A broker-dealer settled FINRA charges for failing to adequately supervise a registered representative who engaged in unsuitable and excessive trading in the accounts of senior customers, in violation of FINRA Rules 2010 ("Standards of Commercial Honor and Principles of Trade") and 3110 ("Supervision").

FINRA determined that daily internal reports showed indicia of "unsuitable and excessive trading" in the accounts of senior customers: high turnover rates, and commissions and securities being purchased using margins. FINRA found that the broker-dealer failed to review the accounts of these impacted customers to determine whether the registered representative's trade recommendations had been suitable.

To settle the charges, the broker-dealer agreed to (i) pay $270,320 in restitution and $9,588 in interest, and (ii) a censure.

Primary Sources

  1. FINRA AWC: Coastal Equities, Inc.

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Cadwalader, Wickersham & Taft LLP
Cadwalader, Wickersham & Taft LLP
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