Global Arena Capital Corp, a FINRA member broker-dealer since 1986 headquartered in New York, NY, maintains multiple branches throughout the country. The Firm was charged by FINRA Department of Market Regulation in a Complaint containing allegations that the Firm charged unfair and excessive markups/markdowns to customers in the course of 495 of its corporate bond transactions (resulting in charges of roughly $333,083.26), and failed to adequately discharge supervisory responsibilities to supervise markups/downs and ensure that the Firm did not charge unfair and excessive markups/markdowns. Dept. of Market Regulation v. Global Arena Capital Corp No. 20110265443 (Filed July 4, 2015).
FINRA Complaint
According to the Complaint, Global Arena’s business consisted of purchasing and selling corporate bonds to and from customers. The Complaint indicates that the Firm would engage broker-dealers of corporate bonds, and sell the same bonds to retail customers at a markup, or would alternatively purchase the corporate bonds of the Firm’s retail customers and then sell such bonds to a broker-dealer, charging the retail customers a markdown.
The Complaint indicates that from October of 2010 through June of 2013, in 495 occurrences concerning the corporate bond transactions, the Firm had charged customers unfair and excessive markups/markdowns, at rates significantly higher than those charged by other industry broker/dealers or clients in similar circumstances. The Complaint indicates that in the 495 transactions, Global Arena’s markups/markdowns ranged from 3.01% to 13.86% – the majority of which held at least 3.5% charges. The Complaint indicates that such conduct allowed Global Arena to rake in a total of $333,083.26 in commissions. FINRA’s Department of Market Regulation found that the Firm’s conduct of engaging in a systematic pattern of excessive markups/markdowns, violated FINRA Rule 2010, NASD Rule 2440, IM-2440-1, and IM-2440-2.
According to the Complaint, FINRA’s Department of Market Regulation also alleged that Global Arena had failed to establish and enforce written supervisory procedures and supervisory systems designed to supervise the Firm’s registered rep activities. Critically, the Complaint alleges that the Firm’s supervisory systems and WSP’s concerning the pricing of corporate bonds had failed to contain a mechanism of ensuring the security’s type, price, availability, money involved in transactions, and disclosure and patterns of markups/markdowns. The Complaint states the supervisory personnel consequently failed to take into consideration such factors in conducting reviews, in turn failing to allow the Firm to ensure against excessive and unfair markups/markdowns.
The Complaint further indicates that prior to November of 2011, the Firm’s fixed income written supervisory procedures had not named a supervisor to conduct reviews, including steps needing to be taken in conducting reviews, frequency of reviews, and documentation required evidencing reviews. According to the Complaint, after November 2011 through June of 2013, the Firm still did not have adequate measures for conducting supervisory reviews concerning pricing of fixed income transactions. Finally, the Department of Market Regulation alleged that Global Arena did not ensure that its supervisory personnel were aware of requirements of conducting reviews, noting an example where one representative responsible for supervisory procedures was not familiar with the NASD Rule IM-2440 factors pertaining to markdown/markup charges. The Complaint indicates that the Firm’s supervisory failures amounted to violations of FINRA Rule 2010 and NASD Rule 3010.
Guiliano Law Group
Investors suffering losses or damages caused by Global Arena Capital in connection with this aforementioned conduct may be able to recover their investment losses. Our practice is limited to the representation of investors in claims, for fraud in connection with the sale of securities, the sale or recommendation of excessively risky or unsuitable securities, breach of fiduciary duty, and the failure to supervise. We accept representation on a contingent fee basis, meaning there is no cost to you unless we make a recovery for you, and there is never any charge for a consultation or an evaluation of your claim. For more information contact us at (877) SEC-ATTY.
