Assets Under Management
Quarterly points use the latest ADV filing or SEC roster snapshot available in each quarter.
Total AUM$22.0B
Total Accounts199,383
10Y AUM Change+$15.7B (+249.5%)
Employee Growth by Quarter
Quarterly points use the latest ADV filing or SEC roster snapshot available in each quarter.
Total Employees1,238
Clients per Employee112:1
10Y Employee Change+138 (+12.5%)
Historical AUM and employee figures reflect available SEC Form ADV filings under this CRD. Filing gaps may reflect registration status changes, dormant periods, state registration periods, firm restructuring, or other reporting changes. Rialytix does not interpolate missing periods.
Private Funds
Private funds reported by Lincoln Investment
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Custodians
Reported custodian relationships by Lincoln Investment
- PERSHING LLC
$20,406,646,966
These custodians are disclosed for separately managed accounts under Form ADV’s 10% reporting threshold. This is not a complete list of custodians for all client assets.
Ownership
Reported direct and indirect relationships by Lincoln Investment
Each range applies to a separate reported relationship and should not be added together.
Reported ownership ranges
Highlighted bands show the percentage range reported in Form ADV.
0%25%50%75%100%
LINCOLN INVESTMENT CAPITAL HOLDINGS, LLCDirect owner · Schedule AInterest in LINCOLN INVESTMENT
75%+
LINCOLN INVESTMENT GROUP HOLDINGS, INC.Indirect owner · Schedule BInterest in LINCOLN INVESTMENT CAPITAL HOLDINGS, LLC
50% to < 75%
Bars represent the reported range at that individual ownership step, not an estimated percentage of the advisory firm. Indirect relationships may refer to intermediate entities rather than directly to Lincoln Investment.
Reported ownership and control details
13 entries
Reported ownership and control details
Compliance & Disclosures
Responses were selected by the RIA in its filing. Questions are shortened for readability; “you” refers to the reporting firm, and some questions also cover advisory affiliates.
RIA or supervised-person involvementThe RIA reported that one or more events below involve the firm or its supervised persons.RIA responseYes
AFelonies1 Yes1 No
In the past ten years, have you or any advisory affiliate:
- A1Been convicted of or pleaded guilty or no contest to a felony?No
- A2Been charged with a felony?Yes
BMisdemeanors2 No
In the past ten years, have you or any advisory affiliate:
- B1Been convicted of or pleaded guilty or no contest to a misdemeanor involving investments, an investment-related business, fraud, false statements or omissions, wrongful taking of property, bribery, perjury, forgery, counterfeiting, or extortion?No
- B2Been charged with a misdemeanor of the kind listed above?No
CSEC or CFTC actions4 Yes1 No
Has the SEC or CFTC ever:
- C1Found you or an advisory affiliate made a false statement or omission?Yes
- C2Found you or an advisory affiliate violated SEC or CFTC regulations or statutes?Yes
- C3Found you or an advisory affiliate caused an investment-related business to have its authorization to do business denied, suspended, revoked, or restricted?No
- C4Entered an order against you or an advisory affiliate in connection with investment-related activity?Yes
- C5Imposed a civil money penalty on you or an advisory affiliate, or ordered you or an advisory affiliate to cease and desist from any activity?Yes
DOther regulatory actions1 Yes4 No
Has any other federal regulatory agency, state regulatory agency, or foreign financial regulatory authority ever:
- D1Found you or an advisory affiliate made a false statement or omission, or was dishonest, unfair, or unethical?No
- D2Found you or an advisory affiliate violated investment-related regulations or statutes?Yes
- D3Found you or an advisory affiliate caused an investment-related business to have its authorization to do business denied, suspended, revoked, or restricted?No
- D4In the past ten years, entered an order against you or an advisory affiliate in connection with investment-related activity?No
- D5Denied, suspended, or revoked your or an advisory affiliate’s registration or license, or otherwise prevented association with an investment-related business or restricted activities?No
ESelf-regulatory organization actions1 Yes3 No
Has a self-regulatory organization or commodities exchange ever:
- E1Found you or an advisory affiliate made a false statement or omission?No
- E2Found you or an advisory affiliate violated its rules, other than a violation designated as a minor rule violation under an SEC-approved plan?Yes
- E3Found you or an advisory affiliate caused an investment-related business to have its authorization to do business denied, suspended, revoked, or restricted?No
- E4Disciplined you or an advisory affiliate by expulsion, suspension, barring association with other members, or otherwise restricting activities?No
FProfessional authorizations1 No
- FHas an authorization to act as an attorney, accountant, or federal contractor granted to you or an advisory affiliate ever been revoked or suspended?No
GPending regulatory proceedings1 No
- GAre you or any advisory affiliate now the subject of a regulatory proceeding that could result in a “Yes” answer to any part of C, D, or E?No
HCivil judicial actions and proceedings4 No
(1) Court actions
Has a domestic or foreign court:
- H(1)(a)In the past ten years, enjoined you or an advisory affiliate in connection with investment-related activity?No
- H(1)(b)Found that you or an advisory affiliate violated investment-related statutes or regulations?No
- H(1)(c)Dismissed, pursuant to a settlement agreement, an investment-related civil action brought against you or an advisory affiliate by a state or foreign financial regulatory authority?No
(2) Pending civil proceedings
- H(2)Are you or any advisory affiliate now the subject of a civil proceeding that could result in a “Yes” answer to any part of H(1)?No
Additional DRP filings 9 source blocks
Verbatim excerpts from supporting DRP filings, which may concern the firm or advisory affiliates. Amounts retain their filed labels; no total or attribution is inferred.
criminal · block 1PDF pages 49–50
Full extracted filing text
Includes form instructions and options. Options shown in this text do not identify which boxes were selected.
GENERAL INSTRUCTIONS This Disclosure Reporting Page (DRP ADV) is an INITIAL OR AMENDED response used to report details for affirmative responses to Items 11.A. or 11.B. of Form ADV. Criminal Check item(s) being responded to: 11.A(1) 11.A(2) 11.B(1) 11.B(2) Use a separate DRP for each event or proceeding . The same event or proceeding may be reported for more than one person or entity using one DRP. File with a completed Execution Page. Multiple counts of the same charge arising out of the same event(s) should be reported on the same DRP. Unrelated criminal actions, including separate cases arising out of the same event, must be reported on separate DRPs. Use this DRP to report all charges arising out of the same event. One event may result in more than one affirmative answer to the items listed above. PART I A. The person(s) or entity(ies) for whom this DRP is being filed is (are): You (the advisory firm) You and one or more of your advisory affiliates One or more of your advisory affiliates If this DRP is being filed for an advisory affiliate, give the full name of the advisory affiliate below (for individuals, Last name, First name, Middle name). If the advisory affiliate has a CRD number, provide that number. If not, indicate "non-registered" by checking the appropriate box. ADV DRP - ADVISORY AFFILIATE CRD Number: 7328806 This advisory affiliate is a Firm an Individual Registered: Yes No Name: Lyons, Olivia (For individuals, Last, First, Middle) This DRP should be removed from the ADV record because the advisory affiliate(s) is no longer associated with the adviser. This DRP should be removed from the ADV record because: (1) the event or proceeding occurred more than ten years ago or (2) the adviser is registered or applying for registration with the SEC or reporting as an exempt reporting adviser with the SEC and the event was resolved in the adviser's or advisory affiliate's favor. This DRP should be removed from the ADV record because it was filed in error, such as due to a clerical or data-entry mistake. Explain the circumstances: B. If the advisory affiliate is registered through the IARD system or CRD system, has the advisory affiliate submitted a DRP (with Form ADV, BD or U-4) to the IARD or CRD for the event? If the answer is "Yes," no other information on this DRP must be provided. Yes No NOTE: The completion of this form does not relieve the advisory affiliate of its obligation to update its IARD or CRD records. PART II 1. If charge(s) were brought against an organization over which you or an advisory affiliate exercise(d) control: Enter organization name, whether or not the organization was an investment-related business and your or the advisory affiliate's position, title, or relationship. 2. Formal Charge(s) were brought in: (include name of Federal, Military, State or Foreign Court, Location of Court - City or County and State or Country, Docket/Case number). 3. Event Disclosure Detail (Use this for both organizational and individual charges.) A. Date First Charged (MM/DD/YYYY): Exact Explanation If not exact, provide explanation: , p p B. Event Disclosure Detail (include Charge(s)/Charge Description(s), and for each charge provide: (1) number of counts, (2) felony or misdemeanor, (3) plea for each charge, and (4) product type if charge is investment-related). C. Did any of the Charge(s) within the Event involve a felony? Yes No D. Current status of the Event? Pending On Appeal Final E. Event Status Date (complete unless status is Pending) (MM/DD/YYYY): Exact Explanation If not exact, provide explanation: p p 4. Disposition Disclosure Detail: Include for each charge (a) Disposition Type (e.g., convicted, acquitted, dismissed, pretrial, etc.), (b) Date, (c) Sentence/Penalty, (d) Duration (if sentence - suspension, probation, etc.), (e) Start Date of Penalty, (f) Penalty/Fine Amount, and (g) Date Paid. 5. Provide a brief summary of circumstances leading to the charge(s) as well as the disposition. Include the relevant dates when the conduct which was the subject of the charge(s) occurred. (Your response must fit within the space provided.)
regulatory · block 1CAPITAL ANALYSTSPDF pages 50–52
- Advisory affiliate name — filed text
- CAPITAL ANALYSTS
- Regulator name — filed text
- SEC
- Monetary/Fine Amount — filed text
- $ 300,000.00
- How was matter resolved — filed text
- Order
Action status / disposition — filed text
ON SEPEMBER 14, 2018, THE SEC ACCEPTED CAPITAL ANALYSTS' OFFER OF SETTLEMENT AND ISSUED AN ORDER INSTITUTING ADMINISTRATIVE AND CEASE-AND-DESIST PROCEEDINGS. WITHOUT ADMITTING OR DENYING THE SEC'S FINDINGS, CAPITAL ANALYSTS AGREED TO PAY DISGORGED FEES, INTEREST, AND A PENALTY TOTALING $2,120,349. ON 9/18/2018, CAPITAL ANALYSTS PAID THE CIVIL PENALTY OF $300,000 AND $770,476 OF DISGORGED FEES AND INTEREST. CAPITAL ANALYSTS IS IN THE PROCESS OF PAYING THE REMAINING PORTION OF DISGORGED FEES AND INTEREST IN THE AMOUNT OF $1,049,873 TO AFFECTED CLIENTS.
Other filed details
Description of allegations — filed text
THE SEC ALLEGED THAT FROM 4/2013 - 3/2016, CAPITAL ANALYSTS DID NOT ADEQUATELY DISCLOSE THAT IT HAD A CONFLICT OF INTEREST WHEN IT INVESTED CAAMS WRAP FEE CLIENTS IN MUTUAL FUND SHARE CLASSES THAT PAID 12B-1 FEES TO ITS AFFILIATED BROKER-DEALER, LINCOLN INVESTMENT PLANNING, LLC ("LINCOLN INVESTMENT") WHEN A LOWER-COST SHARE CLASS OF THE SAME FUND WITHOUT A 12B-1 FEE WAS AVAILABLE. THE SEC ALSO ALLEGED THAT CAPITAL ANALYSTS DID NOT MEET ITS DUTY OF BEST EXECUTION, FAILED TO ADOPT AND IMPLEMENT WRITTEN POLICIES AND PROCEDURES REASONABLY DESIGNED TO ADDRESS MUTUAL FUND SHARE CLASS SELECTION AND RELATED CONFLICTS OF INTEREST AND, FROM 4/13 - 3/2017, DID NOT ADEQUATELY DISCLOSE REVENUE SHARING RECEIVED BY LINCOLN INVESTMENT FROM ITS CLEARING FIRM. AS A RESULT, THE SEC ALLEGED THAT CAPITAL ANALYSTS VIOLATED SECTIONS 206(2) AND 206(4) OF THE INVESTMENT ADVISERS ACT OF 1940 AND RULE 206(4)-7 THEREUNDER. ON SEPEMBER 14, 2018, THE SEC ACCEPTED CAPITAL ANALYSTS' OFFER OF SETTLEMENT AND ISSUED AN ORDER INSTITUTING ADMINISTRATIVE AND CEASE-AND-DESIST PROCEEDINGS, DISGORGEMENT AND PAYMENT OF A PENALTY. THE FIRM NEITHER ADMITTED NOR DENIED THE SEC'S FINDINGS IN AGREEING TO ENTER THE SETTLEMENT.
Sanction detail — filed text
A TOTAL AMOUNT OF $2,120,349, REPRESENTING DISGORGED FEES AND PREJUDGEMENT INTEREST OF $1,820,349 AND A CIVIL PENALTY OF $300,000. ON 9/18/2018, CAPITAL ANALYSTS PAID THE CIVIL PENALTY OF $300,000 AND $770,476 OF DISGORGED FEES AND INTEREST. CAPITAL ANALYSTS IS IN THE PROCESS OF PAYING THE REMAINING PORTION OF DISGORGED FEES AND INTEREST IN THE AMOUNT OF $1,049,873 TO AFFECTED CLIENTS.
Full extracted filing text
Includes form instructions and options. Options shown in this text do not identify which boxes were selected.
GENERAL INSTRUCTIONS
This Disclosure Reporting Page (DRP ADV) is an
INITIAL OR
AMENDED response used to report details for affirmative responses to Items 11.C., 11.D.,
11.E., 11.F. or 11.G. of Form ADV.
Regulatory Action
Check item(s) being responded to:
11.C(1)
11.C(2)
11.C(3)
11.C(4)
11.C(5)
11.D(1)
11.D(2)
11.D(3)
11.D(4)
11.D(5)
11.E(1)
11.E(2)
11.E(3)
11.E(4)
11.F.
11.G.
Use a separate DRP for each event or proceeding . The same event or proceeding may be reported for more than one person or entity using one DRP. File
with a completed Execution Page.
One event may result in more than one affirmative answer to Items 11.C., 11.D., 11.E., 11.F. or 11.G. Use only one DRP to report details related to the
same event. If an event gives rise to actions by more than one regulator, provide details for each action on a separate DRP.
PART I
A. The person(s) or entity(ies) for whom this DRP is being filed is (are):
You (the advisory firm)
You and one or more of your advisory affiliates
One or more of your advisory affiliates
If this DRP is being filed for an advisory affiliate, give the full name of the advisory affiliate below (for individuals, Last name, First name, Middle name).
If the advisory affiliate has a CRD number, provide that number. If not, indicate "non-registered" by checking the appropriate box.
ADV DRP - ADVISORY AFFILIATE
CRD
Number:
162200
This advisory affiliate is
a Firm
an Individual
Registered:
Yes
No
Name:
CAPITAL ANALYSTS
(For individuals, Last, First,
Middle)
This DRP should be removed from the ADV record because the advisory affiliate(s) is no longer associated with the adviser.
This DRP should be removed from the ADV record because: (1) the event or proceeding occurred more than ten years ago or (2) the adviser is
registered or applying for registration with the SEC or reporting as an exempt reporting adviser with the SEC and the event was resolved in the
adviser's or advisory affiliate's favor.
If you are registered or registering with a state securities authority , you may remove a DRP for an event you reported only in response to Item
11.D(4), and only if that event occurred more than ten years ago. If you are registered or registering with the SEC, you may remove a DRP for any
event listed in Item 11 that occurred more than ten years ago.
This DRP should be removed from the ADV record because it was filed in error, such as due to a clerical or data-entry mistake. Explain the
circumstances:
B.
If the advisory affiliate is registered through the IARD system or CRD system, has the advisory affiliate submitted a DRP (with Form ADV, BD or U-4) to
the IARD or CRD for the event? If the answer is "Yes," no other information on this DRP must be provided.
Yes
No
NOTE: The completion of this form does not relieve the advisory affiliate of its obligation to update its IARD or CRD records.
PART II
1. Regulatory Action initiated by:
SEC
Other Federal
State
SRO
Foreign
(Full name of regulator, foreign financial regulatory authority, federal, state, or SRO)
SEC
2.
Principal Sanction:
Cease and Desist
Other Sanctions:
CENSURE, DISGORGEMENT, CIVIL AND ADMINISTRATIVE PENALTY
3.
Date Initiated (MM/DD/YYYY):
09/14/2018
Exact
Explanation
If not exact, provide explanation:
4.
Docket/Case Number:
3-18765
5.
Advisory Affiliate Employing Firm when activity occurred which led to the regulatory action (if applicable):
6.
Principal Product Type:
Mutual Fund(s)
Other Product Types:
7.
Describe the allegations related to this regulatory action (your response must fit within the space provided):
THE SEC ALLEGED THAT FROM 4/2013 - 3/2016, CAPITAL ANALYSTS DID NOT ADEQUATELY DISCLOSE THAT IT HAD A CONFLICT OF INTEREST WHEN IT
INVESTED CAAMS WRAP FEE CLIENTS IN MUTUAL FUND SHARE CLASSES THAT PAID 12B-1 FEES TO ITS AFFILIATED BROKER-DEALER, LINCOLN
INVESTMENT PLANNING, LLC ("LINCOLN INVESTMENT") WHEN A LOWER-COST SHARE CLASS OF THE SAME FUND WITHOUT A 12B-1 FEE WAS
AVAILABLE. THE SEC ALSO ALLEGED THAT CAPITAL ANALYSTS DID NOT MEET ITS DUTY OF BEST EXECUTION, FAILED TO ADOPT AND IMPLEMENT
WRITTEN POLICIES AND PROCEDURES REASONABLY DESIGNED TO ADDRESS MUTUAL FUND SHARE CLASS SELECTION AND RELATED CONFLICTS OF
INTEREST AND, FROM 4/13 - 3/2017, DID NOT ADEQUATELY DISCLOSE REVENUE SHARING RECEIVED BY LINCOLN INVESTMENT FROM ITS CLEARING
FIRM. AS A RESULT, THE SEC ALLEGED THAT CAPITAL ANALYSTS VIOLATED SECTIONS 206(2) AND 206(4) OF THE INVESTMENT ADVISERS ACT OF 1940
AND RULE 206(4)-7 THEREUNDER. ON SEPEMBER 14, 2018, THE SEC ACCEPTED CAPITAL ANALYSTS' OFFER OF SETTLEMENT AND ISSUED AN ORDER
INSTITUTING ADMINISTRATIVE AND CEASE-AND-DESIST PROCEEDINGS, DISGORGEMENT AND PAYMENT OF A PENALTY. THE FIRM NEITHER ADMITTED
NOR DENIED THE SEC'S FINDINGS IN AGREEING TO ENTER THE SETTLEMENT.
8.
Current Status?
Pending
On Appeal
Final
9.
If on appeal, regulatory action appealed to (SEC, SRO, Federal or State Court) and Date Appeal Filed:
If Final or On Appeal, complete all items below. For Pending Actions, complete Item 13 only.
10. How was matter resolved:
Order
11. Resolution Date (MM/DD/YYYY):
09/14/2018
Exact
Explanation
If not exact, provide explanation:
12. Resolution Detail:
A. Were any of the following Sanctions Ordered (check all appropriate items)?
Monetary/Fine Amount: $ 300,000.00
Revocation/Expulsion/Denial
Disgorgement/Restitution
Censure
Cease and Desist/Injunction
Bar
Suspension
B.
Other Sanctions Ordered:
Sanction detail: if suspended, enjoined or barred, provide duration including start date and capacities affected (General Securities Principal,
Financial Operations Principal, etc.). If requalification by exam/retraining was a condition of the sanction, provide length of time given to
requalify/retrain, type of exam required and whether condition has been satisfied. If disposition resulted in a fine, penalty, restitution,
disgorgement or monetary compensation, provide total amount, portion levied against you or an advisory affiliate, date paid and if any portion
of penalty was waived:
A TOTAL AMOUNT OF $2,120,349, REPRESENTING DISGORGED FEES AND PREJUDGEMENT INTEREST OF $1,820,349 AND A CIVIL PENALTY OF
$300,000. ON 9/18/2018, CAPITAL ANALYSTS PAID THE CIVIL PENALTY OF $300,000 AND $770,476 OF DISGORGED FEES AND INTEREST.
CAPITAL ANALYSTS IS IN THE PROCESS OF PAYING THE REMAINING PORTION OF DISGORGED FEES AND INTEREST IN THE AMOUNT OF $1,049,873
TO AFFECTED CLIENTS.
13. Provide a brief summary of details related to the action status and (or) disposition and include relevant terms, conditions and dates (your response
must fit within the space provided).
ON SEPEMBER 14, 2018, THE SEC ACCEPTED CAPITAL ANALYSTS' OFFER OF SETTLEMENT AND ISSUED AN ORDER INSTITUTING ADMINISTRATIVE AND
CEASE-AND-DESIST PROCEEDINGS. WITHOUT ADMITTING OR DENYING THE SEC'S FINDINGS, CAPITAL ANALYSTS AGREED TO PAY DISGORGED FEES,
INTEREST, AND A PENALTY TOTALING $2,120,349. ON 9/18/2018, CAPITAL ANALYSTS PAID THE CIVIL PENALTY OF $300,000 AND $770,476 OF
DISGORGED FEES AND INTEREST. CAPITAL ANALYSTS IS IN THE PROCESS OF PAYING THE REMAINING PORTION OF DISGORGED FEES AND INTEREST IN
THE AMOUNT OF $1,049,873 TO AFFECTED CLIENTS.regulatory · block 2PDF pages 52–54
- Regulator name — filed text
- NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.
- Monetary/Fine Amount — filed text
- $ 7,500.00
- How was matter resolved — filed text
- Acceptance, Waiver & Consent(AWC)
Action status / disposition — filed text
BY SIGNING THE AWC, THE FIRM ACCEPTED THE ALLEGATIONS MADE AGAINST THE FIRM, WAIVED THEIR RIGHT TO A HEARING TO DEFEND THEM, AND CONSENTED TO THE FINE AND CENSURE IMPOSED BY THE NASD ON THE FIRM AND ITS PRINCIPALS. AT NO TIME WERE CUSTOMER FUNDS OR SECURITIES IN JEOPARDY OR UTILIZED FOR ANYTHING BUT THE SOLE PURPOSE OF THE CUSTOMER AND HIS/HER INSTRUCTIONS. THESE ALLEGED VIOLATIONS WERE AS A RESULT OF AN INSPECTION OF THE BROKER-DEALER CONDUCTED BY THE NASD IN JUNE AND JULY, 1992.
Other filed details
Description of allegations — filed text
VIOLATIONS GOVERNING RULES OF THE NASD, SEC AND MSRB: INACCURATE FINANCIAL REPORTING: FAILURE TO MAINTAIN MINIMUM NET CAPITAL AS OF PERIOD ENDING 5/31/92; CUSTOMER RESERVE COMP. ERRORS; SHORT-COMINGS IN ESTABLISHMENT, MAINTENANCE AND ENFORCEMENT OF SUPERV. PROCED. OF THE FIRM; FAILURE TO BE PROPERLY REGISTERED TO TRANSACT MUNI. SEC. BUS
Sanction detail — filed text
LINCOLN INVESTMENT PLANNING, INC., EDWARD S. FORST, SR. AND THOMAS FORST SANCTIONED, CENSURED AND FINED $7,500.00 JOINTLY AND SEVERALLY AS A RESULT OF THE ALLEGED FINDINGS BY THE NASD OF VIOLATIONS OF THE RULES GOVERNING A BROKER-DEALER.
Full extracted filing text
Includes form instructions and options. Options shown in this text do not identify which boxes were selected.
GENERAL INSTRUCTIONS This Disclosure Reporting Page (DRP ADV) is an INITIAL OR AMENDED response used to report details for affirmative responses to Items 11.C., 11.D., 11.E., 11.F. or 11.G. of Form ADV. Regulatory Action Check item(s) being responded to: 11.C(1) 11.C(2) 11.C(3) 11.C(4) 11.C(5) 11.D(1) 11.D(2) 11.D(3) 11.D(4) 11.D(5) 11.E(1) 11.E(2) 11.E(3) 11.E(4) 11.F. 11.G. Use a separate DRP for each event or proceeding . The same event or proceeding may be reported for more than one person or entity using one DRP. File with a completed Execution Page. One event may result in more than one affirmative answer to Items 11.C., 11.D., 11.E., 11.F. or 11.G. Use only one DRP to report details related to the same event. If an event gives rise to actions by more than one regulator, provide details for each action on a separate DRP. PART I A. The person(s) or entity(ies) for whom this DRP is being filed is (are): You (the advisory firm) You and one or more of your advisory affiliates One or more of your advisory affiliates If this DRP is being filed for an advisory affiliate, give the full name of the advisory affiliate below (for individuals, Last name, First name, Middle name). If the advisory affiliate has a CRD number, provide that number. If not, indicate "non-registered" by checking the appropriate box. ADV DRP - ADVISORY AFFILIATE CRD Number: 211437 This advisory affiliate is a Firm an Individual Registered: Yes No Name: FORST, EDWARD SAMUEL (For individuals, Last, First, Middle) CRD Number: 841057 This advisory affiliate is a Firm an Individual Registered: Yes No Name: FORST, THOMAS (For individuals, Last, First, Middle) This DRP should be removed from the ADV record because the advisory affiliate(s) is no longer associated with the adviser. This DRP should be removed from the ADV record because: (1) the event or proceeding occurred more than ten years ago or (2) the adviser is registered or applying for registration with the SEC or reporting as an exempt reporting adviser with the SEC and the event was resolved in the adviser's or advisory affiliate's favor. If you are registered or registering with a state securities authority , you may remove a DRP for an event you reported only in response to Item 11.D(4), and only if that event occurred more than ten years ago. If you are registered or registering with the SEC, you may remove a DRP for any event listed in Item 11 that occurred more than ten years ago. This DRP should be removed from the ADV record because it was filed in error, such as due to a clerical or data-entry mistake. Explain the circumstances: B. If the advisory affiliate is registered through the IARD system or CRD system, has the advisory affiliate submitted a DRP (with Form ADV, BD or U-4) to the IARD or CRD for the event? If the answer is "Yes," no other information on this DRP must be provided. Yes No NOTE: The completion of this form does not relieve the advisory affiliate of its obligation to update its IARD or CRD records. PART II 1. Regulatory Action initiated by: SEC Other Federal State SRO Foreign (Full name of regulator, foreign financial regulatory authority, federal, state, or SRO) NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC. 2. Principal Sanction: Civil and Administrative Penalt(ies) /Fine(s) Other Sanctions: 3. Date Initiated (MM/DD/YYYY): 03/25/1993 Exact Explanation If not exact, provide explanation: 4. Docket/Case Number: C9A930025-AWC 5. Advisory Affiliate Employing Firm when activity occurred which led to the regulatory action (if applicable): LINCOLN INVESTMENT PLANNING, INC. 6. Principal Product Type: No Product Other Product Types: 7. Describe the allegations related to this regulatory action (your response must fit within the space provided): VIOLATIONS GOVERNING RULES OF THE NASD, SEC AND MSRB: INACCURATE FINANCIAL REPORTING: FAILURE TO MAINTAIN MINIMUM NET CAPITAL AS OF PERIOD ENDING 5/31/92; CUSTOMER RESERVE COMP. ERRORS; SHORT-COMINGS IN ESTABLISHMENT, MAINTENANCE AND ENFORCEMENT OF SUPERV. PROCED. OF THE FIRM; FAILURE TO BE PROPERLY REGISTERED TO TRANSACT MUNI. SEC. BUS 8. Current Status? Pending On Appeal Final 9. If on appeal, regulatory action appealed to (SEC, SRO, Federal or State Court) and Date Appeal Filed: If Final or On Appeal, complete all items below. For Pending Actions, complete Item 13 only. 10. How was matter resolved: Acceptance, Waiver & Consent(AWC) 11. Resolution Date (MM/DD/YYYY): 07/27/1993 Exact Explanation If not exact, provide explanation: 12. Resolution Detail: A. Were any of the following Sanctions Ordered (check all appropriate items)? Monetary/Fine Amount: $ 7,500.00 Revocation/Expulsion/Denial Disgorgement/Restitution Censure Cease and Desist/Injunction Bar Suspension B. Other Sanctions Ordered: Sanction detail: if suspended, enjoined or barred, provide duration including start date and capacities affected (General Securities Principal, Financial Operations Principal, etc.). If requalification by exam/retraining was a condition of the sanction, provide length of time given to requalify/retrain, type of exam required and whether condition has been satisfied. If disposition resulted in a fine, penalty, restitution, disgorgement or monetary compensation, provide total amount, portion levied against you or an advisory affiliate, date paid and if any portion of penalty was waived: LINCOLN INVESTMENT PLANNING, INC., EDWARD S. FORST, SR. AND THOMAS FORST SANCTIONED, CENSURED AND FINED $7,500.00 JOINTLY AND SEVERALLY AS A RESULT OF THE ALLEGED FINDINGS BY THE NASD OF VIOLATIONS OF THE RULES GOVERNING A BROKER-DEALER. 13. Provide a brief summary of details related to the action status and (or) disposition and include relevant terms, conditions and dates (your response must fit within the space provided). BY SIGNING THE AWC, THE FIRM ACCEPTED THE ALLEGATIONS MADE AGAINST THE FIRM, WAIVED THEIR RIGHT TO A HEARING TO DEFEND THEM, AND CONSENTED TO THE FINE AND CENSURE IMPOSED BY THE NASD ON THE FIRM AND ITS PRINCIPALS. AT NO TIME WERE CUSTOMER FUNDS OR SECURITIES IN JEOPARDY OR UTILIZED FOR ANYTHING BUT THE SOLE PURPOSE OF THE CUSTOMER AND HIS/HER INSTRUCTIONS. THESE ALLEGED VIOLATIONS WERE AS A RESULT OF AN INSPECTION OF THE BROKER-DEALER CONDUCTED BY THE NASD IN JUNE AND JULY, 1992.
regulatory · block 3PDF pages 54–55
- Regulator name — filed text
- SUPERINTENDENT OF SECURITIES OF THE STATE OF IOWA
- Monetary/Fine Amount — filed text
- $ 250.00
- How was matter resolved — filed text
- Other
Other filed details
Description of allegations — filed text
THE APPLICANT EFFECTED THREE (3) TRANSACTIONS IN MUTUAL FUND SECURITIES ON BEHALF OF IOWANS BEFORE OBTAINING PROPER REGISTRATION AS SET FORTH IN SECTION 502 302 CODE OF IOWA 1987
Sanction detail — filed text
APPLICANT CENSURED AND FINED $250.00 PURSUANT TO SECTION 502 304(1) CODE OF IOWA, 1987
Full extracted filing text
Includes form instructions and options. Options shown in this text do not identify which boxes were selected.
GENERAL INSTRUCTIONS This Disclosure Reporting Page (DRP ADV) is an INITIAL OR AMENDED response used to report details for affirmative responses to Items 11.C., 11.D., 11.E., 11.F. or 11.G. of Form ADV. Regulatory Action Check item(s) being responded to: 11.C(1) 11.C(2) 11.C(3) 11.C(4) 11.C(5) 11.D(1) 11.D(2) 11.D(3) 11.D(4) 11.D(5) 11.E(1) 11.E(2) 11.E(3) 11.E(4) 11.F. 11.G. Use a separate DRP for each event or proceeding . The same event or proceeding may be reported for more than one person or entity using one DRP. File with a completed Execution Page. One event may result in more than one affirmative answer to Items 11.C., 11.D., 11.E., 11.F. or 11.G. Use only one DRP to report details related to the same event. If an event gives rise to actions by more than one regulator, provide details for each action on a separate DRP. PART I A. The person(s) or entity(ies) for whom this DRP is being filed is (are): You (the advisory firm) You and one or more of your advisory affiliates One or more of your advisory affiliates If this DRP is being filed for an advisory affiliate, give the full name of the advisory affiliate below (for individuals, Last name, First name, Middle name). If the advisory affiliate has a CRD number, provide that number. If not, indicate "non-registered" by checking the appropriate box. ADV DRP - ADVISORY AFFILIATE No Information Filed This DRP should be removed from the ADV record because the advisory affiliate(s) is no longer associated with the adviser. This DRP should be removed from the ADV record because: (1) the event or proceeding occurred more than ten years ago or (2) the adviser is registered or applying for registration with the SEC or reporting as an exempt reporting adviser with the SEC and the event was resolved in the adviser's or advisory affiliate's favor. If you are registered or registering with a state securities authority , you may remove a DRP for an event you reported only in response to Item 11.D(4), and only if that event occurred more than ten years ago. If you are registered or registering with the SEC, you may remove a DRP for any event listed in Item 11 that occurred more than ten years ago. This DRP should be removed from the ADV record because it was filed in error, such as due to a clerical or data-entry mistake. Explain the circumstances: B. If the advisory affiliate is registered through the IARD system or CRD system, has the advisory affiliate submitted a DRP (with Form ADV, BD or U-4) to the IARD or CRD for the event? If the answer is "Yes," no other information on this DRP must be provided. Yes No NOTE: The completion of this form does not relieve the advisory affiliate of its obligation to update its IARD or CRD records. PART II 1. Regulatory Action initiated by: SEC Other Federal State SRO Foreign (Full name of regulator, foreign financial regulatory authority, federal, state, or SRO) SUPERINTENDENT OF SECURITIES OF THE STATE OF IOWA 2. Principal Sanction: Civil and Administrative Penalt(ies) /Fine(s) Other Sanctions: 3. Date Initiated (MM/DD/YYYY): 10/01/1987 Exact Explanation If not exact, provide explanation: RECORDS HAVE BEEN ARCHIVED 4. Docket/Case Number: IOWA ORDER & CONSENT TO ORDER C88-10-85 5. Advisory Affiliate Employing Firm when activity occurred which led to the regulatory action (if applicable): 6. Principal Product Type: Mutual Fund(s) Other Product Types: 7. Describe the allegations related to this regulatory action (your response must fit within the space provided): THE APPLICANT EFFECTED THREE (3) TRANSACTIONS IN MUTUAL FUND SECURITIES ON BEHALF OF IOWANS BEFORE OBTAINING PROPER REGISTRATION AS SET FORTH IN SECTION 502 302 CODE OF IOWA 1987 8. Current Status? Pending On Appeal Final 9. If on appeal, regulatory action appealed to (SEC, SRO, Federal or State Court) and Date Appeal Filed: If Final or On Appeal, complete all items below. For Pending Actions, complete Item 13 only. 10. How was matter resolved: Other 11. Resolution Date (MM/DD/YYYY): 05/31/1988 Exact Explanation If not exact, provide explanation: 12. Resolution Detail: A. Were any of the following Sanctions Ordered (check all appropriate items)? Monetary/Fine Amount: $ 250.00 Revocation/Expulsion/Denial Disgorgement/Restitution Censure Cease and Desist/Injunction Bar Suspension B. Other Sanctions Ordered: Sanction detail: if suspended, enjoined or barred, provide duration including start date and capacities affected (General Securities Principal, Financial Operations Principal, etc.). If requalification by exam/retraining was a condition of the sanction, provide length of time given to requalify/retrain, type of exam required and whether condition has been satisfied. If disposition resulted in a fine, penalty, restitution, disgorgement or monetary compensation, provide total amount, portion levied against you or an advisory affiliate, date paid and if any portion of penalty was waived: APPLICANT CENSURED AND FINED $250.00 PURSUANT TO SECTION 502 304(1) CODE OF IOWA, 1987 13. Provide a brief summary of details related to the action status and (or) disposition and include relevant terms, conditions and dates (your response must fit within the space provided).
regulatory · block 4PDF pages 55–57
- Regulator name — filed text
- FINANCIAL INDUSTRY REGULATORY AUTHORITY (FINRA)
- Monetary/Fine Amount — filed text
- $ 15,000.00
- How was matter resolved — filed text
- Acceptance, Waiver & Consent(AWC)
Action status / disposition — filed text
IT WAS DETERMINED THAT 398 INVESTORS WERE NOT PROVIDED THEIR BREAKPOINT REFUND WITHIN 90 DAYS OF RECEIPT OF THE INVESTOR'S CLAIM FORM. ALL INVESTORS WERE SENT THEIR REFUND WITH INTEREST CREDITED FROM THE DATE OF THE ORIGINAL TRANSACTION UP TO THE DATE THE REFUND WAS CREDITED TO THE INVESTOR. THE FIRM HAS VOLUNTARILY CONSENTED TO FINRA'S LETTER OF ACCEPTANCE, WAIVER AND CONSENT DATED MARCH 23, 2009.
Other filed details
Description of allegations — filed text
IN MARCH 2003, LINCOLN INVESTMENT WAS REQUIRED BY NASD TO COMPLETE A MUTUAL FUND BREAKPOINT SELF-ASSESSMENT. IT WAS ALLEGED THAT THE FIRM VIOLATED NASD CONDUCT RULE 2110 FOR THE UNTIMELY MAILING OF CUSTOMER REFUNDS ISSUED PURSUANT TO THE BREAKPOINT SELF-ASSESSMENT.
Sanction detail — filed text
FINE OF $15,000 LEVIED AGAINST THE FIRM AND PAID WITHIN 10 DAYS OF DATE OF AWC.
Full extracted filing text
Includes form instructions and options. Options shown in this text do not identify which boxes were selected.
GENERAL INSTRUCTIONS This Disclosure Reporting Page (DRP ADV) is an INITIAL OR AMENDED response used to report details for affirmative responses to Items 11.C., 11.D., 11.E., 11.F. or 11.G. of Form ADV. Regulatory Action Check item(s) being responded to: 11.C(1) 11.C(2) 11.C(3) 11.C(4) 11.C(5) 11.D(1) 11.D(2) 11.D(3) 11.D(4) 11.D(5) 11.E(1) 11.E(2) 11.E(3) 11.E(4) 11.F. 11.G. Use a separate DRP for each event or proceeding . The same event or proceeding may be reported for more than one person or entity using one DRP. File with a completed Execution Page. One event may result in more than one affirmative answer to Items 11.C., 11.D., 11.E., 11.F. or 11.G. Use only one DRP to report details related to the same event. If an event gives rise to actions by more than one regulator, provide details for each action on a separate DRP. PART I A. The person(s) or entity(ies) for whom this DRP is being filed is (are): You (the advisory firm) You and one or more of your advisory affiliates One or more of your advisory affiliates If this DRP is being filed for an advisory affiliate, give the full name of the advisory affiliate below (for individuals, Last name, First name, Middle name). If the advisory affiliate has a CRD number, provide that number. If not, indicate "non-registered" by checking the appropriate box. ADV DRP - ADVISORY AFFILIATE No Information Filed This DRP should be removed from the ADV record because the advisory affiliate(s) is no longer associated with the adviser. This DRP should be removed from the ADV record because: (1) the event or proceeding occurred more than ten years ago or (2) the adviser is registered or applying for registration with the SEC or reporting as an exempt reporting adviser with the SEC and the event was resolved in the adviser's or advisory affiliate's favor. If you are registered or registering with a state securities authority , you may remove a DRP for an event you reported only in response to Item 11.D(4), and only if that event occurred more than ten years ago. If you are registered or registering with the SEC, you may remove a DRP for any event listed in Item 11 that occurred more than ten years ago. This DRP should be removed from the ADV record because it was filed in error, such as due to a clerical or data-entry mistake. Explain the circumstances: B. If the advisory affiliate is registered through the IARD system or CRD system, has the advisory affiliate submitted a DRP (with Form ADV, BD or U-4) to the IARD or CRD for the event? If the answer is "Yes," no other information on this DRP must be provided. Yes No NOTE: The completion of this form does not relieve the advisory affiliate of its obligation to update its IARD or CRD records. PART II 1. Regulatory Action initiated by: SEC Other Federal State SRO Foreign (Full name of regulator, foreign financial regulatory authority, federal, state, or SRO) FINANCIAL INDUSTRY REGULATORY AUTHORITY (FINRA) 2. Principal Sanction: Censure Other Sanctions: FINE IN THE AMOUNT OF $15,000 3. Date Initiated (MM/DD/YYYY): 02/19/2008 Exact Explanation If not exact, provide explanation: 4. Docket/Case Number: 2005001160501 5. Advisory Affiliate Employing Firm when activity occurred which led to the regulatory action (if applicable): 6. Principal Product Type: Mutual Fund(s) Other Product Types: 7. Describe the allegations related to this regulatory action (your response must fit within the space provided): IN MARCH 2003, LINCOLN INVESTMENT WAS REQUIRED BY NASD TO COMPLETE A MUTUAL FUND BREAKPOINT SELF-ASSESSMENT. IT WAS ALLEGED THAT THE FIRM VIOLATED NASD CONDUCT RULE 2110 FOR THE UNTIMELY MAILING OF CUSTOMER REFUNDS ISSUED PURSUANT TO THE BREAKPOINT SELF-ASSESSMENT. 8. Current Status? Pending On Appeal Final 9. If on appeal, regulatory action appealed to (SEC, SRO, Federal or State Court) and Date Appeal Filed: If Final or On Appeal, complete all items below. For Pending Actions, complete Item 13 only. 10. How was matter resolved: Acceptance, Waiver & Consent(AWC) 11. Resolution Date (MM/DD/YYYY): 03/23/2009 Exact Explanation If not exact, provide explanation: 12. Resolution Detail: A. Were any of the following Sanctions Ordered (check all appropriate items)? Monetary/Fine Amount: $ 15,000.00 Revocation/Expulsion/Denial Disgorgement/Restitution Censure Cease and Desist/Injunction Bar Suspension B. Other Sanctions Ordered: Sanction detail: if suspended, enjoined or barred, provide duration including start date and capacities affected (General Securities Principal, Financial Operations Principal, etc.). If requalification by exam/retraining was a condition of the sanction, provide length of time given to requalify/retrain, type of exam required and whether condition has been satisfied. If disposition resulted in a fine, penalty, restitution, disgorgement or monetary compensation, provide total amount, portion levied against you or an advisory affiliate, date paid and if any portion of penalty was waived: FINE OF $15,000 LEVIED AGAINST THE FIRM AND PAID WITHIN 10 DAYS OF DATE OF AWC. 13. Provide a brief summary of details related to the action status and (or) disposition and include relevant terms, conditions and dates (your response must fit within the space provided). IT WAS DETERMINED THAT 398 INVESTORS WERE NOT PROVIDED THEIR BREAKPOINT REFUND WITHIN 90 DAYS OF RECEIPT OF THE INVESTOR'S CLAIM FORM. ALL INVESTORS WERE SENT THEIR REFUND WITH INTEREST CREDITED FROM THE DATE OF THE ORIGINAL TRANSACTION UP TO THE DATE THE REFUND WAS CREDITED TO THE INVESTOR. THE FIRM HAS VOLUNTARILY CONSENTED TO FINRA'S LETTER OF ACCEPTANCE, WAIVER AND CONSENT DATED MARCH 23, 2009.
regulatory · block 5PDF pages 57–59
- Regulator name — filed text
- FINRA
- Monetary/Fine Amount — filed text
- $ 75,000.00
- How was matter resolved — filed text
- Acceptance, Waiver & Consent(AWC)
Other filed details
Description of allegations — filed text
WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTED TO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT FAILED TO ENFORCE A SUPERVISORY SYSTEM AND WSPS REASONABLY DESIGNED TO ENSURE AN EFFECTIVE REVIEW OF CONSOLIDATED REPORTS PRODUCED BY REGISTERED REPRESENTATIVES AND PROVIDED TO CUSTOMERS. THE FINDINGS STATED THAT THE FIRM REQUIRED REGISTERED REPRESENTATIVES WHO PRODUCED CONSOLIDATED REPORTS USING AN APPLICATION OTHER THAN ONE OF THREE APPROVED METHODS TO EITHER UPLOAD THE CONSOLIDATED REPORTS TO THE FIRM'S COMMUNICATIONS REVIEW SYSTEM SO THAT THEY COULD BE FORWARDED TO A DESIGNATED SUPERVISOR FOR REVIEW, OR PROVIDE THE REPORTS DIRECTLY TO THEIR SUPERVISOR. HOWEVER, THE FIRM FAILED TO ENSURE THAT REPRESENTATIVES WERE COMPLYING WITH THIS PROCEDURE OR THAT THE FIRM WAS CAPTURING THE FULL EXTENT OF REPRESENTATIVES' CONSOLIDATED REPORT ACTIVITY.
Sanction detail — filed text
THE FIRM WAS CENSURED, FINED $75,000, AND REQUIRED TO SUBMIT A CERTIFICATION, IN WRITING, TO FINRA WITHIN 90 DAYS OF THE ISSUANCE OF THIS AWC, CERTIFYING THAT THE FIRM HAS ADOPTED AND IMPLEMENTED PROCEDURES REASONBLY DESIGNED TO ENHANCE THE ENFORCEMENT OF ITS SUPERVISORY SYSTEM AND WSPS TO ENSURE AN EFFECTIVE REVIEW OF CONSOLIDATED REPORTS PRODUCED BY REGISTERED REPRESENTATIVES AND PROVIDED TO CUSTOMERS.
Full extracted filing text
Includes form instructions and options. Options shown in this text do not identify which boxes were selected.
GENERAL INSTRUCTIONS This Disclosure Reporting Page (DRP ADV) is an INITIAL OR AMENDED response used to report details for affirmative responses to Items 11.C., 11.D., 11.E., 11.F. or 11.G. of Form ADV. Regulatory Action Check item(s) being responded to: 11.C(1) 11.C(2) 11.C(3) 11.C(4) 11.C(5) 11.D(1) 11.D(2) 11.D(3) 11.D(4) 11.D(5) 11.E(1) 11.E(2) 11.E(3) 11.E(4) 11.F. 11.G. Use a separate DRP for each event or proceeding . The same event or proceeding may be reported for more than one person or entity using one DRP. File with a completed Execution Page. One event may result in more than one affirmative answer to Items 11.C., 11.D., 11.E., 11.F. or 11.G. Use only one DRP to report details related to the same event. If an event gives rise to actions by more than one regulator, provide details for each action on a separate DRP. PART I A. The person(s) or entity(ies) for whom this DRP is being filed is (are): You (the advisory firm) You and one or more of your advisory affiliates One or more of your advisory affiliates If this DRP is being filed for an advisory affiliate, give the full name of the advisory affiliate below (for individuals, Last name, First name, Middle name). If the advisory affiliate has a CRD number, provide that number. If not, indicate "non-registered" by checking the appropriate box. ADV DRP - ADVISORY AFFILIATE No Information Filed This DRP should be removed from the ADV record because the advisory affiliate(s) is no longer associated with the adviser. This DRP should be removed from the ADV record because: (1) the event or proceeding occurred more than ten years ago or (2) the adviser is registered or applying for registration with the SEC or reporting as an exempt reporting adviser with the SEC and the event was resolved in the adviser's or advisory affiliate's favor. If you are registered or registering with a state securities authority , you may remove a DRP for an event you reported only in response to Item 11.D(4), and only if that event occurred more than ten years ago. If you are registered or registering with the SEC, you may remove a DRP for any event listed in Item 11 that occurred more than ten years ago. This DRP should be removed from the ADV record because it was filed in error, such as due to a clerical or data-entry mistake. Explain the circumstances: B. If the advisory affiliate is registered through the IARD system or CRD system, has the advisory affiliate submitted a DRP (with Form ADV, BD or U-4) to the IARD or CRD for the event? If the answer is "Yes," no other information on this DRP must be provided. Yes No NOTE: The completion of this form does not relieve the advisory affiliate of its obligation to update its IARD or CRD records. PART II 1. Regulatory Action initiated by: SEC Other Federal State SRO Foreign (Full name of regulator, foreign financial regulatory authority, federal, state, or SRO) FINRA 2. Principal Sanction: Other Other Sanctions: 3. Date Initiated (MM/DD/YYYY): 01/27/2016 Exact Explanation If not exact, provide explanation: 4. Docket/Case Number: 2014039109201 5. Advisory Affiliate Employing Firm when activity occurred which led to the regulatory action (if applicable): 6. Principal Product Type: No Product Other Product Types: 7. Describe the allegations related to this regulatory action (your response must fit within the space provided): WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTED TO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT FAILED TO ENFORCE A SUPERVISORY SYSTEM AND WSPS REASONABLY DESIGNED TO ENSURE AN EFFECTIVE REVIEW OF CONSOLIDATED REPORTS PRODUCED BY REGISTERED REPRESENTATIVES AND PROVIDED TO CUSTOMERS. THE FINDINGS STATED THAT THE FIRM REQUIRED REGISTERED REPRESENTATIVES WHO PRODUCED CONSOLIDATED REPORTS USING AN APPLICATION OTHER THAN ONE OF THREE APPROVED METHODS TO EITHER UPLOAD THE CONSOLIDATED REPORTS TO THE FIRM'S COMMUNICATIONS REVIEW SYSTEM SO THAT THEY COULD BE FORWARDED TO A DESIGNATED SUPERVISOR FOR REVIEW, OR PROVIDE THE REPORTS DIRECTLY TO THEIR SUPERVISOR. HOWEVER, THE FIRM FAILED TO ENSURE THAT REPRESENTATIVES WERE COMPLYING WITH THIS PROCEDURE OR THAT THE FIRM WAS CAPTURING THE FULL EXTENT OF REPRESENTATIVES' CONSOLIDATED REPORT ACTIVITY. 8. Current Status? Pending On Appeal Final 9. If on appeal, regulatory action appealed to (SEC, SRO, Federal or State Court) and Date Appeal Filed: If Final or On Appeal, complete all items below. For Pending Actions, complete Item 13 only. 10. How was matter resolved: Acceptance, Waiver & Consent(AWC) 11. Resolution Date (MM/DD/YYYY): 01/27/2016 Exact Explanation If not exact, provide explanation: 12. Resolution Detail: A. Were any of the following Sanctions Ordered (check all appropriate items)? Monetary/Fine Amount: $ 75,000.00 Revocation/Expulsion/Denial Disgorgement/Restitution Censure Cease and Desist/Injunction Bar Suspension B. Other Sanctions Ordered: UNDERTAKING Sanction detail: if suspended, enjoined or barred, provide duration including start date and capacities affected (General Securities Principal, Financial Operations Principal, etc.). If requalification by exam/retraining was a condition of the sanction, provide length of time given to requalify/retrain, type of exam required and whether condition has been satisfied. If disposition resulted in a fine, penalty, restitution, disgorgement or monetary compensation, provide total amount, portion levied against you or an advisory affiliate, date paid and if any portion of penalty was waived: THE FIRM WAS CENSURED, FINED $75,000, AND REQUIRED TO SUBMIT A CERTIFICATION, IN WRITING, TO FINRA WITHIN 90 DAYS OF THE ISSUANCE OF THIS AWC, CERTIFYING THAT THE FIRM HAS ADOPTED AND IMPLEMENTED PROCEDURES REASONBLY DESIGNED TO ENHANCE THE ENFORCEMENT OF ITS SUPERVISORY SYSTEM AND WSPS TO ENSURE AN EFFECTIVE REVIEW OF CONSOLIDATED REPORTS PRODUCED BY REGISTERED REPRESENTATIVES AND PROVIDED TO CUSTOMERS. 13. Provide a brief summary of details related to the action status and (or) disposition and include relevant terms, conditions and dates (your response must fit within the space provided).
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regulatory · block 6PDF pages 59–61
- Regulator name — filed text
- FINRA
- How was matter resolved — filed text
- Acceptance, Waiver & Consent(AWC)
Action status / disposition — filed text
IN RESOLVING THIS MATTER, FINRA RECOGNIZED THE EXTRAORDINARY COOPERATION OF THE FIRM FOR: (1) INITIATING AN INVESTIGATION TO IDENTIFY WHETHER ELIGIBLE CUSTOMERS RECEIVED SALES CHARGE WAIVERS DURING THE RELEVANT PERIOD, AND SELF-REPORTING ITS FINDINGS TO FINRA; (2) PROVIDING RESTITUTION TO ELIGIBLE CUSTOMERS FOR A PERIOD OF SEVEN AND ONE-HALF YEARS; (3) PROMPTLY ESTABLISHING A PLAN OF REMEDIATION FOR ELIGIBLE CUSTOMERS WHO DID NOT RECEIVE APPROPRIATE SALES CHARGE WAIVERS; (4) PROMPTLY TAKING ACTION AND REMEDIAL STEPS TO CORRECT THE VIOLATIVE CONDUCT, INCLUDING BY MAKING PROGRAMMING CHANGES TO PRECLUDE ONGOING CUSTOMER HARM AS THE FIRM INSTITUTED PERMANENT SYSTEM UPGRADES; AND (5) EMPLOYING SUBSEQUENT CORRECTIVE MEASURES, PRIOR TO DETECTION OR INTERVENTION BY A REGULATOR, TO REVISE THE FIRM'S PROCEDURES TO AVOID RECURRENCE OF THE MISCONDUCT.
Other filed details
Description of allegations — filed text
WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTED TO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT DISADVANTAGED CERTAIN RETIREMENT PLAN AND CHARITABLE ORGANIZATION CUSTOMERS THAT WERE ELIGIBLE TO PURCHASE CLASS A SHARES IN CERTAIN MUTUAL FUNDS WITHOUT A FRONT-END SALES CHARGE. THE FINDINGS STATED THAT THESE ELIGIBLE CUSTOMERS WERE INSTEAD SOLD CLASS A SHARES WITH A FRONT-END SALES CHARGE, OR CLASS B OR C SHARES WITH BACK-END SALES CHARGES AND HIGHER ONGOING FEES AND EXPENSES. THESE SALES DISADVANTAGED ELIGIBLE CUSTOMERS BY CAUSING THE CUSTOMERS TO PAY HIGHER FEES THAN THEY WERE ACTUALLY REQUIRED TO PAY. THE FINDINGS ALSO STATED THAT THE FIRM FAILED TO REASONABLY SUPERVISE THE APPLICATION OF SALES-CHARGE WAIVERS TO ELIGIBLE MUTUAL FUND SALES. THE FIRM RELIED ON ITS FINANCIAL ADVISORS TO DETERMINE THE APPLICABILITY OF SALES-CHARGE WAIVERS, BUT FAILED TO MAINTAIN ADEQUATE WRITTEN SUPERVISORY PROCEDURES (WSPS) TO ASSIST FINANCIAL ADVISORS IN MAKING THIS DETERMINATION. IN ADDITION, THE FIRM FAILED TO ADEQUATELY NOTIFY AND TRAIN ITS FINANCIAL ADVISORS REGARDING THE AVAILABILITY OF MUTUAL FUND SALES- CHARGE WAIVERS FOR ELIGIBLE CUSTOMERS. THE FIRM ALSO FAILED TO ADOPT ADEQUATE CONTROLS TO DETECT INSTANCES IN WHICH THE FIRM DID NOT PROVIDE SALES-CHARGE WAIVERS TO THE ELIGIBLE CUSTOMERS IN CONNECTION WITH THEIR MUTUAL FUND PURCHASES. AS A RESULT OF THE FIRM'S FAILURE TO APPLY APPLICABLE SALES-CHARGE WAIVERS, THE FIRM ESTIMATES THAT ELIGIBLE CUSTOMERS WERE OVERCHARGED BY APPROXIMATELY $1,167,689 FOR MUTUAL FUND PURCHASES MADE SINCE JANUARY 1, 2011.
Sanction detail — filed text
THE FIRM WAS CENSURED AND REQUIRED TO PROVIDE FINRA WITH A REMEDIATION PLAN TO REMEDIATE ELIGIBLE CUSTOMERS WHO QUALIFIED FOR, BUT DID NOT RECEIVE, THE APPLICABLE MUTUAL FUND SALES-CHARGE WAIVER. AS PART OF THIS SETTLEMENT, THE FIRM AGREED TO PAY RESTITUTION TO ELIGIBLE CUSTOMERS, WHICH IS ESTIMATED TO TOTAL $1,368,681 (THE AMOUNT ELIGIBLE CUSTOMERS WERE OVERCHARGED, INCLUSIVE OF INTEREST).
Full extracted filing text
Includes form instructions and options. Options shown in this text do not identify which boxes were selected.
GENERAL INSTRUCTIONS This Disclosure Reporting Page (DRP ADV) is an INITIAL OR AMENDED response used to report details for affirmative responses to Items 11.C., 11.D., 11.E., 11.F. or 11.G. of Form ADV. Regulatory Action Check item(s) being responded to: 11.C(1) 11.C(2) 11.C(3) 11.C(4) 11.C(5) 11.D(1) 11.D(2) 11.D(3) 11.D(4) 11.D(5) 11.E(1) 11.E(2) 11.E(3) 11.E(4) 11.F. 11.G. Use a separate DRP for each event or proceeding . The same event or proceeding may be reported for more than one person or entity using one DRP. File with a completed Execution Page. One event may result in more than one affirmative answer to Items 11.C., 11.D., 11.E., 11.F. or 11.G. Use only one DRP to report details related to the same event. If an event gives rise to actions by more than one regulator, provide details for each action on a separate DRP. PART I A. The person(s) or entity(ies) for whom this DRP is being filed is (are): You (the advisory firm) You and one or more of your advisory affiliates One or more of your advisory affiliates If this DRP is being filed for an advisory affiliate, give the full name of the advisory affiliate below (for individuals, Last name, First name, Middle name). If the advisory affiliate has a CRD number, provide that number. If not, indicate "non-registered" by checking the appropriate box. ADV DRP - ADVISORY AFFILIATE No Information Filed This DRP should be removed from the ADV record because the advisory affiliate(s) is no longer associated with the adviser. This DRP should be removed from the ADV record because: (1) the event or proceeding occurred more than ten years ago or (2) the adviser is registered or applying for registration with the SEC or reporting as an exempt reporting adviser with the SEC and the event was resolved in the adviser's or advisory affiliate's favor. If you are registered or registering with a state securities authority , you may remove a DRP for an event you reported only in response to Item 11.D(4), and only if that event occurred more than ten years ago. If you are registered or registering with the SEC, you may remove a DRP for any event listed in Item 11 that occurred more than ten years ago. This DRP should be removed from the ADV record because it was filed in error, such as due to a clerical or data-entry mistake. Explain the circumstances: B. If the advisory affiliate is registered through the IARD system or CRD system, has the advisory affiliate submitted a DRP (with Form ADV, BD or U-4) to the IARD or CRD for the event? If the answer is "Yes," no other information on this DRP must be provided. Yes No NOTE: The completion of this form does not relieve the advisory affiliate of its obligation to update its IARD or CRD records. PART II 1. Regulatory Action initiated by: SEC Other Federal State SRO Foreign (Full name of regulator, foreign financial regulatory authority, federal, state, or SRO) FINRA 2. Principal Sanction: Censure Other Sanctions: 3. Date Initiated (MM/DD/YYYY): 09/05/2018 Exact Explanation If not exact, provide explanation: 4. Docket/Case Number: 2017053723701 5. Advisory Affiliate Employing Firm when activity occurred which led to the regulatory action (if applicable): 6. Principal Product Type: Mutual Fund(s) Other Product Types: 7. Describe the allegations related to this regulatory action (your response must fit within the space provided): WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTED TO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT DISADVANTAGED CERTAIN RETIREMENT PLAN AND CHARITABLE ORGANIZATION CUSTOMERS THAT WERE ELIGIBLE TO PURCHASE CLASS A SHARES IN CERTAIN MUTUAL FUNDS WITHOUT A FRONT-END SALES CHARGE. THE FINDINGS STATED THAT THESE ELIGIBLE CUSTOMERS WERE INSTEAD SOLD CLASS A SHARES WITH A FRONT-END SALES CHARGE, OR CLASS B OR C SHARES WITH BACK-END SALES CHARGES AND HIGHER ONGOING FEES AND EXPENSES. THESE SALES DISADVANTAGED ELIGIBLE CUSTOMERS BY CAUSING THE CUSTOMERS TO PAY HIGHER FEES THAN THEY WERE ACTUALLY REQUIRED TO PAY. THE FINDINGS ALSO STATED THAT THE FIRM FAILED TO REASONABLY SUPERVISE THE APPLICATION OF SALES-CHARGE WAIVERS TO ELIGIBLE MUTUAL FUND SALES. THE FIRM RELIED ON ITS FINANCIAL ADVISORS TO DETERMINE THE APPLICABILITY OF SALES-CHARGE WAIVERS, BUT FAILED TO MAINTAIN ADEQUATE WRITTEN SUPERVISORY PROCEDURES (WSPS) TO ASSIST FINANCIAL ADVISORS IN MAKING THIS DETERMINATION. IN ADDITION, THE FIRM FAILED TO ADEQUATELY NOTIFY AND TRAIN ITS FINANCIAL ADVISORS REGARDING THE AVAILABILITY OF MUTUAL FUND SALES- CHARGE WAIVERS FOR ELIGIBLE CUSTOMERS. THE FIRM ALSO FAILED TO ADOPT ADEQUATE CONTROLS TO DETECT INSTANCES IN WHICH THE FIRM DID NOT PROVIDE SALES-CHARGE WAIVERS TO THE ELIGIBLE CUSTOMERS IN CONNECTION WITH THEIR MUTUAL FUND PURCHASES. AS A RESULT OF THE FIRM'S FAILURE TO APPLY APPLICABLE SALES-CHARGE WAIVERS, THE FIRM ESTIMATES THAT ELIGIBLE CUSTOMERS WERE OVERCHARGED BY APPROXIMATELY $1,167,689 FOR MUTUAL FUND PURCHASES MADE SINCE JANUARY 1, 2011. 8. Current Status? Pending On Appeal Final 9. If on appeal, regulatory action appealed to (SEC, SRO, Federal or State Court) and Date Appeal Filed: If Final or On Appeal, complete all items below. For Pending Actions, complete Item 13 only. 10. How was matter resolved: Acceptance, Waiver & Consent(AWC) 11. Resolution Date (MM/DD/YYYY): 09/05/2018 Exact Explanation If not exact, provide explanation: 12. Resolution Detail: A. Were any of the following Sanctions Ordered (check all appropriate items)? Monetary/Fine Amount: $ Revocation/Expulsion/Denial Disgorgement/Restitution Censure Cease and Desist/Injunction Bar Suspension B. Other Sanctions Ordered: INTEREST; REMEDIATION PLAN Sanction detail: if suspended, enjoined or barred, provide duration including start date and capacities affected (General Securities Principal, Financial Operations Principal, etc.). If requalification by exam/retraining was a condition of the sanction, provide length of time given to requalify/retrain, type of exam required and whether condition has been satisfied. If disposition resulted in a fine, penalty, restitution, disgorgement or monetary compensation, provide total amount, portion levied against you or an advisory affiliate, date paid and if any portion of penalty was waived: THE FIRM WAS CENSURED AND REQUIRED TO PROVIDE FINRA WITH A REMEDIATION PLAN TO REMEDIATE ELIGIBLE CUSTOMERS WHO QUALIFIED FOR, BUT DID NOT RECEIVE, THE APPLICABLE MUTUAL FUND SALES-CHARGE WAIVER. AS PART OF THIS SETTLEMENT, THE FIRM AGREED TO PAY RESTITUTION TO ELIGIBLE CUSTOMERS, WHICH IS ESTIMATED TO TOTAL $1,368,681 (THE AMOUNT ELIGIBLE CUSTOMERS WERE OVERCHARGED, INCLUSIVE OF INTEREST). 13. Provide a brief summary of details related to the action status and (or) disposition and include relevant terms, conditions and dates (your response must fit within the space provided). IN RESOLVING THIS MATTER, FINRA RECOGNIZED THE EXTRAORDINARY COOPERATION OF THE FIRM FOR: (1) INITIATING AN INVESTIGATION TO IDENTIFY WHETHER ELIGIBLE CUSTOMERS RECEIVED SALES CHARGE WAIVERS DURING THE RELEVANT PERIOD, AND SELF-REPORTING ITS FINDINGS TO FINRA; (2) PROVIDING RESTITUTION TO ELIGIBLE CUSTOMERS FOR A PERIOD OF SEVEN AND ONE-HALF YEARS; (3) PROMPTLY ESTABLISHING A PLAN OF REMEDIATION FOR ELIGIBLE CUSTOMERS WHO DID NOT RECEIVE APPROPRIATE SALES CHARGE WAIVERS; (4) PROMPTLY TAKING ACTION AND REMEDIAL STEPS TO CORRECT THE VIOLATIVE CONDUCT, INCLUDING BY MAKING PROGRAMMING CHANGES TO PRECLUDE ONGOING CUSTOMER HARM AS THE FIRM INSTITUTED PERMANENT SYSTEM UPGRADES; AND (5) EMPLOYING SUBSEQUENT CORRECTIVE MEASURES, PRIOR TO DETECTION OR INTERVENTION BY A REGULATOR, TO REVISE THE FIRM'S PROCEDURES TO AVOID RECURRENCE OF THE MISCONDUCT.
regulatory · block 7PDF pages 61–63
- Regulator name — filed text
- FINRA
- Monetary/Fine Amount — filed text
- $ 35,000.00
- How was matter resolved — filed text
- Acceptance, Waiver & Consent(AWC)
Other filed details
Description of allegations — filed text
WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTED TO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT DURING THE RELEVANT PERIOD, AUGUST 1, 2015 THROUGH SEPTEMBER 1, 2017, IT FAILED TO IMPLEMENT REASONABLY DESIGNED SURVEILLANCE PROCEDURES TO MONITOR ITS REGISTERED REPRESENTATIVES' RATES OF EFFECTING VARIABLE ANNUITY EXCHANGES. THE FINDINGS STATED THAT THE FIRM ONLY TRACKED EXCHANGES WHERE IT WAS THE BROKER OF RECORD FOR THE VARIABLE ANNUITY THAT WAS BEING EXCHANGED. IN SO DOING, THE FIRM DID NOT TRACK VARIABLE ANNUITY EXCHANGES WHERE THE FIRM WAS NOT THE BROKER OF RECORD FOR THE VARIABLE ANNUITY THAT WAS BEING EXCHANGED. THE FINDINGS ALSO STATED THAT DURING THE RELEVANT PERIOD, MORE THAN HALF OF THE APPROXIMATELY 2,800 VARIABLE ANNUITY EXCHANGES EFFECTED BY THE FIRM'S REPRESENTATIVES WERE EXCLUDED FROM ITS SURVEILLANCE REPORT BECAUSE LINCOLN WAS NOT THE BROKER OF RECORD FOR THE VARIABLE ANNUITY THAT WAS BEING EXCHANGED. AFTER FINRA RAISED THIS ISSUE WITH THE FIRM, IT CORRECTED ITS SURVEILLANCE REPORT TO INCLUDE ALL VARIABLE ANNUITY EXCHANGES.
Sanction detail — filed text
THE FIRM PAID THE $35,000.00 FINE ON 10/3/2018
Full extracted filing text
Includes form instructions and options. Options shown in this text do not identify which boxes were selected.
GENERAL INSTRUCTIONS This Disclosure Reporting Page (DRP ADV) is an INITIAL OR AMENDED response used to report details for affirmative responses to Items 11.C., 11.D., 11.E., 11.F. or 11.G. of Form ADV. Regulatory Action Check item(s) being responded to: 11.C(1) 11.C(2) 11.C(3) 11.C(4) 11.C(5) 11.D(1) 11.D(2) 11.D(3) 11.D(4) 11.D(5) 11.E(1) 11.E(2) 11.E(3) 11.E(4) 11.F. 11.G. Use a separate DRP for each event or proceeding . The same event or proceeding may be reported for more than one person or entity using one DRP. File with a completed Execution Page. One event may result in more than one affirmative answer to Items 11.C., 11.D., 11.E., 11.F. or 11.G. Use only one DRP to report details related to the same event. If an event gives rise to actions by more than one regulator, provide details for each action on a separate DRP. PART I A. The person(s) or entity(ies) for whom this DRP is being filed is (are): You (the advisory firm) You and one or more of your advisory affiliates One or more of your advisory affiliates If this DRP is being filed for an advisory affiliate, give the full name of the advisory affiliate below (for individuals, Last name, First name, Middle name). If the advisory affiliate has a CRD number, provide that number. If not, indicate "non-registered" by checking the appropriate box. ADV DRP - ADVISORY AFFILIATE No Information Filed This DRP should be removed from the ADV record because the advisory affiliate(s) is no longer associated with the adviser. This DRP should be removed from the ADV record because: (1) the event or proceeding occurred more than ten years ago or (2) the adviser is registered or applying for registration with the SEC or reporting as an exempt reporting adviser with the SEC and the event was resolved in the adviser's or advisory affiliate's favor. If you are registered or registering with a state securities authority , you may remove a DRP for an event you reported only in response to Item 11.D(4), and only if that event occurred more than ten years ago. If you are registered or registering with the SEC, you may remove a DRP for any event listed in Item 11 that occurred more than ten years ago. This DRP should be removed from the ADV record because it was filed in error, such as due to a clerical or data-entry mistake. Explain the circumstances: B. If the advisory affiliate is registered through the IARD system or CRD system, has the advisory affiliate submitted a DRP (with Form ADV, BD or U-4) to the IARD or CRD for the event? If the answer is "Yes," no other information on this DRP must be provided. Yes No NOTE: The completion of this form does not relieve the advisory affiliate of its obligation to update its IARD or CRD records. PART II 1. Regulatory Action initiated by: SEC Other Federal State SRO Foreign (Full name of regulator, foreign financial regulatory authority, federal, state, or SRO) FINRA 2. Principal Sanction: Censure Other Sanctions: FINE 3. Date Initiated (MM/DD/YYYY): 09/25/2018 Exact Explanation If not exact, provide explanation: 4. Docket/Case Number: 2017052410201 5. Advisory Affiliate Employing Firm when activity occurred which led to the regulatory action (if applicable): 6. Principal Product Type: Annuity(ies) - Variable Other Product Types: 7. Describe the allegations related to this regulatory action (your response must fit within the space provided): WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTED TO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT DURING THE RELEVANT PERIOD, AUGUST 1, 2015 THROUGH SEPTEMBER 1, 2017, IT FAILED TO IMPLEMENT REASONABLY DESIGNED SURVEILLANCE PROCEDURES TO MONITOR ITS REGISTERED REPRESENTATIVES' RATES OF EFFECTING VARIABLE ANNUITY EXCHANGES. THE FINDINGS STATED THAT THE FIRM ONLY TRACKED EXCHANGES WHERE IT WAS THE BROKER OF RECORD FOR THE VARIABLE ANNUITY THAT WAS BEING EXCHANGED. IN SO DOING, THE FIRM DID NOT TRACK VARIABLE ANNUITY EXCHANGES WHERE THE FIRM WAS NOT THE BROKER OF RECORD FOR THE VARIABLE ANNUITY THAT WAS BEING EXCHANGED. THE FINDINGS ALSO STATED THAT DURING THE RELEVANT PERIOD, MORE THAN HALF OF THE APPROXIMATELY 2,800 VARIABLE ANNUITY EXCHANGES EFFECTED BY THE FIRM'S REPRESENTATIVES WERE EXCLUDED FROM ITS SURVEILLANCE REPORT BECAUSE LINCOLN WAS NOT THE BROKER OF RECORD FOR THE VARIABLE ANNUITY THAT WAS BEING EXCHANGED. AFTER FINRA RAISED THIS ISSUE WITH THE FIRM, IT CORRECTED ITS SURVEILLANCE REPORT TO INCLUDE ALL VARIABLE ANNUITY EXCHANGES. 8. Current Status? Pending On Appeal Final 9. If on appeal, regulatory action appealed to (SEC, SRO, Federal or State Court) and Date Appeal Filed: If Final or On Appeal, complete all items below. For Pending Actions, complete Item 13 only. 10. How was matter resolved: Acceptance, Waiver & Consent(AWC) 11. Resolution Date (MM/DD/YYYY): 09/25/2018 Exact Explanation If not exact, provide explanation: 12. Resolution Detail: A. Were any of the following Sanctions Ordered (check all appropriate items)? Monetary/Fine Amount: $ 35,000.00 Revocation/Expulsion/Denial Disgorgement/Restitution Censure Cease and Desist/Injunction Bar Suspension B. Other Sanctions Ordered: Sanction detail: if suspended, enjoined or barred, provide duration including start date and capacities affected (General Securities Principal, Financial Operations Principal, etc.). If requalification by exam/retraining was a condition of the sanction, provide length of time given to requalify/retrain, type of exam required and whether condition has been satisfied. If disposition resulted in a fine, penalty, restitution, disgorgement or monetary compensation, provide total amount, portion levied against you or an advisory affiliate, date paid and if any portion of penalty was waived: THE FIRM PAID THE $35,000.00 FINE ON 10/3/2018 13. Provide a brief summary of details related to the action status and (or) disposition and include relevant terms, conditions and dates (your response must fit within the space provided).
regulatory · block 8PDF pages 63–65
- Regulator name — filed text
- FINRA
- Monetary/Fine Amount — filed text
- $ 35,000.00
- How was matter resolved — filed text
- Acceptance, Waiver & Consent(AWC)
Other filed details
Description of allegations — filed text
WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTED TO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT ITS WSPS DID NOT REASONABLY ADDRESS THE REQUIREMENT TO REVIEW AND MONITOR INSTRUCTIONS TO TRANSMIT OR WITHDRAW CUSTOMER FUNDS, INCLUDING A METHOD OF CUSTOMER CONFIRMATION, NOTIFICATION, OR FOLLOW-UP THAT CAN BE DOCUMENTED. THE FINDINGS STATED THAT THE FIRM RELIED UPON OTHER WRITTEN POLICIES AND PROCEDURES MAINTAINED BY THE FIRM, INCLUDING THE FIRM'S OPERATIONS POLICY AND ITS ADVISOR COMPLIANCE MANUAL, WHICH DID NOT REASONABLY ADDRESS THE REQUIREMENT. THE FIRM'S OPERATIONS POLICY PROVIDED THAT IF A CUSTOMER CALLED THE FIRM TO REQUEST A TRANSMITTAL OF FUNDS TO AN OUTSIDE ENTITY, THE FIRM'S SERVICE REPRESENTATIVES WERE REQUIRED TO ASK PRIMARY VERIFICATION QUESTIONS OF THE CUSTOMER. THE OPERATIONS POLICY DIRECTED FIRM PERSONNEL TO ASK ADDITIONAL SECURITY QUESTIONS IF THE CLIENT EXHIBITED SUSPICIOUS BEHAVIOR OR WAS UNABLE TO PROVIDE THE REQUESTED VERIFICATION INFORMATION. THE OPERATIONS POLICY DID NOT STATE HOW MANY VERIFICATION QUESTIONS, PRIMARY OR SECONDARY, NEEDED TO BE ANSWERED CORRECTLY BEFORE GRANTING A REQUEST (OR, ALTERNATIVELY, HOW MANY QUESTIONS NEEDED TO BE ANSWERED INCORRECTLY BEFORE REJECTING A REQUEST). ADDITIONALLY, THE ADVISOR COMPLIANCE MANUAL NOTED THE IMPORTANCE OF DETECTING RED FLAGS OF IDENTITY THEFT, BUT IT DID NOT DEFINE RED FLAGS OR EXPLAIN HOW TO IDENTIFY OR RESPOND TO RED FLAGS. THE FIRM RECEIVED TELEPHONE CALLS FROM A WOMAN IMPERSONATING A CUSTOMER. THE IMPOSTER ALSO FAXED TO THE FIRM REQUESTS FOR TRANSMITTALS OF FUNDS FROM THE CUSTOMER'S BROKERAGE ACCOUNT AT THE FIRM TO A BANK ACCOUNT, PURPORTEDLY IN HER OWN NAME, WHICH THE FIRM PROCESSED. ULTIMATELY, THE IMPOSTER OBTAINED APPROXIMATELY $15,800 FROM THE CUSTOMER'S ACCOUNT. THE FIRM FAILED TO REASONABLY IDENTIFY AND RESPOND TO MULTIPLE RED FLAGS CONCERNING THE CUSTOMER. THE FIRM REIMBURSED THE CUSTOMER THE FULL AMOUNT THAT WAS WRONGLY TRANSFERRED FROM HER ACCOUNT, PLUS MISSED MARKET GAINS. THE CUSTOMER ALSO WAS OFFERED CREDIT MONITORING. THE FINDINGS ALSO STATED THAT THE FIRM FAILED REASONABLY TO IMPLEMENT ITS WSPS CONCERNING THE TRANSMITTAL OF CUSTOMER FUNDS TO THIRD PARTIES. AN AFFILIATED PERSON OF THE FIRM RECEIVED AN EMAIL FROM A SECOND CUSTOMER'S EMAIL ADDRESS. THE SECOND CUSTOMER DID NOT SEND THE EMAIL, AN IMPOSTOR DID. IN THE EMAIL, THE IMPOSTER ASKED HOW TO TRANSFER $30,000 THAT DAY TO A THIRD PARTY VIA CHECK. WHEN THE AFFILIATED PERSON EMAILED THE IMPOSTER AT THE SECOND CUSTOMER'S EMAIL ADDRESS AND INFORMED HIM THAT THE FIRM MAY NEED TO CONTACT HIM BY TELEPHONE TO VERIFY THE TRANSMITTAL REQUEST, THE IMPOSTER REPLIED: "THEY CAN VERIFY THE WITHDRAWAL WITH MY SIGNATURE AS I WOULD BE GETTING INTO A MEETING SOON." THE AFFILIATED PERSON THEN EMAILED THE IMPOSTER AN AUTHORIZATION LETTER, WHICH THE IMPOSTER RETURNED. THE SECOND CUSTOMER'S REGISTERED REPRESENTATIVE DID NOT ATTEST TO THE AUTHENTICITY OF THE SIGNATURE ON THE AUTHORIZATION LETTER. IN FACT, THE SIGNATURE WAS ELECTRONICALLY AFFIXED TO THE LETTER OF AUTHORIZATION AND COULD BE MANIPULATED. MOREOVER, NO ONE ASSOCIATED WITH THE FIRM CALLED THE SECOND CUSTOMER TO VERIFY THE TRANSMITTAL REQUEST, AS REQUIRED BY THE FIRM'S PROCEDURES. FOLLOWING ITS DISCOVERY OF THE EVENTS DESCRIBED ABOVE INVOLVING THE CUSTOMER ACCOUNTS, THE FIRM UNDERTOOK REMEDIAL MEASURES TO ADDRESS THE DEFICIENCIES IN ITS WSPS AND SUPERVISORY SYSTEM.
Sanction detail — filed text
THE FIRM WAS CENSURED, FINED $35,000, AND REQUIRED TO CERTIFY TO FINRA THAT THE FIRM HAS COMPLETED A REVIEW OF ITS POLICIES, SYSTEMS, AND PROCEDURES REGARDING THE MONITORING OF TRANSMITTALS OF CUSTOMER FUNDS, AND AS OF THE DATE OF THE CERTIFICATION, THE FIRM'S POLICIES, SYSTEMS, AND PROCEDURES ARE REASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITH APPLICABLE SECURITIES LAWS, REGULATIONS, AND FINRA RULES.
Full extracted filing text
Includes form instructions and options. Options shown in this text do not identify which boxes were selected.
GENERAL INSTRUCTIONS This Disclosure Reporting Page (DRP ADV) is an INITIAL OR AMENDED response used to report details for affirmative responses to Items 11.C., 11.D., 11.E., 11.F. or 11.G. of Form ADV. Regulatory Action Check item(s) being responded to: 11.C(1) 11.C(2) 11.C(3) 11.C(4) 11.C(5) 11.D(1) 11.D(2) 11.D(3) 11.D(4) 11.D(5) 11.E(1) 11.E(2) 11.E(3) 11.E(4) 11.F. 11.G. Use a separate DRP for each event or proceeding . The same event or proceeding may be reported for more than one person or entity using one DRP. File with a completed Execution Page. One event may result in more than one affirmative answer to Items 11.C., 11.D., 11.E., 11.F. or 11.G. Use only one DRP to report details related to the same event. If an event gives rise to actions by more than one regulator, provide details for each action on a separate DRP. PART I A. The person(s) or entity(ies) for whom this DRP is being filed is (are): You (the advisory firm) You and one or more of your advisory affiliates One or more of your advisory affiliates If this DRP is being filed for an advisory affiliate, give the full name of the advisory affiliate below (for individuals, Last name, First name, Middle name). If the advisory affiliate has a CRD number, provide that number. If not, indicate "non-registered" by checking the appropriate box. ADV DRP - ADVISORY AFFILIATE No Information Filed This DRP should be removed from the ADV record because the advisory affiliate(s) is no longer associated with the adviser. This DRP should be removed from the ADV record because: (1) the event or proceeding occurred more than ten years ago or (2) the adviser is registered or applying for registration with the SEC or reporting as an exempt reporting adviser with the SEC and the event was resolved in the adviser's or advisory affiliate's favor. If you are registered or registering with a state securities authority , you may remove a DRP for an event you reported only in response to Item 11.D(4), and only if that event occurred more than ten years ago. If you are registered or registering with the SEC, you may remove a DRP for any event listed in Item 11 that occurred more than ten years ago. This DRP should be removed from the ADV record because it was filed in error, such as due to a clerical or data-entry mistake. Explain the circumstances: B. If the advisory affiliate is registered through the IARD system or CRD system, has the advisory affiliate submitted a DRP (with Form ADV, BD or U-4) to the IARD or CRD for the event? If the answer is "Yes," no other information on this DRP must be provided. Yes No NOTE: The completion of this form does not relieve the advisory affiliate of its obligation to update its IARD or CRD records. PART II 1. Regulatory Action initiated by: SEC Other Federal State SRO Foreign (Full name of regulator, foreign financial regulatory authority, federal, state, or SRO) FINRA 2. Principal Sanction: Censure Other Sanctions: FINE AND UNDERTAKING 3. Date Initiated (MM/DD/YYYY): 12/10/2020 Exact Explanation If not exact, provide explanation: 4. Docket/Case Number: 2018056408401 5. Advisory Affiliate Employing Firm when activity occurred which led to the regulatory action (if applicable): 6. Principal Product Type: No Product Other Product Types: 7. Describe the allegations related to this regulatory action (your response must fit within the space provided): WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTED TO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT ITS WSPS DID NOT REASONABLY ADDRESS THE REQUIREMENT TO REVIEW AND MONITOR INSTRUCTIONS TO TRANSMIT OR WITHDRAW CUSTOMER FUNDS, INCLUDING A METHOD OF CUSTOMER CONFIRMATION, NOTIFICATION, OR FOLLOW-UP THAT CAN BE DOCUMENTED. THE FINDINGS STATED THAT THE FIRM RELIED UPON OTHER WRITTEN POLICIES AND PROCEDURES MAINTAINED BY THE FIRM, INCLUDING THE FIRM'S OPERATIONS POLICY AND ITS ADVISOR COMPLIANCE MANUAL, WHICH DID NOT REASONABLY ADDRESS THE REQUIREMENT. THE FIRM'S OPERATIONS POLICY PROVIDED THAT IF A CUSTOMER CALLED THE FIRM TO REQUEST A TRANSMITTAL OF FUNDS TO AN OUTSIDE ENTITY, THE FIRM'S SERVICE REPRESENTATIVES WERE REQUIRED TO ASK PRIMARY VERIFICATION QUESTIONS OF THE CUSTOMER. THE OPERATIONS POLICY DIRECTED FIRM PERSONNEL TO ASK ADDITIONAL SECURITY QUESTIONS IF THE CLIENT EXHIBITED SUSPICIOUS BEHAVIOR OR WAS UNABLE TO PROVIDE THE REQUESTED VERIFICATION INFORMATION. THE OPERATIONS POLICY DID NOT STATE HOW MANY VERIFICATION QUESTIONS, PRIMARY OR SECONDARY, NEEDED TO BE ANSWERED CORRECTLY BEFORE GRANTING A REQUEST (OR, ALTERNATIVELY, HOW MANY QUESTIONS NEEDED TO BE ANSWERED INCORRECTLY BEFORE REJECTING A REQUEST). ADDITIONALLY, THE ADVISOR COMPLIANCE MANUAL NOTED THE IMPORTANCE OF DETECTING RED FLAGS OF IDENTITY THEFT, BUT IT DID NOT DEFINE RED FLAGS OR EXPLAIN HOW TO IDENTIFY OR RESPOND TO RED FLAGS. THE FIRM RECEIVED TELEPHONE CALLS FROM A WOMAN IMPERSONATING A CUSTOMER. THE IMPOSTER ALSO FAXED TO THE FIRM REQUESTS FOR TRANSMITTALS OF FUNDS FROM THE CUSTOMER'S BROKERAGE ACCOUNT AT THE FIRM TO A BANK ACCOUNT, PURPORTEDLY IN HER OWN NAME, WHICH THE FIRM PROCESSED. ULTIMATELY, THE IMPOSTER OBTAINED APPROXIMATELY $15,800 FROM THE CUSTOMER'S ACCOUNT. THE FIRM FAILED TO REASONABLY IDENTIFY AND RESPOND TO MULTIPLE RED FLAGS CONCERNING THE CUSTOMER. THE FIRM REIMBURSED THE CUSTOMER THE FULL AMOUNT THAT WAS WRONGLY TRANSFERRED FROM HER ACCOUNT, PLUS MISSED MARKET GAINS. THE CUSTOMER ALSO WAS OFFERED CREDIT MONITORING. THE FINDINGS ALSO STATED THAT THE FIRM FAILED REASONABLY TO IMPLEMENT ITS WSPS CONCERNING THE TRANSMITTAL OF CUSTOMER FUNDS TO THIRD PARTIES. AN AFFILIATED PERSON OF THE FIRM RECEIVED AN EMAIL FROM A SECOND CUSTOMER'S EMAIL ADDRESS. THE SECOND CUSTOMER DID NOT SEND THE EMAIL, AN IMPOSTOR DID. IN THE EMAIL, THE IMPOSTER ASKED HOW TO TRANSFER $30,000 THAT DAY TO A THIRD PARTY VIA CHECK. WHEN THE AFFILIATED PERSON EMAILED THE IMPOSTER AT THE SECOND CUSTOMER'S EMAIL ADDRESS AND INFORMED HIM THAT THE FIRM MAY NEED TO CONTACT HIM BY TELEPHONE TO VERIFY THE TRANSMITTAL REQUEST, THE IMPOSTER REPLIED: "THEY CAN VERIFY THE WITHDRAWAL WITH MY SIGNATURE AS I WOULD BE GETTING INTO A MEETING SOON." THE AFFILIATED PERSON THEN EMAILED THE IMPOSTER AN AUTHORIZATION LETTER, WHICH THE IMPOSTER RETURNED. THE SECOND CUSTOMER'S REGISTERED REPRESENTATIVE DID NOT ATTEST TO THE AUTHENTICITY OF THE SIGNATURE ON THE AUTHORIZATION LETTER. IN FACT, THE SIGNATURE WAS ELECTRONICALLY AFFIXED TO THE LETTER OF AUTHORIZATION AND COULD BE MANIPULATED. MOREOVER, NO ONE ASSOCIATED WITH THE FIRM CALLED THE SECOND CUSTOMER TO VERIFY THE TRANSMITTAL REQUEST, AS REQUIRED BY THE FIRM'S PROCEDURES. FOLLOWING ITS DISCOVERY OF THE EVENTS DESCRIBED ABOVE INVOLVING THE CUSTOMER ACCOUNTS, THE FIRM UNDERTOOK REMEDIAL MEASURES TO ADDRESS THE DEFICIENCIES IN ITS WSPS AND SUPERVISORY SYSTEM. 8. Current Status? Pending On Appeal Final 9. If on appeal, regulatory action appealed to (SEC, SRO, Federal or State Court) and Date Appeal Filed: If Final or On Appeal, complete all items below. For Pending Actions, complete Item 13 only. 10. How was matter resolved: Acceptance, Waiver & Consent(AWC) 11. Resolution Date (MM/DD/YYYY): 12/10/2020 Exact Explanation If not exact, provide explanation: 12. Resolution Detail: A. Were any of the following Sanctions Ordered (check all appropriate items)? Monetary/Fine Amount: $ 35,000.00 Revocation/Expulsion/Denial Disgorgement/Restitution Censure Cease and Desist/Injunction Bar Suspension B. Other Sanctions Ordered: UNDERTAKING Sanction detail: if suspended, enjoined or barred, provide duration including start date and capacities affected (General Securities Principal, Financial Operations Principal, etc.). If requalification by exam/retraining was a condition of the sanction, provide length of time given to requalify/retrain, type of exam required and whether condition has been satisfied. If disposition resulted in a fine, penalty, restitution, disgorgement or monetary compensation, provide total amount, portion levied against you or an advisory affiliate, date paid and if any portion of penalty was waived: THE FIRM WAS CENSURED, FINED $35,000, AND REQUIRED TO CERTIFY TO FINRA THAT THE FIRM HAS COMPLETED A REVIEW OF ITS POLICIES, SYSTEMS, AND PROCEDURES REGARDING THE MONITORING OF TRANSMITTALS OF CUSTOMER FUNDS, AND AS OF THE DATE OF THE CERTIFICATION, THE FIRM'S POLICIES, SYSTEMS, AND PROCEDURES ARE REASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITH APPLICABLE SECURITIES LAWS, REGULATIONS, AND FINRA RULES. 13. Provide a brief summary of details related to the action status and (or) disposition and include relevant terms, conditions and dates (your response must fit within the space provided).
* Metrics are based on the latest available data, including Form ADV filings, brochures, and relationship summaries pulled from the SEC IAPD, and may be subject to change. Learn what is included in the Rialytix database. Please refer to the firm's official disclosures for the most accurate information using their CRD number. This is not investment advice.