Essex Securities LLC is a brokerage firm headquartered in Massachusetts that has been censured and fined twenty-five thousand dollars by Financial Industry Regulatory Authority (FINRA) based in part on consenting to findings that the firm neglected to adequately supervise outside business activities that its registered representatives engaged in during the time that they were employed with the firm. Letter of Acceptance Waiver and Consent No. 2016047573901 (Feb. 23 2018).
Apparently, between June 30, 2014 and December 31, 2016, the firm’s supervision protocol failed to appoint a principal to provide supervision of outside business activities that the registered representatives engaged in. The procedures reportedly failed to indicate the manner by which employed representatives had to report their outside business activities to the firm. In addition, the supervisory procedures lacked any clarification regarding supervisory review, approval and maintenance of documentation relating to outside business activities.
The AWC stated that Essex Securities LLC also failed to document that outside business activities had been reviewed and approved by its compliance personnel during the times that registered representatives reported outside business activities to the firm. Consequently, FINRA found that the firm’s conduct was violative of FINRA Rules 2010, 3270, and 3110, as well as National Association of Securities Dealers (NASD) Rule 3010.
This is not the first time that Essex Securities has been sanctioned by FINRA for misconduct. Particularly, it was censured and fined twenty thousand dollars by FINRA based on consenting to findings that it (1) executed unsuitable switches of mutual funds in seven customers’ accounts and (2) failed to supervise its practices to prevent switching of mutual funds that were unsuitable. Letter of Acceptance Waiver and Consent No. 2011025433901 (Nov 7 2014). FINRA found the firm’s conduct violative of FINRA Rule 2010, IM-2310-2; and NASD Rules 2310 and 3010.
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