Philip Paul Wright of Eden Prairie, Minnesota, a stockbroker registered with BrokerBank Securities Inc., has been barred from associating with any Financial Industry Regulatory Authority (FINRA) member in any capacity because Wright allowed someone without FINRA registration to conduct securities business through their participation in preferred share and bond sales to customers. Default Decision No. 2022074278301 (July 24, 2023).
Wright, who was the majority owner, FINOP, Chief Compliance Officer, and CEO, had made an agreement with this unregistered individual. In this agreement, the individual would introduce previous customers to Wright’s firm, and in return, the firm would pay him a large portion of the commissions earned from customers’ transactions over a four-year period.
The individual brought nine customers to the firm who ended up making transactions totaling $1,800,000.00. Wright was listed as the stockbroker for these accounts, but he didn’t help with the paperwork to establish these accounts or purchase the securities. Instead, he sent the necessary documents to the unregistered individual, who then worked with the customers to get everything signed and then sent the paperwork back to Wright.
The firm and Wright also let the individual work with them knowing that the individual had been suspended by FINRA between August of 2019 to November of 2020, for unauthorized transactions in customer accounts and falsifying records. Because of the suspension, he was legally prohibited from any securities business. Despite knowing about this, the firm and Wright didn’t fill out the necessary application and allowed him to continue to conduct securities business.
According to the regulator, the firm gave the individual over $100,000 from the commissions from securities purchases by the customer. Of this, $19,125 was paid while he was legally prohibited from doing any securities business and under FINRA suspension. FINRA found that Wright violated Rules 8311, 2040, 2010, 1210, and NASD Rule 1031 as well as FINRA By-Laws, Article III Section 3(b)
The regulator found that Wright did not turn over documents and information during the time that asked about the securities transactions by customers of the firm, the suitability of transactions, the compensation to individuals by the firm for securities sales, and the steps Wright took in supervising these transactions. He also did not answer questions about if the firm had properly researched the securities before making sales to customers, and if the firm’s supervision systems and procedures were able to comply with federal securities laws and FINRA rules. FINRA found that Wright violated FINRA Rules 2010 and 8210.
This is not the first time that Wright has been the subject of a regulatory action concerning Wright’s conduct in the securities industry. FINRA Public Disclosure shows that Wright has been fined $15,000.00 by FINRA because Wright distributed misleading press releases when he was BrokerBank Securities CEO. Department of Enforcement v. Philip Paul Wright, Decision and Order of Offer of Settlement No. 2014041087701 (March 30, 2016). On February 3, 2021, Wright was also barred and fined $2,500.00 by Michigan because Wright failed to supervise certain representatives. Administrative Consent Agreement and Order No. 342742.
Wright was registered with BrokerBank Securities Inc. from May 20, 2004 to March 30, 2021. BrokerBank Securities Inc. was expelled by FINRA on July 24, 2023.
