Frank Harmon Black, of Charlotte, North Carolina, owner of Southeast Investments, N.C., Inc., has been fined $170,000.00 and barred from associating with any Financial Industry Regulatory Authority (FINRA) member in any capacity based on an Extended Hearing Panel Decision containing findings that he failed to supervise the firm’s business operations in a manner which was compliant with securities regulations and laws, and falsely testified and furnished untruthful information before FINRA staff concerning the firm’s branch inspections. Department of Enforcement v. Southeast Investments, N.C. Inc., et al., No. 2014039285401 (Mar. 3, 2017).
According to the Decision, in 2012, Southeast and Black had insufficient supervisory procedures and systems concerning branch office inspections. The Order stated that Black took no legitimate steps to make sure that the firm had performed them; one of Black’s several supervisory failures sited in the Decision which ran afoul of Securities and Exchange Commission (SEC) regulations and FINRA rules. Apparently, when Black had provided testimony before FINRA staff, he falsely stated that the inspections occurred and gave phony documentation to FINRA in this regard. FINRA found that Southeast Investments, via Black, committed conduct violative of FINRA Rules 2010, 3010, 3110, 4511, and 8210.
Prior to the Extended Hearing Panel Decision, Black was fined $25,000.00 and subject of cease and desist sanctions issued by the State of Washington’s Department of Financial Institutions based upon consenting to findings that the firm did not reasonably create and implement supervisory systems geared to identify and stop registered representatives from effecting excessive trades in customer accounts. Case No. S-11-0597-14-SC01 (Mar. 14, 2016).
Financial Industry Regulatory Authority (FINRA) Public Disclosure reveals that Black has been identified in four additional customer initiated investment related disputes containing allegations of his misconduct while registered with Southeast Investments N.C., Inc., Robert Thomas Securities, Inc., and E.H. Hutton & Company Inc. Particularly, on February 6, 2015, a customer was awarded $52,152.00 in damages according to an investment related arbitration claim involving Black’s misconduct, based upon allegations that Black utilized the customer’s margin account inappropriately, charged excessive commissions, and effected unsuitable over-the-counter equity transactions in the customer’s account.
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