CAPITAL GUARDIAN, LLC

BrokerCheck Report

CAPITAL GUARDIAN, LLC

Section Title

Report Summary

Registration and Withdrawal

Firm History

CRD# 137919

1

2

8

Firm Profile 3 - 7

Page(s)

Firm Operations 9 - 14

Disclosure Events 15

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CRD# 137919

SEC# 8-67133

Main Office Location

521 EAST MOREHEAD STSUITE 405CHARLOTTE, NC 28202

Mailing Address

1395 BRICKELL AVE1500MIAMI, FL 33131

Business Telephone Number

786-594-4411

Report Summary for this Firm

This report summary provides an overview of the brokerage firm. Additional information for this firm can be foundin the detailed report.

Disclosure Events

Brokerage firms are required to disclose certaincriminal matters, regulatory actions, civil judicialproceedings and financial matters in which the firm orone of its control affiliates has been involved.

Are there events disclosed about this firm? Yes

The following types of disclosures have beenreported:

Type Count

Regulatory Event 5

Firm Profile

This firm is classified as a limited liability company.

This firm was formed in North Carolina on02/15/2005.

Its fiscal year ends in December.

Firm History

Information relating to the brokerage firm's historysuch as other business names and successions(e.g., mergers, acquisitions) can be found in thedetailed report.

Firm Operations

This brokerage firm is no longer registered withFINRA or a national securities exchange.

www.finra.org/brokercheck User Guidance

1©2021 FINRA. All rights reserved. Report about CAPITAL GUARDIAN, LLC


http://www.finra.org/brokercheck

http://www.finra.org/brokercheck_reports


This section provides information relating to the date the brokerage firm ceased doing business and the firm's financialobligations to customers or other brokerage firms.

Registration Withdrawal Information

07/13/2017

No

This firm terminated orwithdrew registration on:

Does this brokerage firm oweany money or securities toany customer or brokeragefirm?






This firm is classified as a limited liability company.

This firm was formed in North Carolina on 02/15/2005.

CRD#

This section provides the brokerage firm's full legal name, "Doing Business As" name, business and mailingaddresses, telephone number, and any alternate name by which the firm conducts business and where such name isused.

Firm Profile

Firm Names and Locations

Its fiscal year ends in December.


SEC#

137919

8-67133

Main Office Location

Mailing Address

Business Telephone Number

Doing business as CAPITAL GUARDIAN, LLC

786-594-4411

521 EAST MOREHEAD STSUITE 405CHARLOTTE, NC 28202

1395 BRICKELL AVE1500MIAMI, FL 33131






This section provides information relating to all direct owners and executive officers of the brokerage firm.

Direct Owners and Executive Officers

Firm Profile

Position

Percentage of Ownership

Is this a public reportingcompany?

Position Start Date

Does this owner direct themanagement or policies ofthe firm?

CAPITAL GUARDIAN HOLDING COMPANY, LLC

OWNER

75% or more

No

Domestic Entity

07/2009

No

Is this a domestic or foreignentity or an individual?

Legal Name & CRD# (if any):

Position



Position Start Date


FACELLA, STEPHEN R

MD

Less than 5%

No

Individual

01/2017

Yes

2912309



Position


Position Start Date

KARAFFA, JOHN EDWARD

CHIEF FINANCIAL OFFICER

Less than 5%

Individual

09/2011

4623625








Direct Owners and Executive Officers (continued)

Firm Profile




Less than 5%

No

Yes

Position



Position Start Date


RAMOS, SANDRO LOUIS

CCO INTERM

Less than 5%

No

Individual

01/2017

Yes

1695283








This section provides information relating to any indirect owners of the brokerage firm.

Indirect Owners

Firm Profile

NORTHERN STAR CAPITAL HOLDINGS LLC

OWNER

NORTHERN STAR CAPITAL MANAGEMENT LLC

75% or more

No

Domestic Entity

01/2015

Yes



Company through whichindirect ownership isestablished

Relationship to Direct Owner

Relationship Established




NORTHERN STAR CAPITAL MANAGEMENT LLC

OWNER

CAPITAL GUARDIAN HOLDING COMPANY, LLC

50% but less than 75%

No

Domestic Entity

01/2015

Yes









LOWE, JUSTIN PETER

Individual

3114310








Indirect Owners (continued)

Firm Profile

OWNER

NORTHERN STAR CAPITAL HOLDINGS LLC

25% but less than 50%

No

Individual

01/2015

Yes













Firm History

This section provides information relating to any successions (e.g., mergers, acquisitions) involving the firm.

No information reported.






Firm Operations

RegistrationsThis section provides information about the regulators (Securities and Exchange Commission (SEC), self-regulatoryorganizations (SROs), and U.S. states and territories) with which the brokerage firm is currently registered andlicensed, the date the license became effective, and certain information about the firm's SEC registration.

The firm's registration was from 04/06/2006 to 01/18/2018.

This firm is no longer registered.






Firm Operations

Types of BusinessThis section provides the types of business, including non-securities business, the brokerage firm is engaged in orexpects to be engaged in.

Other Types of Business

This firm does effect transactions in commodities, commodity futures, or commodity options.This firm does not engage in other non-securities business.

Non-Securities Business Description:

This firm currently conducts 16 types of businesses.

Types of Business

Broker or dealer retailing corporate equity securities over-the-counter

Broker or dealer selling corporate debt securities

Mutual fund retailer

U S. government securities broker

Municipal securities dealer

Municipal securities broker

Broker or dealer selling variable life insurance or annuities

Solicitor of time deposits in a financial institution

Put and call broker or dealer or option writer

Investment advisory services

Broker or dealer selling tax shelters or limited partnerships in primary distributions

Non-exchange member arranging for transactions in listed securities by exchange member

Private placements of securities

Broker or dealer selling interests in mortgages or other receivables

Broker or dealer involved in a networking, kiosk or similar arrangment with a: bank, savings bank or association, orcredit union

Other - ACT AS SOLICITOR IN INTRODUCING POTENTIAL INVESTORS TO HEDGE FUND MANAGERS.TRADING FIXED INCOME SERCURITIES (CORPORATE BONDS, GOVERNMENT SECURITIES,MUNICIPALBONDS, AND MORTGAGE BACKED SECURITIES) ON A PRINCIPAL BASIS.EFFECT TRANSACTIONS IN COMMODITY FUTURES, COMMODITIES OR COMMODITY OPTIONS AS BROKERFOR OTHERS.






Firm Operations

Clearing Arrangements

This firm does not hold or maintain funds or securities or provide clearing services for other broker-dealer(s).

Introducing Arrangements

This firm does refer or introduce customers to other brokers and dealers.

Name: PERSHING LLC

Business Address: ONE PERSHING PLAZAJERSEY CITY, NJ 07399

CRD #: 7560

Effective Date: 09/01/2005

Description: THE COMPANY WILL EXECUTE AND CLEAR TRANSACTIONS THROUGHPERSHING LLC. PERSHING LLC WILL HOLD ALL CUSTOMERACCOUNTS, FUNDS AND SECURITIES.






Firm Operations

Industry Arrangements

This firm does not have books or records maintained by a third party.

This firm does have accounts, funds, or securities maintained by a third party.

This firm does have customer accounts, funds, or securities maintained by a third party.

This firm does not have individuals who control its management or policies through agreement.

This firm does not have individuals who wholly or partly finance the firm's business.

Control Persons/Financing

Name: PERSHING LLC


CRD #: 7560


Description: THE COMPANY WILL EXECUTE AND CLEAR TRANSACTIONS THROUGHPERSHING LLC. PERSHING WILL HOLD ALL CUSTOMER ACCOUNTS,FUNDS AND SECURITIES.

Name: ADM INVESTOR SERVICES, INC.

Business Address: 141 WEST JACKSON BLVD.,SUITE 1600ACHICAGO, IL 60604


Description: THE FIRM WILL EXECUTE AND CLEAR TRANSACTION IN OPTIONS ANDFUTURES THROUGH ADM. ADM WILL HOLD ALL CUSTOMER ACCOUNTS,FUNDS AND SECURITIES.

Name: PERSHING LLC


CRD #: 7560


Description: THE COMPANY WILL EXECUTE AND CLEAR TRANSACTIONS THROUGHPERSHING LLC. PERSHING LLC WILL HOLD ALL CUSTOMERACCOUNTS, FUNDS AND SECURITIES.






Firm Operations

Organization AffiliatesThis section provides information on control relationships the firm has with other firms in the securities, investmentadvisory, or banking business.

This firm is, directly or indirectly:

· in control of· controlled by· or under common control withthe following partnerships, corporations, or other organizations engaged in the securities or investmentadvisory business.

Yes

Yes

No

01/20/2015

750 LEXINTON AVENUE24TH FLOORNEW YORK, NY 10022

152917

PAN RELIANCE CAPITAL ADVISORS is under common control with the firm.

PAN RELIANCE LLC IS AN SEC REGISTERED INVESTMENT ADVISOR THATIS 49 PERCENT OWNED BY NORTHERN STAR CAPITAL HOLDINGS LLC, THEULTIMATE PARENT OF THE APPLICANT.

Description:

Investment AdvisoryActivities:

Securities Activities:

Country:

Foreign Entity:

Effective Date:

Business Address:

CRD #:

Yes

No

No

12/14/2005

420 PARK STSUITE 100BELMONT, NC 28012

131631

CAPITAL GUARDIAN WEALTH MANAGEMENT, LLC is under common control with the firm.

Investment AdvisoryActivities:

Securities Activities:

Country:

Foreign Entity:

Effective Date:

Business Address:

CRD #:






Firm Operations

Organization Affiliates (continued)

THE OWNERS OF THE BROKER DEALER ALSO HAVE AN OWNERSHIPINTEREST IN THIS INVESTMENT ADVISOR.

Description:

This firm is not directly or indirectly, controlled by the following:

· bank holding company· national bank· state member bank of the Federal Reserve System· state non-member bank· savings bank or association· credit union· or foreign bank






Disclosure Events

All firms registered to sell securities or provide investment advice are required to disclose regulatory actions, criminal orcivil judicial proceedings, and certain financial matters in which the firm or one of its control affiliates has been involved.For your convenience, below is a matrix of the number and status of disclosure events involving this brokerage firm orone of its control affiliates. Further information regarding these events can be found in the subsequent pages of thisreport.

Final On AppealPending

Regulatory Event 0 5 0






Disclosure Event Details

What you should know about reported disclosure events:

1. BrokerCheck provides details for any disclosure event that was reported in CRD. It also includessummary information regarding FINRA arbitration awards in cases where the brokerage firm wasnamed as a respondent.

2. Certain thresholds must be met before an event is reported to CRD, for example: o A law enforcement agency must file formal charges before a brokerage firm is required to disclose a

particular criminal event.3. Disclosure events in BrokerCheck reports come from different sources:

o Disclosure events for this brokerage firm were reported by the firm and/or regulators. When the firmand a regulator report information for the same event, both versions of the event will appear in theBrokerCheck report. The different versions will be separated by a solid line with the reporting sourcelabeled.

4. There are different statuses and dispositions for disclosure events: o A disclosure event may have a status of pending, on appeal, or final.

§ A "pending" event involves allegations that have not been proven or formally adjudicated.§ An event that is "on appeal" involves allegations that have been adjudicated but are currently

being appealed.§ A "final" event has been concluded and its resolution is not subject to change.

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or (2) an administrative panel in an action brought by a regulator that is contested by the partycharged with some alleged wrongdoing.

§ A "settled" matter generally involves an agreement by the parties to resolve the matter.Please note that firms may choose to settle customer disputes or regulatory matters forbusiness or other reasons.

§ A "resolved" matter usually involves no payment to the customer and no finding ofwrongdoing on the part of the individual broker. Such matters generally involve customerdisputes.

5. You may wish to contact the brokerage firm to obtain further information regarding any of thedisclosure events contained in this BrokerCheck report.

Regulatory - Final

This type of disclosure event involves (1) a final, formal proceeding initiated by a regulatory authority (e.g., a statesecurities agency, self-regulatory organization, federal regulator such as the U.S. Securities and Exchange Commission,foreign financial regulatory body) for a violation of investment-related rules or regulations; or (2) a revocation orsuspension of the authority of a brokerage firm or its control affiliate to act as an attorney, accountant or federalcontractor.

Disclosure 1 of 5

Reporting Source: Regulator

Allegations: RESPONDENT CAPITAL GUARDIAN, LLC FAILED TO PAY FINES AND/ORCOSTS OF $26,587.82 IN FINRA CASE #2013035775302.

Current Status: Final






Initiated By: FINRA

Principal Sanction(s)/ReliefSought:

Revocation

Other Sanction(s)/ReliefSought:

Date Initiated: 01/18/2018

Docket/Case Number: 2013035775302

Principal Product Type: No Product

Other Product Type(s):

Allegations: RESPONDENT CAPITAL GUARDIAN, LLC FAILED TO PAY FINES AND/ORCOSTS OF $26,587.82 IN FINRA CASE #2013035775302.

Resolution Date: 01/18/2018

Resolution:

Other Sanctions Ordered:

Sanction Details: PURSUANT TO FINRA RULE 8320, RESPONDENT CAPITAL GUARDIAN, LLCIS EXPELLED FROM FINRA MEMBERSHIP AS OF THE CLOSE OF BUSINESSON JANUARY 18, 2018 FOR FAILURE TO PAY FINES AND/OR COSTS.

Does the order constitute afinal order based onviolations of any laws orregulations that prohibitfraudulent, manipulative, ordeceptive conduct?

No

Sanctions Ordered: Revocation/Expulsion/Denial

Other

Disclosure 2 of 5

i

Reporting Source: Firm

Initiated By: NORTH CAROLINA DEPARTMENT OF INSURANCE, RALEIGH NC


Docket/Case Number: 41759/8843237

Allegations: FAILED TO TIMELY REPORT TO THE NORTH CAROLINA DEPARTMENT OFINSURANCE (NCGS 58-33-32(K) AN ADMINISTRATIVE ACTION (FINRA CASE2013035775302) WITHIN 30 DAYS.






https://www.finra.org/rules-guidance/oversight-enforcement/finra-disciplinary-actions?search=2013035775302



Civil and Administrative Penalt(ies) /Fine(s)


NONE




Resolution:

Other Sanctions Ordered: NONE

Sanction Details: CG WAS FINED $250.00 AND IT WAS PAID JULY 7, 2016 CHECK #10709.

Firm Statement OVERSIGHT

Sanctions Ordered: Monetary/Fine $250.00

Settled

Disclosure 3 of 5

i


Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT THE FIRMFAILED TO DETECT, INVESTIGATE AND REPORT, IF APPROPRIATE,POTENTIALLY SUSPICIOUS TRANSACTIONS RELATED TO THE DEPOSITAND RAPID LIQUIDATION OF VENEZUELAN BONDS ISSUED UNDER THESITME PROGRAM AND MONEY MOVEMENTS INTO AND OUT OF CUSTOMERACCOUNTS WITH ONLY MINIMAL SECURITIES ACTIVITY. THE FINDINGSSTATED THAT APPROXIMATELY 30 CUSTOMER ACCOUNTS WERE OPENEDAT THE FIRM THAT A FORMER REGISTERED REPRESENTATIVE SERVICED,WHICH WERE ALL HELD IN THE NAME OF ENTITIES THAT WEREBENEFICIALLY OWNED BY CITIZENS OF VENEZUELA. THE ACCOUNTSPRESENTED A HIGHER RISK OF POTENTIALLY SUSPICIOUS ACTIVITYBASED ON THEIR GEOGRAPHIC LOCATION AND BUSINESS MODEL, WHICHINCLUDED THE LIQUIDATION OF VENEZUELAN SOVEREIGN AND STATE-SPONSORED BONDS. THE FINDINGS ALSO STATED THAT A SMALL NUMBEROF THE ACCOUNTS DID NOT LIQUIDATE VENEZUELAN BONDS, BUTRATHER, ENGAGED IN FREQUENT MONEY MOVEMENTS WITHOUTCORRESPONDING SECURITIES TRANSACTIONS. THE FINDINGS ALSOINCLUDED THAT DURING THE ACCOUNT-OPENING PROCESS FOR SOMEOF THE ACCOUNTS, THE REGISTERED REPRESENTATIVE PREPAREDATTESTATIONS FOR THE FIRM REGARDING THE EXPECTED ACTIVITY INTHE ACCOUNTS, WHICH INDICATED THAT THE ACCOUNTS WEREASSOCIATED WITH (THE SITME) PROGRAM. SITME ALLOWED FORVENEZUELAN ENTITIES, AND TO A LESSER EXTENT INDIVIDUALS, TOCONVERT VENEZUELAN BOLIVARS (VEF) TO U.S. DOLLARS (USD) (OROTHER CURRENCY FOREIGN TO VENEZUELA) BY PURCHASINGAPPROVED USD DENOMINATED VENEZUELAN BONDS LOCALLY IN VEFAND SELLING THE BONDS ABROAD FOR USD. FINRA FOUND THAT UPONACCEPTING CUSTOMERS ENGAGED IN SITME ACTIVITY, THE FIRM DID NOTUPDATE ITS ANTI-MONEY LAUNDERING (AML) POLICIES AND PROCEDURESTO ACCOUNT FOR THE RISKS POSED BY THIS BUSINESS. FINRA ALSOFOUND THAT UPON RECEIPT OF THE USD DENOMINATED VENEZUELANBONDS, THE MAJORITY OF THE ACCOUNTS WOULD OFTEN LIQUIDATE ANDTHEN TRANSFER THE PROCEEDS OF THE BONDS VIA FIRST-PARTY WIRETO OPERATING ACCOUNTS THAT THEY MAINTAINED AT OTHER U.S.BROKER-DEALERS OR BANKING INSTITUTIONS. HOWEVER, ONNUMEROUS OCCASIONS, MANY OF THE ACCOUNTS TRANSFERRED THEBOND PROCEEDS VIA THIRD-PARTY WIRES (OR EVEN IN SOME CASES VIACHECK OR ATM WITHDRAWAL) WHICH DIFFERED FROM EXPECTEDACTIVITY UNDER SITME AND FOR THE ACCOUNTS' EXPECTED ACTIVITY,AND WHICH RAISED RED FLAGS UNDER THE FIRM'S ANTI MONEYLAUNDERING COMPLIANCE PROCEDURES (AMLCP). IN ADDITION FINRADETERMINED THAT EVEN THOUGH THE ACCOUNTS WERE ESTABLISHEDAS INVESTMENT ACCOUNTS AT THE FIRM, THE ACCOUNTS WERE USEDALMOST EXCLUSIVELY FOR THE PURPOSE OF TRANSFER ANDLIQUIDATION OF SITME BONDS AND, AS A RESULT, THERE WAS VIRTUALLYNO INVESTMENT ACTIVITY IN ANY OF THE ACCOUNTS. MOREOVER, FINRAFOUND THAT BECAUSE THE MAJORITY OF THE ACCOUNTS WEREMAINTAINED BY THE SAME OR RELATED BENEFICIAL OWNERS, THEREWERE OFTEN TRANSFERS TO AND FROM RELATED ACCOUNTS THAT DIDNOT COMPORT WITH SITME REGULATIONS OR THE EXPECTED ACTIVITY INTHE ACCOUNTS. FURTHERMORE, FINRA FOUND THAT THE FIRM FAILED TOESTABLISH AML POLICIES AND PROCEDURES REASONABLY DESIGNED TOADDRESS THE RISKS TO THE FIRM PRESENTED BY ACCOUNTS ENGAGINGIN SITME ACTIVITY. NOT ONLY WERE THE FIRM'S PROCEDURESINADEQUATE FOR THE RISKS POSED BY ACCOUNTS ENGAGING IN SITMEACTIVITY, BUT THE PROCEDURES WERE NOT PROPERLY IMPLEMENTEDEITHER. UNDER THE FIRM'S EXISTING AMLCP, THE FIRM FAILED TOIDENTIFY AND RESPOND TO RED FLAGS EXHIBITED IN THEACCOUNTS.THE FINDINGS ALSO STATED THE FIRM'S AMLCP ALSOREQUIRED THE FIRM TO MONITOR FOR POTENTIALLY SUSPICIOUSACTIVITY AS INDICATED BY THE ABOVE RED FLAGS, INVESTIGATE THEACTIVITY, AND, AS APPROPRIATE, REPORT SUSPICIOUS ACTIVITY BYFILING A SUSPICIOUS ACTIVITY REPORT (SAR). THE FIRM FAILED TOADEQUATELY MONITOR THE ACCOUNTS.







Initiated By: FINRA

WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT THE FIRMFAILED TO DETECT, INVESTIGATE AND REPORT, IF APPROPRIATE,POTENTIALLY SUSPICIOUS TRANSACTIONS RELATED TO THE DEPOSITAND RAPID LIQUIDATION OF VENEZUELAN BONDS ISSUED UNDER THESITME PROGRAM AND MONEY MOVEMENTS INTO AND OUT OF CUSTOMERACCOUNTS WITH ONLY MINIMAL SECURITIES ACTIVITY. THE FINDINGSSTATED THAT APPROXIMATELY 30 CUSTOMER ACCOUNTS WERE OPENEDAT THE FIRM THAT A FORMER REGISTERED REPRESENTATIVE SERVICED,WHICH WERE ALL HELD IN THE NAME OF ENTITIES THAT WEREBENEFICIALLY OWNED BY CITIZENS OF VENEZUELA. THE ACCOUNTSPRESENTED A HIGHER RISK OF POTENTIALLY SUSPICIOUS ACTIVITYBASED ON THEIR GEOGRAPHIC LOCATION AND BUSINESS MODEL, WHICHINCLUDED THE LIQUIDATION OF VENEZUELAN SOVEREIGN AND STATE-SPONSORED BONDS. THE FINDINGS ALSO STATED THAT A SMALL NUMBEROF THE ACCOUNTS DID NOT LIQUIDATE VENEZUELAN BONDS, BUTRATHER, ENGAGED IN FREQUENT MONEY MOVEMENTS WITHOUTCORRESPONDING SECURITIES TRANSACTIONS. THE FINDINGS ALSOINCLUDED THAT DURING THE ACCOUNT-OPENING PROCESS FOR SOMEOF THE ACCOUNTS, THE REGISTERED REPRESENTATIVE PREPAREDATTESTATIONS FOR THE FIRM REGARDING THE EXPECTED ACTIVITY INTHE ACCOUNTS, WHICH INDICATED THAT THE ACCOUNTS WEREASSOCIATED WITH (THE SITME) PROGRAM. SITME ALLOWED FORVENEZUELAN ENTITIES, AND TO A LESSER EXTENT INDIVIDUALS, TOCONVERT VENEZUELAN BOLIVARS (VEF) TO U.S. DOLLARS (USD) (OROTHER CURRENCY FOREIGN TO VENEZUELA) BY PURCHASINGAPPROVED USD DENOMINATED VENEZUELAN BONDS LOCALLY IN VEFAND SELLING THE BONDS ABROAD FOR USD. FINRA FOUND THAT UPONACCEPTING CUSTOMERS ENGAGED IN SITME ACTIVITY, THE FIRM DID NOTUPDATE ITS ANTI-MONEY LAUNDERING (AML) POLICIES AND PROCEDURESTO ACCOUNT FOR THE RISKS POSED BY THIS BUSINESS. FINRA ALSOFOUND THAT UPON RECEIPT OF THE USD DENOMINATED VENEZUELANBONDS, THE MAJORITY OF THE ACCOUNTS WOULD OFTEN LIQUIDATE ANDTHEN TRANSFER THE PROCEEDS OF THE BONDS VIA FIRST-PARTY WIRETO OPERATING ACCOUNTS THAT THEY MAINTAINED AT OTHER U.S.BROKER-DEALERS OR BANKING INSTITUTIONS. HOWEVER, ONNUMEROUS OCCASIONS, MANY OF THE ACCOUNTS TRANSFERRED THEBOND PROCEEDS VIA THIRD-PARTY WIRES (OR EVEN IN SOME CASES VIACHECK OR ATM WITHDRAWAL) WHICH DIFFERED FROM EXPECTEDACTIVITY UNDER SITME AND FOR THE ACCOUNTS' EXPECTED ACTIVITY,AND WHICH RAISED RED FLAGS UNDER THE FIRM'S ANTI MONEYLAUNDERING COMPLIANCE PROCEDURES (AMLCP). IN ADDITION FINRADETERMINED THAT EVEN THOUGH THE ACCOUNTS WERE ESTABLISHEDAS INVESTMENT ACCOUNTS AT THE FIRM, THE ACCOUNTS WERE USEDALMOST EXCLUSIVELY FOR THE PURPOSE OF TRANSFER ANDLIQUIDATION OF SITME BONDS AND, AS A RESULT, THERE WAS VIRTUALLYNO INVESTMENT ACTIVITY IN ANY OF THE ACCOUNTS. MOREOVER, FINRAFOUND THAT BECAUSE THE MAJORITY OF THE ACCOUNTS WEREMAINTAINED BY THE SAME OR RELATED BENEFICIAL OWNERS, THEREWERE OFTEN TRANSFERS TO AND FROM RELATED ACCOUNTS THAT DIDNOT COMPORT WITH SITME REGULATIONS OR THE EXPECTED ACTIVITY INTHE ACCOUNTS. FURTHERMORE, FINRA FOUND THAT THE FIRM FAILED TOESTABLISH AML POLICIES AND PROCEDURES REASONABLY DESIGNED TOADDRESS THE RISKS TO THE FIRM PRESENTED BY ACCOUNTS ENGAGINGIN SITME ACTIVITY. NOT ONLY WERE THE FIRM'S PROCEDURESINADEQUATE FOR THE RISKS POSED BY ACCOUNTS ENGAGING IN SITMEACTIVITY, BUT THE PROCEDURES WERE NOT PROPERLY IMPLEMENTEDEITHER. UNDER THE FIRM'S EXISTING AMLCP, THE FIRM FAILED TOIDENTIFY AND RESPOND TO RED FLAGS EXHIBITED IN THEACCOUNTS.THE FINDINGS ALSO STATED THE FIRM'S AMLCP ALSOREQUIRED THE FIRM TO MONITOR FOR POTENTIALLY SUSPICIOUSACTIVITY AS INDICATED BY THE ABOVE RED FLAGS, INVESTIGATE THEACTIVITY, AND, AS APPROPRIATE, REPORT SUSPICIOUS ACTIVITY BYFILING A SUSPICIOUS ACTIVITY REPORT (SAR). THE FIRM FAILED TOADEQUATELY MONITOR THE ACCOUNTS.










Principal Product Type: Other

Other Product Type(s): UNSPECIFIED SECURITIES


Resolution:


Sanction Details: THE FIRM WAS CENSURED AND FINED $125,000.


No

Sanctions Ordered: CensureMonetary/Fine $125,000.00

Acceptance, Waiver & Consent(AWC)

iReporting Source: Firm

Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT THE FIRMFAILED TO DETECT, INVESTIGATE AND REPORT, IF APPROPRIATE,POTENTIALLY SUSPICIOUS TRANSACTIONS RELATED TO THE DEPOSITAND RAPID LIQUIDATION OF VENEZUELAN BONDS ISSUED UNDER THESITME PROGRAM AND MONEY MOVEMENTS INTO AND OUT OF CUSTOMERACCOUNTS WITH ONLY MINIMAL SECURITIES ACTIVITY. THE FINDINGSSTATED THAT APPROXIMATELY 30 CUSTOMER ACCOUNTS WERE OPENEDAT THE FIRM THAT A FORMER REGISTERED REPRESENTATIVE SERVICED,WHICH WERE ALL HELD IN THE NAME OF ENTITIES THAT WEREBENEFICIALLY OWNED BY CITIZENS OF VENEZUELA. THE ACCOUNTSPRESENTED A HIGHER RISK OF POTENTIALLY SUSPICIOUS ACTIVITYBASED ON THEIR GEOGRAPHIC LOCATION AND BUSINESS MODEL, WHICHINCLUDED THE LIQUIDATION OF VENEZUELAN SOVEREIGN AND STATE-SPONSORED BONDS. THE FINDINGS ALSO STATED THAT A SMALL NUMBEROF THE ACCOUNTS DID NOT LIQUIDATE VENEZUELAN BONDS, BUTRATHER, ENGAGED IN FREQUENT MONEY MOVEMENTS WITHOUTCORRESPONDING SECURITIES TRANSACTIONS. THE FINDINGS ALSOINCLUDED THAT DURING THE ACCOUNT-OPENING PROCESS FOR SOMEOF THE ACCOUNTS, THE REGISTERED REPRESENTATIVE PREPAREDATTESTATIONS FOR THE FIRM REGARDING THE EXPECTED ACTIVITY INTHE ACCOUNTS, WHICH INDICATED THAT THE ACCOUNTS WEREASSOCIATED WITH (THE SITME) PROGRAM. SITME ALLOWED FORVENEZUELAN ENTITIES, AND TO A LESSER EXTENT INDIVIDUALS, TOCONVERT VENEZUELAN BOLIVARS (VEF) TO U.S. DOLLARS (USD) (OROTHER CURRENCY FOREIGN TO VENEZUELA) BY PURCHASINGAPPROVED USD DENOMINATED VENEZUELAN BONDS LOCALLY IN VEFAND SELLING THE BONDS ABROAD FOR USD. FINRA FOUND THAT UPONACCEPTING CUSTOMERS ENGAGED IN SITME ACTIVITY, THE FIRM DID NOTUPDATE ITS ANTI-MONEY LAUNDERING (AML) POLICIES AND PROCEDURESTO ACCOUNT FOR THE RISKS POSED BY THIS BUSINESS. FINRA ALSOFOUND THAT UPON RECEIPT OF THE USD DENOMINATED VENEZUELANBONDS, THE MAJORITY OF THE ACCOUNTS WOULD OFTEN LIQUIDATE ANDTHEN TRANSFER THE PROCEEDS OF THE BONDS VIA FIRST-PARTY WIRETO OPERATING ACCOUNTS THAT THEY MAINTAINED AT OTHER U.S.BROKER-DEALERS OR BANKING INSTITUTIONS. HOWEVER, ONNUMEROUS OCCASIONS, MANY OF THE ACCOUNTS TRANSFERRED THEBOND PROCEEDS VIA THIRD-PARTY WIRES (OR EVEN IN SOME CASES VIACHECK OR ATM WITHDRAWAL) WHICH DIFFERED FROM EXPECTEDACTIVITY UNDER SITME AND FOR THE ACCOUNTS' EXPECTED ACTIVITY,AND WHICH RAISED RED FLAGS UNDER THE FIRM'S ANTI MONEYLAUNDERING COMPLIANCE PROCEDURES (AMLCP). IN ADDITION FINRADETERMINED THAT EVEN THOUGH THE ACCOUNTS WERE ESTABLISHEDAS INVESTMENT ACCOUNTS AT THE FIRM, THE ACCOUNTS WERE USEDALMOST EXCLUSIVELY FOR THE PURPOSE OF TRANSFER ANDLIQUIDATION OF SITME BONDS AND, AS A RESULT, THERE WAS VIRTUALLYNO INVESTMENT ACTIVITY IN ANY OF THE ACCOUNTS. MOREOVER, FINRAFOUND THAT BECAUSE THE MAJORITY OF THE ACCOUNTS WEREMAINTAINED BY THE SAME OR RELATED BENEFICIAL OWNERS, THEREWERE OFTEN TRANSFERS TO AND FROM RELATED ACCOUNTS THAT DIDNOT COMPORT WITH SITME REGULATIONS OR THE EXPECTED ACTIVITY INTHE ACCOUNTS. FURTHERMORE, FINRA FOUND THAT THE FIRM FAILED TOESTABLISH AML POLICIES AND PROCEDURES REASONABLY DESIGNED TOADDRESS THE RISKS TO THE FIRM PRESENTED BY ACCOUNTS ENGAGINGIN SITME ACTIVITY. NOT ONLY WERE THE FIRM'S PROCEDURESINADEQUATE FOR THE RISKS POSED BY ACCOUNTS ENGAGING IN SITMEACTIVITY, BUT THE PROCEDURES WERE NOT PROPERLY IMPLEMENTEDEITHER. UNDER THE FIRM'S EXISTING AMLCP, THE FIRM FAILED TOIDENTIFY AND RESPOND TO RED FLAGS EXHIBITED IN THEACCOUNTS.THE FINDINGS ALSO STATED THE FIRM'S AMLCP ALSOREQUIRED THE FIRM TO MONITOR FOR POTENTIALLY SUSPICIOUSACTIVITY AS INDICATED BY THE ABOVE RED FLAGS, INVESTIGATE THEACTIVITY, AND, AS APPROPRIATE, REPORT SUSPICIOUS ACTIVITY BYFILING A SUSPICIOUS ACTIVITY REPORT (SAR). THE FIRM FAILED TOADEQUATELY MONITOR THE ACCOUNTS.








Initiated By: FINANCIAL INDUSTRY REGULATORY AUTHORITY.


Censure


THE FIRM WAS ALSO FINED $125,000.



Principal Product Type: Other




Resolution:


Sanction Details: A PORTION OF THE FINE HAS BEEN PAID AND THE FIRM HAS AGREED TO AINSTALLMENT PAYMENT PLAN WITH FINRA.

Sanctions Ordered: CensureMonetary/Fine $125,000.00

Acceptance, Waiver & Consent(AWC)

Disclosure 4 of 5

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Initiated By: ILLINOIS



URL for Regulatory Action:



Allegations: RESPONDENT'S REGISTRATION AS A DEALER IN THE STATE OF ILLINOIS ISSUBJECT TO REVOCATION PURSUANT TO SECTION 8.E(1)(G) OF THE ACT.









Revocation




Resolution:

Other Sanctions Ordered: CIVIL AND ADMINISTRATIVE PENALTY(IES)/FINE(S) RESPONDENT IS FINED IN THE AMOUNT OF TWO HUNDRED FIFTYDOLLARS ($250.00), WHICH HAS BEEN PAID. RESPONDENT IS LEVIEDCOSTS OF INVESTIGATION IN THIS MATTER IN THE AMOUNT OF TWO HUNDRED FIFTY DOLLARS($250.00), WHICH HAS BEEN PAID.

Sanction Details: RESPONDENT IS FINED IN THE AMOUNT OF TWO HUNDRED FIFTYDOLLARS ($250.00), WHICH HAS BEEN PAID. RESPONDENT IS LEVIEDCOSTS OF INVESTIGATION IN THIS MATTER IN THE AMOUNT OF TWO HUNDRED FIFTY DOLLARS($250.00), WHICH HAS BEEN PAID.

Regulator Statement FORMAL HEARING SCHEDULED ON THIS MATTER IS HEREBY DISMISSEDWITHOUT FURTHER PROCEEDINGS


No


Order


Initiated By: ILLINOIS





Allegations: FIRM DID NOT RENEW DESIGNATED PRINCIPAL IN A TIMELY FASHION








Civil and Administrative Penalt(ies) /Fine(s)


REPAYMENT OF COSTS



Resolution:

Other Sanctions Ordered: $250 FOR COSTS INCURRED

Sanction Details: $250 FINE AND $250 CHARGE FOR COSTS INCURRED PAID BY APPLICANTON 05/12/2010

Firm Statement FIRM DID NOT RENEW DESIGNATED PRINCIPAL FOR THE STATE IN ATIMELY FASHION. FIRM HAS MAINTAINED REGISTRATION IN STATE AT ALLTIMES, AND MAY CONTINUE TO DO BUSINESS IN THE STATE WITH NORESTRICTIONS.


Order

Disclosure 5 of 5

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Initiated By: ALABAMA


Cease and Desist


CONSENT ORDER CO-2006-0046


Docket/Case Number: CO-2006-0046

URL for Regulatory Action:

Principal Product Type: Investment Contract(s)


Allegations: APPLICATION FOR REGISTRATION AS BD WAS MADE BY CAPITAL AND ANAFFIDAVIT ATTESTED THAT CAPITAL HAD MADE NO PRIOR SALES INALABAMA WHEN IN FACT, THEY HAD OPEN ACCOUNTS AND HADAFFECTED TRADES PRIOR TO REGISTRATION; FILING OF APPLICATIONCONTAINING FALSE STATEMENTS


Resolution: Consent 24©2021 FINRA. All rights reserved. Report about CAPITAL GUARDIAN, LLC






Resolution:

Other Sanctions Ordered: RESCISSION OFFER - $202,971.24ADMINISTRATIVE ASSESSMENT $4,064.00INVESTIGATIVE COSTS $4,000.00

Sanction Details: RESCISSION OFFER - $202,971.24ADMINISTRATIVE ASSESSMENT $4,064.00INVESTIGATIVE COSTS $4,000.00

Regulator Statement APPLICATION FOR REGISTRATION AS BD WAS MADE BY CAPITAL AND ANAFFIDAVIT ATTESTED THAT CAPITAL HAD MADE NO PRIOR SALES INALABAMA WHEN IN FACT, THEY HAD OPEN ACCOUNTS AND HADAFFECTED TRADES PRIOR TO REGISTRATION; FILING OF APPLICATIONCONTAINING FALSE STATEMENTS. ON AUGUST 30, 2007, CONSENT ORDERCO-2006-0046 WAS ISSUED TO CAPITAL GUARDIAN AND MICHAELMCMAHAN, RESCISSION OFFER TOTALING $202,971.24. ADMIN.ASSMT.-$4,064, INVESTIGATIVE COSTS-$4,000. ON ENTRY OF THE ORDERRESPONDENTS APPLICATION FOR REGISTRATION IN ALABAMA WASAPPROVED.


No

Sanctions Ordered: Monetary/Fine $211,035.24

Consent


Initiated By: ALABAMA


Docket/Case Number: CD-2006-0046



Allegations: APPLICATION FOR REGISTRATION AS BD WAS MADE BY CAPITAL AND ANAFFIDAVIT ATTESTED THAT CAPITAL HAD MADE NO PRIOR SALES INALABAMA WHEN IN FACT, THEY HAD OPEN ACCOUNTS AND HADAFFECTED TRADES PRIOR TO REGISTRATION; FILING OF APPLICATIONCONTAINING FALSE STATEMENTS.








Cease and Desist




Resolution:

Other Sanctions Ordered: NONE

Sanction Details: ADMINISTRATIVE ASSESSMENT OF $4000.00 AND DISGORGECOMMISSIONS OF $64.00 (TOTALLING $4064.00)

Sanctions Ordered: Monetary/Fine $4,064.00Disgorgement/Restitution

Consent






End of Report

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