimer
Guiliano Law Group
Our practice is limited to the representation of investors. We accept representation on a contingent fee basis, meaning there is no cost to you unless we make a recovery for you. There is never any charge for a consultation or an evaluation of your claim. For more information, contact us at (877) SEC-ATTY.
For more information concerning common claims against stockbrokers and investment professionals, please visit us at securitiesarbitrations.com
To learn more about FINRA Securities Arbitration, and the legal process, please visit us at securitiesarbitrations.com
