Regal Securities, a broker-dealer headquartered in Glenview, Illinois, has been censured and fined $25,000.00 by Financial Industry Regulatory Authority (FINRA) based upon consenting to findings that the firm failed to supervise the evaluation and authorization of outside business activities. Letter of Acceptance, Waiver and Consent, No. 2015043657202 (Dec. 21, 2016).
According to the AWC, in March of 2011, the firm received a request for permission to engage in an outside business activity by one of its registered representatives, Raymond Adcock. Apparently, Adcock sought the firm’s permission for him and registered representative, CF, to participate in an outside business activity with a limited liability company, TC. Particularly, Adcock indicated his intent to participate in one of TC’s private placement offerings. TC apparently planned to have qualified investors collectively accumulate $500,000.00 in return for unsecured notes.
The AWC stated that Regal Securities informed CF and Adcock in April of 2011 that their outside business activity was not approved due to the firm’s anticipation of having to extensively supervise the transactions. Subsequently, CF resigned from Regal Securities, and later opened up a Regal Securities account in TC’s name. CF evidently gave Adcock the title of TC’s account representative. Apparently, the address which CF provided in setting up the Regal Securities account happened to match the address of a securities business which Adcock conducted.
The AWC stated that Regal Securities, after being made aware of the red flags associated with Adcock’s and CF’s conduct, did not respond to concerns of the private securities transactions or possible outside business transaction which had included TC. Consequently, from March of 2011 to October of 2012, $500,000.00 had been raised by TC from Regal Securities customers.
Apparently, TC later added Adcock as an authorized signer in July of 2013. At this time, Adcock utilized the checking account belonging to TC for purposes of converting $10,000.00 in cash. FINRA found that the firm’s failure to detect and respond to the red flags posed by CF and Adcock was conduct violative of FINRA Rules 2010 and 3270.
Public Disclosure reveals that Adcock, of Cabot, Arizona, has been permanently barred from associating with any Financial Industry Regulatory Authority (FINRA) member based upon consenting to findings that he misappropriated $10,000.00 in customer funds. Letter of Acceptance, Waiver and Consent, No. 2015044253401 (June 10, 2015).
Additionally, on December 15, 2000, a customer initiated investment related arbitration claim involving Adcock’s conduct was settled for $6,480.00 in damages based upon allegations that Adcock failed to disclose the terms associated with a certificate of deposit. On November 15, 2004, another customer initiated investment related arbitration action regarding Adcock’s conduct was settled for $75,000.00 in damages based upon allegations that Adcock made misrepresentations to the customer concerning investments and effected unsuitable transactions in the customer’s account.
FINRA Public Disclosure reveals that since Regal Securities Inc.’s establishment in May 6, 1977, the firm has been named in eight regulatory events and four customer initiated investment related arbitration claims concerning allegations of the firm’s misconduct.
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