Alejandro Falla, of Miami, Florida, a former president and chief executive officer of Ultralat Capital Markets, Inc., has been permanently barred from associating with any Financial Industry Regulatory Authority (FINRA) member in any capacity based upon consenting to findings that he omitted information from customers concerning non-market foreign exchange rates pertaining to transactions involving bond swaps; and failed to supervise the firm’s activities to ensure compliance with securities laws and regulations. Letter of Acceptance, Waiver and Consent, No. 2013035313902 (Feb. 9, 2017).
According to the AWC, between April 11, 2012 and June 5, 2012, the firm effected transactions of bond swaps in the accounts of customers which utilized bonds containing denominations in foreign currency. Yet, the foreign exchange rates had been adjusted by the firm via manual entries of a foreign exchange rate, wherein the rate utilized was not the current spot rate but instead a non-market rate. The AWC stated that the firm tried to match net amounts of each component of the swap transaction, which led customers to be overcharged on the buy side of a bond swap.
The AWC stated that Falla was the assigned registered representative for customers who had bond swap transactions effected in their accounts. In his capacity with Ultralat, Falla reportedly effected a number of transactions containing valuations which were inaccurate upon conversion to United States dollars. Evidently, customers did not receive any disclosures in accounts statements or confirmations which confirmed that non-market foreign exchange rates were utilized, or how this affected the bond swap transaction valuations. Moreover, Falla reportedly failed to indicate to customers that there were substantial markups charged via the execution of transactions. FINRA found that Falla’s conduct, which consisted of retrieving monies through false statements or omissions, was violative of Securities Act Section 17(a)(2) and FINRA Rule 2010.
The AWC additionally stated that Falla, on behalf of his firm, did not create and sustain reasonable supervision systems and written supervisory procedures which were geared towards complying with regulations and securities laws regarding mark-ups. Apparently, the firm’s written supervisory procedures failed to provide any guidance on the analysis of excessive trading or short-term trading effected by the firm’s staff in the accounts of customers. Additionally, no criteria was reportedly utilized for determining when accounts had been overconcentrated, and an insufficient amount of guidance was associated with analyzing the utilization of margin inappropriately.
FINRA found that Falla was tasked with making sure supervision systems and procedures were created and sustained for identification and prevention of unsuitable margin use in customer accounts, short-term trading, charging of excessive mark-ups, and utilization of non-market foreign exchange rates. Consequently, FINRA found that Falla’s failure to supervise in this regard was violative of FINRA Rule 2010, as well as NASD Rules 3010(a) and 3010(b).
Prior to Falla’s permanent bar, Falla was fined $60,000.00 and suspended for eighteen months from associating with any FINRA member in any capacity based upon an Office of Hearing Officers’ Order Accepting Offer of Settlement containing findings that Falla made misleading statements and omissions pertaining to $99,543.21 worth of mark-ups and markdowns. Department of Market Regulation v. Falla, No. 20160500923-01 (Sept. 26, 2016). FINRA found Falla’s conduct to be violative of Securities Act Section 17(a)(2), along with FINRA Rules 2010, 5210, 5310(a), and 2010.
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