Supreme Alliance LLC is a brokerage firm headquartered in Wilmington North Carolina which has been censured by Financial Industry Regulatory Authority (FINRA) based upon accusations that it (1) failed to supervise its variable annuity business and (2) failed to supervise private securities transactions and outside business activities. Letter of Acceptance Waiver and Consent No. 201605005701 (Feb. 16 2018).
According to the AWC, between February of 2015 and June of 2016, the firm’s stockbrokers made disclosures to the firm in reference to their outside business activities. However, the AWC stated that the firm failed to evidence that those outside business activities had actually been evaluated by the firm. The firm reportedly failed to evidence whether any assessment was made about whether those outside business activities were indeed private securities transactions.
Evidently, the firm’s stockbrokers, DK and SK, effected at least one-thousand private securities transactions that were never recorded on the firm’s records and books. Supreme Alliance reportedly failed to provide supervision of the private securities transactions as though they were executed through the firm. FINRA found Supreme Alliance LLC’s supervisory failures in that regard to be violative of NASD Rule 3040 and FINRA Rule 3280.
Moreover, from February of 2015 to June of 2016, Supreme Alliance neglected to impose a requirement that the sales effected by registered representatives conformed to the amount of commissions generated through the firm’s direct application variable annuity sales model. Evidently, a registered representative was permitted by the firm to furnish customers’ insurance applications directly to the insurance companies, failing to ensure that those applications were approved through the firm’s supervisors. Consequently, five variable annuity transactions were not placed on the firm’s sale and purchase blotter. FINRA found that the firm’s failure to supervise was violative of Securities Exchange Act Rule 17a-3(a)(1) and FINRA Rule 4511.
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