Mid Atlantic Capital Corporation, a brokerage firm headquartered in Pittsburgh, Pennsylvania, has been censured and fined $100,000.00 by Financial Industry Regulatory Authority (FINRA) based upon the firm’s consent to findings that it failed to supervise the private securities transactions that two stockbrokers engaged in. Letter of Acceptance, Waiver and Consent, No. 2013039024401 (Apr. 6, 2017).
According to the AWC, in September of 2011, two of the firm’s registered representatives, WG and TD, became registered with the firm. The AWC stated that the firm was notified of WG’s and TG’s participation in a hedge fund that was ran from their New York office during the time that the individuals were associated with the firm.
Apparently, private securities transactions had been effected by WG and TD between September of 2011 and January of 2013, wherein the individuals were compensated for their work. The AWC stated that despite Mid Atlantic not having received compensation for the stockbrokers’ private securities transactions, the firm was still required to supervise the transactions. Mid Atlantic evidently failed to fulfill its supervisory duties in this regard with respect to the hedge fund’s activities, despite having received the hedge fund’s monthly statements which were sent to Mid Atlantic from the administrator and custodian of the hedge fund. Consequently, the firm did not identify that while WG and TD were associated with the firm, an estimated $1,250,000.00 in fund subscriptions were accepted by WG and TD.
Moreover, the AWC stated that Mid Atlantic erred in referring to WG’s and TD’s activities as outside business activities; in reality, WG and TD had sold securities outside the auspices of the firm. As a result, the firm evidently failed to fulfill its obligation to place WG’s and TD’s transactions on Mid Atlantic’s records and books. FINRA found that the firm’s failure to supervise the private securities transactions effected by WG and TD and place the transactions on the firm’s records and books was conduct violative of FINRA Rule 2010, as well as NASD Rules 3010 and 3040.
FINRA Public Disclosure reveals that Mid Atlantic Capital Corporation has been identified in six additional regulatory disciplinary actions, as well as one customer initiated investment related arbitration claim concerning allegations of the firm’s wrongdoing.
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