Planmember Securities Corporation a securities broker dealer with main offices in Carpinteria California has been censured and fined $90,000.00 by Financial Industry Regulatory Authority (FINRA) based in part upon findings that (1) Planmember Securities Corporation failed to supervise the execution of variable annuity exchanges to determine if they were appropriate for customers and (2) Planmember Securities Corporation failed to supervise its stockbrokers’ use of consolidated reports to ensure that they were reviewed by supervisory personnel. Letter of Acceptance Waiver and Consent No. 2015047824201 (July 3, 2019).
According to the AWC, from July of 2012 to June of 2016, there had been no adequate supervision system or written supervisory procedures utilized by Planmember Securities Corporation to supervise the exchanges of variable annuities executed for customers of the firm. According to Planmember Securities Corporation, a spreadsheet had been compiled by the firm which detailed rates in which variable annuities had been exchanged; however, the spreadsheet reportedly omitted information about whether transactions constituted exchanges. Consequently, there was no way for Planmember Securities Corporation to know whether there had been exchanges which should have been more carefully evaluated to assess whether there were inappropriate exchanges. FINRA found the firm’s supervisory failures in this respect to be violative of FINRA Rules 2010, 3110 and National Association of Securities Dealers (NASD) Rule 3010.
Moreover, the AWC stated that consolidated reports prepared by the firm’s stockbrokers had not been adequately supervised. Apparently, stockbrokers were allowed under the firm’s policies to establish and disseminate reports concerning customers’ assets held both inside the firm and away from the firm, comprising most if not all of the assets owned by the customer. Evidently, there had been no written supervisory procedures or system or supervision concerning both the review of consolidated reports and the firm’s authorization for those reports to be disseminated to customers of the firm.
Moreover, the preparation and use by stockbrokers’ was not supervised by Planmember Securities Corporation. The AWC stated that there were at least one hundred forty eight customers who were provided reports which the firm failed to monitor or authorize to ensure regulatory compliance. FINRA found the firm’s activities in this respect to be violative of FINRA Rules 2010 and NASD Rules 3010(a) and 3010(B).
