Melissa Ann Strouse of Scottsdale Arizona a stockbroker formerly registered with First Financial Equity Corporation is the subject of a Financial Industry Regulatory Authority (FINRA) investigation in which FINRA indicated that its Department of Enforcement should pursue disciplinary action against the stockbroker for possible supervisory failures and other violations of FINRA and National Association of Securities Dealers (NASD) Rules. Case No. 2017055723501 (Aug. 12, 2019).
FINRA Public disclosure indicates that Strouse potentially failed to disclose the nature of her supervision of First Financial Equity Corporation. She possibly failed to make annual disclosures concerning the supervisory controls utilized by the securities broker dealer. FINRA Department of Enforcement was advised to pursue disciplinary action for Strouse’s potential violations of FINRA Rules 2010, 3120, 1122, FINRA By-Laws Article V, Section 2, and NASD Rule 3012.
Strouse has also been fined $10,000.00 and suspended from associating with any FINRA member in any capacity according to a FINRA Office of Hearing Officers Order Accepting Offer of Settlement containing findings of Strouse’s supervisory failures when she was Chief Compliance Officer of First Financial Equity Corporation. Department of Enforcement v. Melissa A. Strouse et al. Disciplinary Proceeding No. 2013034966701 (Mar. 8, 2017).
According to the Order, Strouse was tasked with ensuring that supervision and compliance systems at First Financial Equity Corporation functioned properly. Strouse also occupied the head supervisory position at the securities broker dealer’s Scottsdale, Arizona office. The Order stated that during the time she assumed these supervisory responsibilities, there were no written supervisory procedures utilized by First Financial Equity Corporation relating to suitability of exchange traded funds among other investments. The Order indicated that no supervisory procedures were used by the firm that dictated how stockbrokers’ exchange traded fund transactions would be reviewed or approved to ensure that the transactions were appropriate for customers.
The Order additionally stated that written supervisory procedures used by First Financial Equity Corporation had been disregarded as it related to reviews of customer accounts for churning, excessive trading and unauthorized trading. Strouse failed to undertake a monthly review of commission reports, subscription documents, a sales and purchase blotter, or customer accounts to assess whether stockbrokers excessively traded or churned customer accounts. FINRA found Strouse’s conduct violative of FINRA Rule 2010 and NASD Rule 3010(b).
Strouse was discharged by First Financial Equity Corporation on September 26, 2017 for failing to perform her duties as Chief Compliance Officer.
