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Equinox Securities, based in Redland, California, was expelled as a Financial Industry Regulatory Authority (FINRA) member firm, and the firm’s chief executive officer, Stephen Michael Oliveira, was permanently barred from associating with any FINRA member firm in a principal capacity, in connection with an Order Accepting Offer of Settlement containing findings that Equinox excessively traded and churned client accounts and made unsuitable recommendations; that Equinox and Oliveira failed to supervise a stockbroker, and have supervisory protocols to detect and prevent unsuitable recommendations. Department of Enforcement v. Equinox Securities, Inc., et al., No. 2012031496501 (May 11, 2016).
According to the Decision, in November 2008 through July of 2012, Oliveira was responsible for supervising a registered representative, Palkowitsh, who engaged in excessive trading and churning in customers’ accounts, causing customers’ to bear losses in excess of $800,000.00 in the aggregate. Apparently, Oliveira was aware of Palkowitsh’s conduct, yet failed to take any action to stop him from committing this misconduct.
The Decision stated that Equinox’s conduct, in allowing for churning and excessive trading to take place, was violative of Securities Exchange Act of 1934 Section 10(b), Rule 10b-5, and NASD Rules 2310 and 2110, IM-2310-2, as well as FINRA Rules 2010 and 2020. FINRA additionally found that as a consequence of unsuitable recommendations taking place which resulted in customers’ overconcentration of securities, Equinox’s conduct was violative of FINRA Rules 2010, and NASD Rules 210 and 3010.
The Decision further stated that Oliveira and Equinox were found to have violated FINRA Rule 2010 as well as NASD Rules 2110 and 3010 in connection with supervisory failures. FINRA claimed that Oliveira and Equinox failed to have any adequate supervisory protocol that could reasonably detect and prevent the unsuitable transactions and churning from taking place.
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