FIRST ALLIED SECURITIES, INC.BrokerCheck Report FIRST ALLIED SECURITIES, INC. Section Title Report...

BrokerCheck Report

FIRST ALLIED SECURITIES, INC.

Section Title

Report Summary

Firm History

CRD# 32444

1

10

Firm Profile 2 - 9

Page(s)

Firm Operations 11 - 21

Disclosure Events 22

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CRD# 32444

SEC# 8-46167

Main Office Location

655 WEST BROADWAY 12TH FLOORSAN DIEGO, CA 92101Regulated by FINRA Los Angeles Office

Mailing Address

655 WEST BROADWAY 12TH FLSAN DIEGO, CA 92101

This firm is a brokerage firm and an investmentadviser firm. For more information aboutinvestment adviser firms, visit the SEC'sInvestment Adviser Public Disclosure website at:

Business Telephone Number

(619) 702-9600

https://www.adviserinfo.sec.gov

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 18

Arbitration 15

Firm Profile

This firm is classified as a corporation.

This firm was formed in New York on 03/30/1993.

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

Is this brokerage firm currently suspended with anyregulator? No

This firm conducts 21 types of businesses.

This firm is affiliated with financial or investmentinstitutions.

This firm has referral or financial arrangements withother brokers or dealers.

This firm is registered with:

• the SEC• 1 Self-Regulatory Organization• 53 U.S. states and territories

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1©2021 FINRA. All rights reserved. Report about FIRST ALLIED SECURITIES, INC.

https://adviserinfo.sec.gov/firm/summary/32444


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This firm is classified as a corporation.

This firm was formed in New York on 03/30/1993.

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#

32444

8-46167

Main Office Location

Mailing Address

Business Telephone Number

Doing business as FIRST ALLIED SECURITIES, INC.

(619) 702-9600

Regulated by FINRA Los Angeles Office

655 WEST BROADWAY 12TH FLOORSAN DIEGO, CA 92101

655 WEST BROADWAY 12TH FLSAN DIEGO, CA 92101

Other Names of this Firm

Name Where is it used

ADVANCED EQUITIES WEALTH MANAGEMENT PRIVATE CLIENTSERVICES

CA

FIRST ALLIED CA

FIRST ALLIED WEALTH MANAGEMENT CA

GREENBOOK FINANCIAL SERVICES CA






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?

FIRST ALLIED HOLDINGS, INC.

SOLE SHAREHOLDER

75% or more

No

Domestic Entity

10/1994

Yes

Is this a domestic or foreignentity or an individual?

Legal Name & CRD# (if any):

Position



Position Start Date


BREGOZZO, MATTHEW GREGORY

RIA CCO

Less than 5%

No

Individual

10/2018

No

5881295



Position


Position Start Date

HARRISON, BRETT LAMAR

DIRECTOR AND CEO

Less than 5%

Individual

08/2016

4032238








Direct Owners and Executive Officers (continued)

Firm Profile




Less than 5%

No

Yes

Position



Position Start Date


HORWITH, THEODORE ROBERT

PRINCIPAL FINANCIAL OFFICER

Less than 5%

No

Individual

12/2020

Yes

3257001



Position



Position Start Date


KESTERSON, BARBARA JO

PRINCIPAL OPERATIONS OFFICER

Less than 5%

No

Individual

10/2018

No

2747533



MERRILL, GARRETT JAMES

4306692








Firm Profile

Position



Position Start Date


VICE PRESIDENT

Less than 5%

No

Individual

12/2019

Yes

4306692


Position



Position Start Date


NEARY, JOSEPH DANIEL

DIRECTOR

Less than 5%

No

Individual

05/2019

Yes

2993505



Position


Position Start Date


OLSON, GREGORY ALAN

ASSISTANT SECRETARY

Less than 5%

Individual

08/2016

No

2692482









Firm Profile



No

No

Position



Position Start Date


ROGERS, JAN WILLIAM

AML COMPLIANCE OFFICER

Less than 5%

No

Individual

07/2006

No

2414139



Position



Position Start Date


SCHOTT, MARY FRANCES

PRESIDENT

Less than 5%

No

Individual

03/2018

No

1453429



SMILEY, STANLEY ROBERT

Individual

3004604









Firm Profile

Position



Position Start Date


VICE PRESIDENT

Less than 5%

No

Individual

08/2016

Yes


Position



Position Start Date


VANNOY-PINEDA, KATHLEEN DENISE

CHIEF COMPLIANCE OFFICER

Less than 5%

No

Individual

08/2018

Yes

1347526








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

Indirect Owners

Firm Profile

ARETEC GROUP INC.

OWNER

FIRST ALLIED HOLDINGS INC.

75% or more

No

Domestic Entity

07/2014

Yes



Company through whichindirect ownership isestablished

Relationship to Direct Owner

Relationship Established




GC TWO HOLDINGS, INC.

OWNER

GC TWO INTERMEDIATE HOLDINGS, INC.

75% or more

No

Domestic Entity

10/2018

Yes









GC TWO INTERMEDIATE HOLDINGS, INC.

ARETEC GROUP, INC.

Domestic Entity









Indirect Owners (continued)

Firm Profile

OWNER

ARETEC GROUP, INC.

75% or more

10/2018

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.

This firm is currently registered with the SEC, 1 SRO and 53 U.S. states and territories.

SEC Registration Questions

This firm is registered with the SEC as:

A broker-dealer:

A broker-dealer and government securities broker or dealer:

A government securities broker or dealer only:

This firm has ceased activity as a government securities broker or dealer:

Yes

Yes

No

No

Federal Regulator Status Date Effective

SEC Approved 05/04/1993

Self-Regulatory Organization Status Date Effective

FINRA Approved 03/28/1994






Firm Operations

Registrations (continued)

U.S. States &Territories

Status Date Effective

Alabama Approved 04/06/1994

Alaska Approved 10/31/1994

Arizona Approved 05/11/1994

Arkansas Approved 06/21/1994

California Approved 03/30/1994

Colorado Approved 03/29/1994

Connecticut Approved 04/13/1994

Delaware Approved 04/08/1994

District of Columbia Approved 03/11/1994

Florida Approved 04/11/1994

Georgia Approved 04/25/1994

Hawaii Approved 12/15/1994

Idaho Approved 05/02/1994

Illinois Approved 04/13/1994

Indiana Approved 04/28/1994

Iowa Approved 03/30/1994

Kansas Approved 05/09/1994

Kentucky Approved 03/24/1994

Louisiana Approved 03/23/1994

Maine Approved 06/14/1995

Maryland Approved 04/11/1994

Massachusetts Approved 05/25/1994

Michigan Approved 04/28/1994

Minnesota Approved 05/09/1994

Mississippi Approved 04/12/1994

Missouri Approved 06/29/1995

Montana Approved 03/30/1994

Nebraska Approved 05/11/1994

Nevada Approved 05/10/1994

New Hampshire Approved 11/02/1994

New Jersey Approved 04/04/1994

New Mexico Approved 04/12/1994

New York Approved 08/12/1993

U.S. States &Territories

Status Date Effective

North Carolina Approved 04/06/1994

North Dakota Approved 03/05/1997

Ohio Approved 01/13/1999

Oklahoma Approved 04/20/1994

Oregon Approved 05/04/1994

Pennsylvania Approved 09/09/1994

Puerto Rico Approved 08/24/2000

Rhode Island Approved 03/29/1994

South Carolina Approved 03/30/1994

South Dakota Approved 05/27/1994

Tennessee Approved 03/30/1994

Texas Approved 05/06/1994

Utah Approved 03/29/1994

Vermont Approved 05/02/1994

Virgin Islands Approved 04/04/2005

Virginia Approved 03/21/1994

Washington Approved 03/31/1994

West Virginia Approved 03/29/1994

Wisconsin Approved 04/05/1994

Wyoming Approved 03/29/1994






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

This firm currently conducts 21 types of businesses.

Types of Business

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

Broker or dealer selling corporate debt securities

Underwriter or selling group participant (corporate securities other than mutual funds)

Mutual fund retailer

U S. government securities dealer

U S. government securities broker

Municipal securities dealer

Municipal securities broker

Broker or dealer selling variable life insurance or annuities

Broker or dealer selling oil and gas interests

Put and call broker or dealer or option writer

Broker or dealer selling securities of non-profit organizations (e.g., churches, hospitals)

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

Broker or dealer selling tax shelters or limited partnerships in the secondary market

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

Trading securities for own account

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

Broker or dealer involved in a networking, kiosk or similar arrangment with a: insurance company or agency

Other - APPLICANT, THROUGH "PIGGY BACK" ARRANGEMENTS WITH OTHER BROKER DEALERS,INTRODUCES ACCOUNTS OF SUCH BROKER DEALERS TO CLEARING FIRMS ON FULLY DISCLOSED BASIS.APPLICANT IS REGISTERED AS AN INTRODUCING BROKER WITH THE NATIONAL FUTURES ASSOCIATION.





www.finra.org/brokercheck User GuidanceThis firm does not effect transactions in commodities, commodity futures, or commodity options.This firm does engage in other non-securities business.

Non-Securities Business Description: INSURANCE / FIXED ANNUITIES





Firm Operations

Clearing Arrangements

This firm does 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: 10/05/2005

Description: APPLICANT CLEARS TRANSACTIONS THROUGH PERSHING LLC ON AFULLY DISCLOSED BASIS.






Firm Operations

Industry Arrangements

This firm does have books or records maintained by a third party.

Name: MICROSOFT CORPORATION

Business Address: ONE MICROSOFT WAYREDMOND, WA 98052


Description: THE FIRM WILL BEGIN UTILIZING MICROSOFT CORPORATION OR ANAFFILIATE OF MICROSOFT CORPORATION ("MICROSOFT"),ELECTRONIC STORAGE MEDIA EXCLUSIVELY FOR CERTAIN BOOKSAND RECORDS.

Name: SITEQUEST, INC

Business Address: 707 W 700 S SUITE 101WOODS CROSS, UT 94087


Description: THE FIRM WILL BEGIN UTILIZING SITEQUEST, INC, ELECTRONICSTORAGE MEDIA EXCLUSIVELY FOR CERTAIN BOOKS AND RECORDSON OR AFTER NOVEMBER 1, 2020.

Name: BIZNEWS24.COM, INC. D/B/A PINPOINT GLOBAL COMMUNICATIONS

Business Address: 9 TRAFALGAR SQUARESUITE 150NASHUA, NH 03063


Description: ELECTRONIC STORAGE MEDIA FOR CERTAIN BOOKS AND RECORDSON OR AFTER MAY 1, 2020.

Name: FMG SUITE, LLC

Business Address: 12395 WORLD TRADE DR #200SAN DIEGO, CA 92128


Description: ELECTRONIC RECORD KEEPER OF SUPERVISORY AND COMPLIANCEPOLICIES AND PROCEDURES.

Name: ACUITY INC. DBA NRS

Business Address: 1007 CHURCH STREETEVANSTON, IL 60201






Firm Operations

Industry Arrangements (continued)

This firm does not have accounts, funds, or securities maintained by a third party.

This firm does not 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


Description: USE OF ACUITY, INC. DBA NRS AS ELECTRONIC RECORD KEEPER.

Name: IRON MOUNTAIN

Business Address: 6935 FLANDERS DRIVESAN DIEGO, CA 92121


Description: HARD COPY RECORD KEEPER

Name: SMARSH

Business Address: 851 SW 6TH AVE #800PORTLAND, OR 97204


Description: ELECTRONIC RECORD KEEPER FOR ARCHIVING EMAILS, INSTANTMESSAGES, SOCIAL MEDIA AND TRADE BLOTTERS.

Name: FIRST ALLIED ADVISORY SERVICES, INC.

Business Address: 655 W. BROADWAY12TH FLOORSAN DIEGO, CA 92101

CRD #: 137888


Description: FIRST ALLIED SECURITIES SHARES ITS BOOKS AND RECORDS WITHFIRST ALLIED ADVISORY SERVICES, INC.






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

No

No

10/19/2017

200 N. PACIFIC COAST HIGHWAYSUITE # 1300EL SEGUNDO, CA 90245

165436

CETERA INVESTMENT MANAGEMENT LLC is under common control with the firm.

COMMON CONTROL THROUGH ARETEC GROUP, INC.Description:

Investment AdvisoryActivities:

Securities Activities:

Country:

Foreign Entity:

Effective Date:

Business Address:

CRD #:

Yes

No

No

11/18/2016

200 N. PACIFIC COAST HIGHWAYSUITE 1300EL SEGUNDO, CA 90245

285648

CETERA ADVISORY SERVICES LLC is under common control with the firm.

UNDER COMMON CONTROL OF ARETEC GROUP, INC.Description:



Country:

Foreign Entity:

Effective Date:

Business Address:

CRD #:






Firm Operations

Organization Affiliates (continued)

Yes

No

No

06/19/2014

595 S. FEDERAL HIGHWAYSUITE #500BOCA RATON, FL 33432

109485

SUMMIT FINANCIAL GROUP INC is under common control with the firm.




Country:

Foreign Entity:

Effective Date:

Business Address:

CRD #:

Yes

No

No

04/29/2014

200 N. MARTINGALE ROADSCHAUMBURG, IL 60173

105644

CETERA INVESTMENT ADVISERS LLC is under common control with the firm.




Country:

Foreign Entity:

Effective Date:

Business Address:

CRD #:

No

04/29/2014

200 N. MARTINGALE ROADSCHAUMBURG, IL 60173

10358

CETERA FINANCIAL SPECIALISTS LLC is under common control with the firm.

Country:

Foreign Entity:

Effective Date:

Business Address:

CRD #:






Firm Operations


No

Yes




Country:

No

Yes

No

04/29/2014

400 FIRST STREET SOUTHSUITE #300ST. CLOUD, MN 56301

15340

CETERA INVESTMENT SERVICES LLC is under common control with the firm.




Country:

Foreign Entity:

Effective Date:

Business Address:

CRD #:

Yes

Yes

No

04/29/2014

200 N. PACIFIC COAST HIGHWAYSUITE # 1300EL SEGUNDO, CA 90245

13572

CETERA ADVISOR NETWORKS LLC is under common control with the firm.




Country:

Foreign Entity:

Effective Date:

Business Address:

CRD #:

10299

CETERA ADVISORS LLC is under common control with the firm.

CRD #:






Firm Operations


Yes

Yes

No

04/29/2014

4600 S. SYRACUSE ST.SUITE #600DENVER, CO 80237




Country:

Foreign Entity:

Effective Date:

Business Address:

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 18 0

Arbitration N/A 15 N/A






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.

o A final event generally has a disposition of adjudicated, settled or otherwise resolved.§ An "adjudicated" matter includes a disposition by (1) a court of law in a criminal or civil matter,

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 18

Reporting Source: Regulator

Allegations: ON JANUARY 2, 2019, THE BANKING COMMISSIONER ENTERED A CONSENTORDER (NO. CO-18-8399-S) WITH RESPECT TO FIRST ALLIED SECURITIES,INC. AND THE FIRM'S ADVISORY AFFILIATE FIRST ALLIED ADVISORYSERVICES, INC. (COLLECTIVELY, "FIRST ALLIED"). THE CONSENT ORDERALLEGED THAT FIRST ALLIED VIOLATED SECTION 36B-31-6F(B) OF THEREGULATIONS UNDER THE CONNECTICUT UNIFORM SECURITIES ACT BYFAILING TO ESTABLISH, ENFORCE AND MAINTAIN AN ADEQUATESUPERVISORY SYSTEM. MORE SPECIFICALLY, THE CONSENT ORDERFOCUSED ON THE CONDUCT OF ONE MATTHEW CHARLES WOODARD, AFORMER BROKER-DEALER AGENT OF PROEQUITIES, INC. WHO WAS ALSOASSOCIATED WITH FIRST ALLIED SECURITIES, INC. IN AN UNREGISTEREDCAPACITY AND WORKED FROM THE FIRM'S OFFICE AT 1031 FARMINGTONAVENUE, FARMINGTON, CONNECTICUT. ALSO WORKING FROM THATLOCATION WAS FIRST ALLIED AGENT WALTER J. DUBIEL (CRD NO.4234689). THE CONSENT ORDER ALLEGED THAT DUBIEL, INCONTRAVENTION OF FIRST ALLIED POLICIES AND PROCEDURES, SHAREDHIS FIRST ALLIED CONFIDENTIAL CLIENT ACCOUNT LOG-IN CREDENTIALSWITH WOODARD WHO THEN USED THE CREDENTIALS TO ACCESS A FIRSTALLIED CLIENT'S ACCOUNT WITHOUT THE CLIENT'S KNOWLEDGE ORCONSENT. AS A RESULT, THE AFFECTED INVESTOR INCURRED TRADINGLOSSES OF $19,265.89.

Current Status: Final






Initiated By: CONNECTICUT

Principal Sanction(s)/ReliefSought:

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

Other Sanction(s)/ReliefSought:

Date Initiated: 01/02/2019

Docket/Case Number: CO-18-8399-S

URL for Regulatory Action:

Principal Product Type: No Product

Other Product Type(s):


Resolution Date: 01/02/2019

Resolution:

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

No

Sanctions Ordered: Monetary/Fine $30,000.00

Consent






Other Sanctions Ordered: THE CONSENT ORDER REQUIRED THAT FIRST ALLIED REIMBURSE THEAFFECTED INVESTOR $19,265.89 NO LATER THAN THE DATE THE CONSENTORDER WAS ENTERED BY THE COMMISSIONER AND PROVIDE PROOF OFPAYMENT TO THE AGENCY. IN ADDITION, THE CONSENT ORDER FINEDFIRST ALLIED $30,000 AND DIRECTED IT TO CEASE AND DESIST FROMREGULATORY VIOLATIONS.

Sanction Details: SEE RESPONSE TO ITEM 13.B. ABOVE.


iReporting Source: Firm

Initiated By: STATE OF CONNETICUT




Docket/Case Number: CO-18-8399-S














Resolution:

Other Sanctions Ordered: THE CONSENT ORDER REQUIRED THAT FIRST ALLIED REIMBURSE THEAFFECTED INVESTOR $19,265.89 NO LATER THAT THE DATE THE CONSENTORDER WAS ENTERED BY THE COMMISSIONER AND PROVIDE PROOF OFPAYMENT TO THE AGENCY. IN ADDITION, THE CONSENT ORDER FINEDFIRST ALLIED $30,000.00 AND DIRECTED IT TO CEASE AND DESIST FROMREGULATORY VIOLATIONS.

Sanction Details: SEE RESPONSE TO ITEM 13.B ABOVE.


Consent

Disclosure 2 of 18

i


Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT ITDISADVANTAGED CERTAIN RETIREMENT PLAN AND CHARITABLEORGANIZATION CUSTOMERS THAT WERE ELIGIBLE TO PURCHASE CLASSA SHARES IN CERTAIN MUTUAL FUNDS WITHOUT A FRONT-END SALESCHARGE. THE FINDINGS STATED THAT THESE ELIGIBLE CUSTOMERSWERE INSTEAD SOLD CLASS A SHARES WITH A FRONT-END SALESCHARGE OR CLASS B OR C SHARES WITH BACK-END SALES CHARGESAND HIGHER ONGOING FEES AND EXPENSES. MANY MUTUAL FUNDSWAIVE THE UP-FRONT SALES CHARGES ASSOCIATED WITH CLASS ASHARES FOR CERTAIN RETIREMENT PLANS AND/OR CHARITABLEORGANIZATIONS. SOME OF THE MUTUAL FUNDS AVAILABLE ON THEFIRM'S RETAIL PLATFORM OFFERED SUCH WAIVERS AND DISCLOSEDTHOSE WAIVERS IN THEIR PROSPECTUSES. NOTWITHSTANDING THEAVAILABILITY OF THE WAIVERS, THE FIRM FAILED TO APPLY THE WAIVERSTO MUTUAL FUND PURCHASES MADE BY ELIGIBLE CUSTOMERS ANDINSTEAD SOLD THEM CLASS A SHARES WITH A FRONT-END SALESCHARGE OR CLASS B OR C SHARES WITH BACK-END SALES CHARGESAND HIGHER ONGOING FEES AND EXPENSES. THESE SALESDISADVANTAGED ELIGIBLE CUSTOMERS BY CAUSING THE CUSTOMERSTO PAY HIGHER FEES THAN THEY WERE ACTUALLY REQUIRED TO PAY.THE FINDINGS ALSO STATED THAT THE FIRM FAILED TO ESTABLISH ANDMAINTAIN A SUPERVISORY SYSTEM AND PROCEDURES REASONABLYDESIGNED TO ENSURE THAT ELIGIBLE CUSTOMERS WHO PURCHASEDMUTUAL FUND SHARES RECEIVED THE BENEFIT OF APPLICABLE SALESCHARGE WAIVERS. THE FIRM RELIED ON ITS FINANCIAL ADVISORS TODETERMINE THE APPLICABILITY OF SALES-CHARGE WAIVERS, BUT FAILEDTO MAINTAIN ADEQUATE WRITTEN POLICIES OR PROCEDURES TO ASSISTFINANCIAL ADVISORS IN MAKING THIS DETERMINATION. IN ADDITION, THEFIRM FAILED TO ADEQUATELY NOTIFY AND TRAIN ITS FINANCIALADVISORS REGARDING THE AVAILABILITY OF MUTUAL FUND SALES-CHARGE WAIVERS FOR ELIGIBLE CUSTOMERS. THE FIRM ALSO FAILED TOADOPT ADEQUATE CONTROLS TO DETECT INSTANCES IN WHICH THEY DIDNOT PROVIDE SALES-CHARGE WAIVERS TO ELIGIBLE CUSTOMERS INCONNECTION WITH THEIR MUTUAL FUND PURCHASES. AS A RESULT OFTHE FIRM'S FAILURE TO APPLY AVAILABLE SALES-CHARGE WAIVERS, THEFIRM ESTIMATES THAT ELIGIBLE CUSTOMERS WERE OVERCHARGED BYAPPROXIMATELY $769,054 FOR MUTUAL FUND PURCHASES MADE SINCEJULY 1, 2009.







Initiated By: FINRA




Docket/Case Number: 2016050259301

Principal Product Type: Mutual Fund(s)


WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT ITDISADVANTAGED CERTAIN RETIREMENT PLAN AND CHARITABLEORGANIZATION CUSTOMERS THAT WERE ELIGIBLE TO PURCHASE CLASSA SHARES IN CERTAIN MUTUAL FUNDS WITHOUT A FRONT-END SALESCHARGE. THE FINDINGS STATED THAT THESE ELIGIBLE CUSTOMERSWERE INSTEAD SOLD CLASS A SHARES WITH A FRONT-END SALESCHARGE OR CLASS B OR C SHARES WITH BACK-END SALES CHARGESAND HIGHER ONGOING FEES AND EXPENSES. MANY MUTUAL FUNDSWAIVE THE UP-FRONT SALES CHARGES ASSOCIATED WITH CLASS ASHARES FOR CERTAIN RETIREMENT PLANS AND/OR CHARITABLEORGANIZATIONS. SOME OF THE MUTUAL FUNDS AVAILABLE ON THEFIRM'S RETAIL PLATFORM OFFERED SUCH WAIVERS AND DISCLOSEDTHOSE WAIVERS IN THEIR PROSPECTUSES. NOTWITHSTANDING THEAVAILABILITY OF THE WAIVERS, THE FIRM FAILED TO APPLY THE WAIVERSTO MUTUAL FUND PURCHASES MADE BY ELIGIBLE CUSTOMERS ANDINSTEAD SOLD THEM CLASS A SHARES WITH A FRONT-END SALESCHARGE OR CLASS B OR C SHARES WITH BACK-END SALES CHARGESAND HIGHER ONGOING FEES AND EXPENSES. THESE SALESDISADVANTAGED ELIGIBLE CUSTOMERS BY CAUSING THE CUSTOMERSTO PAY HIGHER FEES THAN THEY WERE ACTUALLY REQUIRED TO PAY.THE FINDINGS ALSO STATED THAT THE FIRM FAILED TO ESTABLISH ANDMAINTAIN A SUPERVISORY SYSTEM AND PROCEDURES REASONABLYDESIGNED TO ENSURE THAT ELIGIBLE CUSTOMERS WHO PURCHASEDMUTUAL FUND SHARES RECEIVED THE BENEFIT OF APPLICABLE SALESCHARGE WAIVERS. THE FIRM RELIED ON ITS FINANCIAL ADVISORS TODETERMINE THE APPLICABILITY OF SALES-CHARGE WAIVERS, BUT FAILEDTO MAINTAIN ADEQUATE WRITTEN POLICIES OR PROCEDURES TO ASSISTFINANCIAL ADVISORS IN MAKING THIS DETERMINATION. IN ADDITION, THEFIRM FAILED TO ADEQUATELY NOTIFY AND TRAIN ITS FINANCIALADVISORS REGARDING THE AVAILABILITY OF MUTUAL FUND SALES-CHARGE WAIVERS FOR ELIGIBLE CUSTOMERS. THE FIRM ALSO FAILED TOADOPT ADEQUATE CONTROLS TO DETECT INSTANCES IN WHICH THEY DIDNOT PROVIDE SALES-CHARGE WAIVERS TO ELIGIBLE CUSTOMERS INCONNECTION WITH THEIR MUTUAL FUND PURCHASES. AS A RESULT OFTHE FIRM'S FAILURE TO APPLY AVAILABLE SALES-CHARGE WAIVERS, THEFIRM ESTIMATES THAT ELIGIBLE CUSTOMERS WERE OVERCHARGED BYAPPROXIMATELY $769,054 FOR MUTUAL FUND PURCHASES MADE SINCEJULY 1, 2009.


Resolution:

Other Sanctions Ordered: UNDERTAKING

Sanction Details: THE FIRM WAS CENSURED, AGREED TO PAY A TOTAL OF APPROXIMATELY$876,915, INCLUSIVE OF INTEREST, IN RESTITUTION TO ELIGIBLECUSTOMERS, AND WILL ALSO ENSURE THAT RETIREMENT ANDCHARITABLE WAIVERS ARE APPROPRIATELY APPLIED TO ALL FUTURETRANSACTIONS, AND REQUIRED TO PROVIDE REMEDIATION TO ELIGIBLECUSTOMERS WHO, FROM JULY 1, 2009, QUALIFIED FOR, BUT DID NOTRECEIVE, THE APPLICABLE MUTUAL FUND SALES CHARGE WAIVERSWHEN THE FIRM FAILED TO IDENTIFY AND APPLY AVAILABLE SALESCHARGE WAIVERS TO ELIGIBLE RETIREMENT ACCOUNTS ANDCHARITABLE ORGANIZATIONS. THE FIRM WILL PROVIDE TO FINRA ADETAILED PLAN TO REMEDIATE ELIGIBLE CUSTOMERS BASED ONSPECIFIC CRITERIA THAT ARE NOT UNACCEPTABLE TO FINRA. THE FIRMWILL ALSO ADDRESS RESTITUTION FOR EACH RETIREMENT PLANCUSTOMER THAT, WHILE NOT ELIGIBLE TO PURCHASE CLASS A SHARESWITHOUT A FRONT-END SALES CHARGE, WAS ELIGIBLE TO PURCHASE ANALTERNATIVE SHARE CLASS (INCLUDING, BUT NOT LIMITED TO, RSHARES) WITHOUT A FRONT-END SALES CHARGE AND WITH ONGOINGFEES SUBSTANTIALLY SIMILAR TO THOSE OF THE CLASS A SHARE. THEFIRM WILL SUBMIT TO FINRA A SCHEDULE OF ELIGIBLE CUSTOMERSIDENTIFIED FOR REMEDIATION AND INCLUDE THE DETAILS OF THEQUALIFYING PURCHASES AND TOTAL DOLLAR AMOUNTS OF RESTITUTIONTHAT WILL BE PROVIDED TO EACH CUSTOMER.


No

Sanctions Ordered: CensureDisgorgement/Restitution

Acceptance, Waiver & Consent(AWC)





https://www.finra.org/rules-guidance/oversight-enforcement/finra-disciplinary-actions?search=2016050259301


Sanction Details: THE FIRM WAS CENSURED, AGREED TO PAY A TOTAL OF APPROXIMATELY$876,915, INCLUSIVE OF INTEREST, IN RESTITUTION TO ELIGIBLECUSTOMERS, AND WILL ALSO ENSURE THAT RETIREMENT ANDCHARITABLE WAIVERS ARE APPROPRIATELY APPLIED TO ALL FUTURETRANSACTIONS, AND REQUIRED TO PROVIDE REMEDIATION TO ELIGIBLECUSTOMERS WHO, FROM JULY 1, 2009, QUALIFIED FOR, BUT DID NOTRECEIVE, THE APPLICABLE MUTUAL FUND SALES CHARGE WAIVERSWHEN THE FIRM FAILED TO IDENTIFY AND APPLY AVAILABLE SALESCHARGE WAIVERS TO ELIGIBLE RETIREMENT ACCOUNTS ANDCHARITABLE ORGANIZATIONS. THE FIRM WILL PROVIDE TO FINRA ADETAILED PLAN TO REMEDIATE ELIGIBLE CUSTOMERS BASED ONSPECIFIC CRITERIA THAT ARE NOT UNACCEPTABLE TO FINRA. THE FIRMWILL ALSO ADDRESS RESTITUTION FOR EACH RETIREMENT PLANCUSTOMER THAT, WHILE NOT ELIGIBLE TO PURCHASE CLASS A SHARESWITHOUT A FRONT-END SALES CHARGE, WAS ELIGIBLE TO PURCHASE ANALTERNATIVE SHARE CLASS (INCLUDING, BUT NOT LIMITED TO, RSHARES) WITHOUT A FRONT-END SALES CHARGE AND WITH ONGOINGFEES SUBSTANTIALLY SIMILAR TO THOSE OF THE CLASS A SHARE. THEFIRM WILL SUBMIT TO FINRA A SCHEDULE OF ELIGIBLE CUSTOMERSIDENTIFIED FOR REMEDIATION AND INCLUDE THE DETAILS OF THEQUALIFYING PURCHASES AND TOTAL DOLLAR AMOUNTS OF RESTITUTIONTHAT WILL BE PROVIDED TO EACH CUSTOMER.

Regulator Statement IN RESOLVING THIS MATTER, FINRA HAS RECOGNIZED THEEXTRAORDINARY COOPERATION OF THE FIRM FOR HAVING: (1) INITIATED,PRIOR TO DETECTION OR INTERVENTION BY A REGULATOR, ANINVESTIGATION TO IDENTIFY WHETHER ELIGIBLE CUSTOMERS RECEIVEDSALES CHARGE WAIVERS DURING THE RELEVANT PERIOD; (2) PROMPTLYESTABLISHED A PLAN OF REMEDIATION FOR ELIGIBLE CUSTOMERS WHODID NOT RECEIVE APPROPRIATE SALES CHARGE WAIVERS; (3) PROMPTLYSELF-REPORTED TO FINRA; (4) PROMPTLY TAKEN ACTION AND REMEDIALSTEPS TO CORRECT THE VIOLATIVE CONDUCT; AND (5) EMPLOYEDSUBSEQUENT CORRECTIVE MEASURES, PRIOR TO DETECTION ORINTERVENTION BY A REGULATOR, TO REVISE ITS PROCEDURES TO AVOIDRECURRENCE OF THE MISCONDUCT.


Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS ANDTO THE ENTRY OF FINDINGS THAT IT DISADVANTAGED CERTAINRETIREMENT PLAN ANDCHARITABLE ORGANIZATION CUSTOMERS THAT WERE ELIGIBLE TOPURCHASE CLASS A SHARES INCERTAIN MUTUAL FUNDS WITHOUT A FRONT-END SALES CHARGE. THEFINDINGS STATED THATTHESE ELIGIBLE CUSTOMERS WERE INSTEAD SOLD CLASS A SHARESWITH A FRONT-END SALESCHARGE OR CLASS B OR C SHARES WITH BACK-END SALES CHARGESAND HIGHER ONGOING FEESAND EXPENSES. THESE SALES DISADVANTAGED ELIGIBLE CUSTOMERSBY CAUSING THECUSTOMERS TO PAY HIGHER FEES THAN THEY WERE ACTUALLYREQUIRED TO PAY. THE FINDINGS ALSO STATED THAT THE FIRM FAILED TOREASONABLY SUPERVISE THE APPLICATION OF SALESCHARGEWAIVERS TO ELIGIBLE MUTUAL FUND SALES. THE FIRM RELIED ON ITSFINANCIALADVISORS TO DETERMINE THE APPLICABILITY OF SALES-CHARGEWAIVERS BUT FAILED TOMAINTAIN ADEQUATE WRITTEN POLICIES OR PROCEDURES TO ASSISTFINANCIAL ADVISORS INMAKING THIS DETERMINATION. IN ADDITION, THE FIRM FAILED TOADEQUATELY NOTIFY ANDTRAIN ITS FINANCIAL ADVISORS REGARDING THE AVAILABILITY OFMUTUAL FUND SALES-CHARGEWAIVERS FOR ELIGIBLE CUSTOMERS. THE FIRM ALSO FAILED TO ADOPTADEQUATE CONTROLS TODETECT INSTANCES IN WHICH THEY DID NOT PROVIDE SALES-CHARGEWAIVERS TO ELIGIBLECUSTOMERS IN CONNECTION WITH THEIR MUTUAL FUND PURCHASES. ASA RESULT OF THE FIRM'SFAILURE TO APPLY AVAILABLE SALES-CHARGE WAIVERS, THE FIRMESTIMATES THAT ELIGIBLECUSTOMERS WERE OVERCHARGED BY APPROXIMATELY $769,054 FORMUTUAL FUND PURCHASESMADE SINCE JULY 1, 2009.







Initiated By: FINRA


Other


AWC





WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS ANDTO THE ENTRY OF FINDINGS THAT IT DISADVANTAGED CERTAINRETIREMENT PLAN ANDCHARITABLE ORGANIZATION CUSTOMERS THAT WERE ELIGIBLE TOPURCHASE CLASS A SHARES INCERTAIN MUTUAL FUNDS WITHOUT A FRONT-END SALES CHARGE. THEFINDINGS STATED THATTHESE ELIGIBLE CUSTOMERS WERE INSTEAD SOLD CLASS A SHARESWITH A FRONT-END SALESCHARGE OR CLASS B OR C SHARES WITH BACK-END SALES CHARGESAND HIGHER ONGOING FEESAND EXPENSES. THESE SALES DISADVANTAGED ELIGIBLE CUSTOMERSBY CAUSING THECUSTOMERS TO PAY HIGHER FEES THAN THEY WERE ACTUALLYREQUIRED TO PAY. THE FINDINGS ALSO STATED THAT THE FIRM FAILED TOREASONABLY SUPERVISE THE APPLICATION OF SALESCHARGEWAIVERS TO ELIGIBLE MUTUAL FUND SALES. THE FIRM RELIED ON ITSFINANCIALADVISORS TO DETERMINE THE APPLICABILITY OF SALES-CHARGEWAIVERS BUT FAILED TOMAINTAIN ADEQUATE WRITTEN POLICIES OR PROCEDURES TO ASSISTFINANCIAL ADVISORS INMAKING THIS DETERMINATION. IN ADDITION, THE FIRM FAILED TOADEQUATELY NOTIFY ANDTRAIN ITS FINANCIAL ADVISORS REGARDING THE AVAILABILITY OFMUTUAL FUND SALES-CHARGEWAIVERS FOR ELIGIBLE CUSTOMERS. THE FIRM ALSO FAILED TO ADOPTADEQUATE CONTROLS TODETECT INSTANCES IN WHICH THEY DID NOT PROVIDE SALES-CHARGEWAIVERS TO ELIGIBLECUSTOMERS IN CONNECTION WITH THEIR MUTUAL FUND PURCHASES. ASA RESULT OF THE FIRM'SFAILURE TO APPLY AVAILABLE SALES-CHARGE WAIVERS, THE FIRMESTIMATES THAT ELIGIBLECUSTOMERS WERE OVERCHARGED BY APPROXIMATELY $769,054 FORMUTUAL FUND PURCHASESMADE SINCE JULY 1, 2009.








AWC


Resolution:

Other Sanctions Ordered: UNDERTAKING

Sanction Details: THE FIRM WAS CENSURED, AGREED TO PAY A TOTAL OF APPROXIMATELY$876,915, INCLUSIVEOF INTEREST, IN RESTITUTION TO ELIGIBLE CUSTOMERS, AND WILL ALSOENSURE THATRETIREMENT AND CHARITABLE WAIVERS ARE APPROPRIATELY APPLIEDTO ALL FUTURETRANSACTIONS, AND REQUIRED TO PROVIDE REMEDIATION TO ELIGIBLECUSTOMERS WHO,FROM JULY 1, 2009, QUALIFIED FOR, BUT DID NOT RECEIVE, THEAPPLICABLE MUTUAL FUNDSALES CHARGE WAIVERS WHEN THE FIRM FAILED TO IDENTIFY ANDAPPLY AVAILABLE SALESCHARGE WAIVERS TO ELIGIBLE RETIREMENT ACCOUNTS ANDCHARITABLE ORGANIZATIONS.THE FIRM WILL PROVIDE TO FINRA A DETAILED PLAN TO REMEDIATEELIGIBLE CUSTOMERSBASED ON SPECIFIC CRITERIA THAT ARE NOT UNACCEPTABLE TO FINRA.THE FIRM WILL ALSOADDRESS RESTITUTION FOR EACH RETIREMENT PLAN CUSTOMER THAT,WHILE NOT ELIGIBLETO PURCHASE CLASS A SHARES WITHOUT A FRONT-END SALES CHARGE,WAS ELIGIBLE TOPURCHASE AN ALTERNATIVE SHARE CLASS (INCLUDING, BUT NOT LIMITEDTO, R SHARES)WITHOUT A FRONT-END SALES CHARGE AND WITHONGOING FEES SUBSTANTIALLY SIMILAR TOTHOSE OF THE CLASS A SHARE. THE FIRM WILL SUBMIT TO FINRA ASCHEDULE OF ELIGIBLECUSTOMERS IDENTIFIED FOR REMEDIATION AND INCLUDE THE DETAILSOF THE QUALIFYINGPURCHASES AND TOTAL DOLLAR AMOUNTS OF RESTITUTION THAT WILLBE PROVIDED TO EACHCUSTOMER.

Firm Statement IN RESOLVING THIS MATTER, FINRA HAS RECOGNIZED THEEXTRAORDINARY COOPERATION OF THEFIRM FOR HAVING: (1) INITIATED, PRIOR TO DETECTION OR INTERVENTIONBY A REGULATOR, ANINVESTIGATION TO IDENTIFY WHETHER ELIGIBLE CUSTOMERS RECEIVEDSALES CHARGE WAIVERSDURING THE RELEVANT PERIOD; (2) PROMPTLY ESTABLISHED A PLAN OFREMEDIATION FORELIGIBLE CUSTOMERS WHO DID NOT RECEIVE APPROPRIATE SALESCHARGE WAIVERS; (3)PROMPTLY SELF-REPORTED TO FINRA; (4) PROMPTLY TAKEN ACTION ANDREMEDIAL STEPS TOCORRECT THE VIOLATIVE CONDUCT; AND (5) EMPLOYED SUBSEQUENTCORRECTIVE MEASURES,PRIOR TO DETECTION OR INTERVENTION BY A REGULATOR, TO REVISEITS PROCEDURES TO AVOIDRECURRENCE OF THE MISCONDUCT.

Sanctions Ordered: CensureDisgorgement/Restitution







IN RESOLVING THIS MATTER, FINRA HAS RECOGNIZED THEEXTRAORDINARY COOPERATION OF THEFIRM FOR HAVING: (1) INITIATED, PRIOR TO DETECTION OR INTERVENTIONBY A REGULATOR, ANINVESTIGATION TO IDENTIFY WHETHER ELIGIBLE CUSTOMERS RECEIVEDSALES CHARGE WAIVERSDURING THE RELEVANT PERIOD; (2) PROMPTLY ESTABLISHED A PLAN OFREMEDIATION FORELIGIBLE CUSTOMERS WHO DID NOT RECEIVE APPROPRIATE SALESCHARGE WAIVERS; (3)PROMPTLY SELF-REPORTED TO FINRA; (4) PROMPTLY TAKEN ACTION ANDREMEDIAL STEPS TOCORRECT THE VIOLATIVE CONDUCT; AND (5) EMPLOYED SUBSEQUENTCORRECTIVE MEASURES,PRIOR TO DETECTION OR INTERVENTION BY A REGULATOR, TO REVISEITS PROCEDURES TO AVOIDRECURRENCE OF THE MISCONDUCT.

Disclosure 3 of 18

i


Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT FAILED TOMAINTAIN A PROCESS REASONABLY DESIGNED TO SUPERVISE ITSREGISTERED REPRESENTATIVES' RECOMMENDATION OF MULTI-SHARECLASS VARIABLE ANNUITIES (VAS) TO ITS CUSTOMERS.THE FINDINGS STATED THAT DESPITE THE SIGNIFICANT ROLE THAT VASALES PLAYED IN THE RESPONDENT'S OVERALL BUSINESS, THE FIRMFAILED TO IMPLEMENT A SUPERVISORY SYSTEM AND PROCEDURESDESIGNED TO REASONABLY ENSURE SUITABILITY IN ITS MULTI-SHARECLASS VA SALES, INCLUDING L-SHARE CONTRACTS.

THE FINDINGS ALSO STATED THAT THE FIRM FAILED TO REASONABLYSUPERVISE THE SALE OF MULTI-SHARE CLASS VAS BY FAILING TOIDENTIFY AND ADDRESS RED FLAGS. SALES OF SHORT SURRENDERPERIOD L-SHARE CONTRACTS COMBINED WITH A LONG-TERM INCOMERIDER HAVE CONFLICTING TIME HORIZONS AND ARE RED FLAGS. THEFIRM DID NOT IDENTIFY SALES OF L-SHARE CONTRACTS COMBINED WITHLONG-TERM INCOME RIDERS AS RED FLAGS DESPITE RECURRINGPATTERNS OVER THE RELEVANT PERIOD. THE FIRM APPROVED L-SHARECONTRACTS SOLD WITH A LONG-TERM INCOME RIDER WITHOUTIDENTIFYING OR SUFFICIENTLY INVESTIGATING THE SUITABILITY OF THEPOTENTIALLY INCOMPATIBLE RECOMMENDATION.

THE FINDINGS ALSO INCLUDED THAT DESPITE THE FACT THAT ASIGNIFICANT PORTION OF THE FIRM'S ANNUAL REVENUES FROM VASWERE GENERATED FROM L-SHARE CONTRACTS, IT FAILED TO ESTABLISH,MAINTAIN, AND ENFORCE A REASONABLE SUPERVISORY SYSTEM ANDWSPS RELATED TO THE SALE OF MULTI-SHARE CLASS VAS. THE FIRMSFAILED TO PROVIDE SUFFICIENT TRAINING TO ITS REGISTEREDREPRESENTATIVES AND PRINCIPALS ON THE SALE AND SUPERVISION OFMULTI-SHARE CLASS VAS. THE FIRM'S WSPS AND TRAINING MATERIALSFAILED TO PROVIDE REGISTERED REPRESENTATIVES AND PRINCIPALSWITH SUFFICIENT GUIDANCE OR SUITABILITY CONSIDERATIONS FORSALES OF DIFFERENT VA SHARE CLASSES. AS A RESULT, THEREGISTERED REPRESENTATIVES AND PRINCIPALS WHO WERERESPONSIBLE FOR REVIEWING VA TRANSACTIONS, FAILED TOADEQUATELY CONSIDER SUITABILITY ISSUES RELATED TO SHARE CLASSSELECTION. THEY ALSO FAILED TO IDENTIFY RED FLAGS IN VARECOMMENDATIONS, INCLUDING SALES OF L-SHARE CONTRACTS TOCUSTOMERS WITH A LONG-TERM INVESTMENT HORIZON. IN ADDITION,THE FIRM FAILED TO ESTABLISH, MAINTAIN, AND ENFORCE WSPS ORPROVIDE SUFFICIENT GUIDANCE OR TRAINING TO ITS REGISTEREDREPRESENTATIVES AND ITS PRINCIPALS ON THE SALE OF LONG-TERMINCOME RIDERS WITH MULTI-SHARE CLASS VAS, PARTICULARLY THECOMBINATION OF L-SHARE CONTRACTS WITH LONG-TERM INCOMERIDERS.

FINRA FOUND THAT THE FIRM OFFERED AND SOLD VARIOUSSTRUCTURED PRODUCTS TO RETAIL CUSTOMERS WITHOUT HAVING INPLACE A SUFFICIENT SUPERVISORY SYSTEM, INCLUDING WSPS,REASONABLY DESIGNED TO DETECT AND PREVENT UNSUITABLE SALESOF STRUCTURED PRODUCTS. THE FIRM FAILED TO ADEQUATELYENFORCE THE FIRM'S PROCEDURE REQUIRING SUPERVISORY POST-TRADE REVIEWS OF STRUCTURED PRODUCT TRANSACTIONS, AND TOFULLY IMPLEMENT A SYSTEM AND ENFORCE ITS PROCEDURESREQUIRING ALL REGISTERED REPRESENTATIVES TO COMPLETE TRAININGPRIOR TO SOLICITING STRUCTURED PRODUCTS.

FINRA ALSO FOUND THAT THE FIRM ENGAGED IN SALES OF INVERSE,LEVERAGED AND INVERSE-LEVERAGED EXCHANGE TRADED FUNDS(NON-TRADITIONAL ETFS). WHILE IT PROVIDED SOME TRAINING TO ITSREGISTERED REPRESENTATIVES ON THESE PRODUCTS AND IMPOSEDCERTAIN MINIMUM REQUIREMENTS WITH RESPECT TO CUSTOMER RISKTOLERANCES AND OBJECTIVES, IT DID NOT CREATE AND IMPLEMENTSUPERVISORY PROCEDURES THAT WERE ADEQUATE TO MONITOR THEIRHOLDING PERIODS.

THE FIRM FAILED TO IMPLEMENT SUPERVISORY PROCEDURES TOADEQUATELY ENSURE SUITABILITY IN SALES OF NON-TRADITIONAL ETFS,AND FAILED TO IDENTIFY OR INVESTIGATE PATTERNS OF NON-TRADITIONAL ETFS HELD FOR LONGER THAN ONE DAY.

IN ADDITION, FINRA DETERMINED THAT THE FIRM FAILED TO SUPERVISETHE USE OF CONSOLIDATED ACCOUNT REPORTS AND FAILED TOENFORCE ITS BOOKS AND RECORDS REQUIREMENTS FORCONSOLIDATED ACCOUNT REPORTS.







WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT FAILED TOMAINTAIN A PROCESS REASONABLY DESIGNED TO SUPERVISE ITSREGISTERED REPRESENTATIVES' RECOMMENDATION OF MULTI-SHARECLASS VARIABLE ANNUITIES (VAS) TO ITS CUSTOMERS.THE FINDINGS STATED THAT DESPITE THE SIGNIFICANT ROLE THAT VASALES PLAYED IN THE RESPONDENT'S OVERALL BUSINESS, THE FIRMFAILED TO IMPLEMENT A SUPERVISORY SYSTEM AND PROCEDURESDESIGNED TO REASONABLY ENSURE SUITABILITY IN ITS MULTI-SHARECLASS VA SALES, INCLUDING L-SHARE CONTRACTS.












Initiated By: FINRA





Principal Product Type: Other

Other Product Type(s): MULTI-SHARE CLASS VARIABLE ANNUITIES(VA): L-SHARE VA'S (L-SHARECONTRACTS) - AND STRUCTURED NOTES AND NON-TRADITIONAL ETFS

WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT FAILED TOMAINTAIN A PROCESS REASONABLY DESIGNED TO SUPERVISE ITSREGISTERED REPRESENTATIVES' RECOMMENDATION OF MULTI-SHARECLASS VARIABLE ANNUITIES (VAS) TO ITS CUSTOMERS.THE FINDINGS STATED THAT DESPITE THE SIGNIFICANT ROLE THAT VASALES PLAYED IN THE RESPONDENT'S OVERALL BUSINESS, THE FIRMFAILED TO IMPLEMENT A SUPERVISORY SYSTEM AND PROCEDURESDESIGNED TO REASONABLY ENSURE SUITABILITY IN ITS MULTI-SHARECLASS VA SALES, INCLUDING L-SHARE CONTRACTS.








Resolution:

Other Sanctions Ordered: UNDERTAKINGS

Sanction Details: THE FIRM WAS CENSURED, FINED $950,000, AND REQUIRED TO CONDUCTUNDERTAKINGS. THE FIRM WAS REQUIRED TO REVIEW AND REVISE, ASNECESSARY, THE FIRM'S SYSTEMS, POLICIES AND PROCEDURES(WRITTEN AND OTHERWISE) AND TRAINING WITH RESPECT TO THE AREASDESCRIBED WITHIN SECTION I.A OF THIS AWC. WITHIN 90 BUSINESS DAYSOF THE DATE THIS AWC IS ACCEPTED, THE FIRM SHALL CERTIFY INWRITING TO FINRA THAT WITH RESPECT TO THE AREAS DESCRIBED INSECTION I.A. OF THIS AWC: (I) THE FIRM HAS ENGAGED IN THE REVIEW;AND (II) AS OF THE DATE OF THE CERTIFICATION, THE FIRM HASESTABLISHED AND IMPLEMENTED SYSTEMS AND POLICIES ANDPROCEDURES (WRITTEN OR OTHERWISE) THAT ARE REASONABLYDESIGNED TO ACHIEVE COMPLIANCE WITH THE APPLICABLE FINRA ANDNASD RULES CITED IN THE AWC.THE FIRM, WITHIN 120 DAYS OF THE DATE THIS AWC IS ACCEPTED BYFINRA, IS ORDERED TO PROVIDE PAYMENT TO ITS CUSTOMERS WHOPURCHASED FROM THE FIRM'S REGISTERED REPRESENTATIVE L-SHARECONTRACTS WITH LONG-TERM INCOME RIDERS AND NO PERSISTENCYCREDITS FROM NOVEMBER 1, 2011 THROUGH OCTOBER 30, 2016 ANDWHO CURRENTLY HOLD THOSE CONTRACTS AT ANY AFFILIATE OF THEFIRM (THE "RESTITUTION VA CONTRACTS"), ACCORDING TO A PLAN NOTUNACCEPTABLE TO FINRA IN AN AMOUNT THAT WILL TOTAL NOT LESSTHAN $4.5 MILLION. FINES PAID ON FULL ON NOVEMBER 21, 2016.


No

Sanctions Ordered: CensureMonetary/Fine $950,000.00








THE FIRM WAS CENSURED, FINED $950,000, AND REQUIRED TO CONDUCTUNDERTAKINGS. THE FIRM WAS REQUIRED TO REVIEW AND REVISE, ASNECESSARY, THE FIRM'S SYSTEMS, POLICIES AND PROCEDURES(WRITTEN AND OTHERWISE) AND TRAINING WITH RESPECT TO THE AREASDESCRIBED WITHIN SECTION I.A OF THIS AWC. WITHIN 90 BUSINESS DAYSOF THE DATE THIS AWC IS ACCEPTED, THE FIRM SHALL CERTIFY INWRITING TO FINRA THAT WITH RESPECT TO THE AREAS DESCRIBED INSECTION I.A. OF THIS AWC: (I) THE FIRM HAS ENGAGED IN THE REVIEW;AND (II) AS OF THE DATE OF THE CERTIFICATION, THE FIRM HASESTABLISHED AND IMPLEMENTED SYSTEMS AND POLICIES ANDPROCEDURES (WRITTEN OR OTHERWISE) THAT ARE REASONABLYDESIGNED TO ACHIEVE COMPLIANCE WITH THE APPLICABLE FINRA ANDNASD RULES CITED IN THE AWC.THE FIRM, WITHIN 120 DAYS OF THE DATE THIS AWC IS ACCEPTED BYFINRA, IS ORDERED TO PROVIDE PAYMENT TO ITS CUSTOMERS WHOPURCHASED FROM THE FIRM'S REGISTERED REPRESENTATIVE L-SHARECONTRACTS WITH LONG-TERM INCOME RIDERS AND NO PERSISTENCYCREDITS FROM NOVEMBER 1, 2011 THROUGH OCTOBER 30, 2016 ANDWHO CURRENTLY HOLD THOSE CONTRACTS AT ANY AFFILIATE OF THEFIRM (THE "RESTITUTION VA CONTRACTS"), ACCORDING TO A PLAN NOTUNACCEPTABLE TO FINRA IN AN AMOUNT THAT WILL TOTAL NOT LESSTHAN $4.5 MILLION. FINES PAID ON FULL ON NOVEMBER 21, 2016.


Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS ANDTO THE ENTRY OF FINDINGS THAT IT FAILED TO MAINTAIN A PROCESSREASONABLY DESIGNED TOSUPERVISE ITS REGISTERED REPRESENTATIVES' RECOMMENDATION OFMULTI-SHARE CLASSVARIABLE ANNUITIES (VAS) TO ITS CUSTOMERS. THE FINDINGS STATEDTHAT DESPITE THESIGNIFICANT ROLE THAT VA SALES PLAYED IN THE RESPONDENT'SOVERALL BUSINESS, THE FIRMFAILED TO IMPLEMENT A SUPERVISORY SYSTEM AND PROCEDURESDESIGNED TO REASONABLY ENSURE SUITABILITY IN ITS MULTI-SHARECLASS VA SALES, INCLUDING L-SHARE CONTRACTS. THEFINDINGS ALSO STATED THAT THE FIRM FAILED TO REASONABLYSUPERVISE THE SALE OF MULTISHARECLASS VAS BY FAILING TO IDENTIFY AND ADDRESS RED FLAGS. SALES OFSHORTSURRENDER PERIOD L-SHARE CONTRACTS COMBINED WITH A LONG-TERM INCOME RIDER HAVECONFLICTING TIME HORIZONS AND ARE RED FLAGS. THE FIRM DID NOTIDENTIFY SALES OFL-SHARE CONTRACTS COMBINED WITH LONG-TERM INCOME RIDERS ASRED FLAGS DESPITERECURRING PATTERNS OVER THE RELEVANT PERIOD. THE FIRMAPPROVED L-SHARE CONTRACTSSOLD WITH A LONG-TERM INCOME RIDER WITHOUT IDENTIFYING ORSUFFICIENTLY INVESTIGATINGTHE SUITABILITY OF THE POTENTIALLY INCOMPATIBLERECOMMENDATION. THE FINDINGS ALSOINCLUDED THAT DESPITE THE FACT THAT A SIGNIFICANT PORTION OF THEFIRM'S ANNUALREVENUES FROM VAS WERE GENERATED FROM L-SHARE CONTRACTS, ITFAILED TO ESTABLISH,MAINTAIN, AND ENFORCE A REASONABLE SUPERVISORY SYSTEM ANDWSPS RELATED TO THE SALEOF MULTI-SHARE CLASS VAS. THE FIRMS FAILED TO PROVIDE SUFFICIENTTRAINING TO ITSREGISTERED REPRESENTATIVES AND PRINCIPALS ON THE SALE ANDSUPERVISION OF MULTI-SHARECLASS VAS. THE FIRM'S WSPS AND TRAINING MATERIALS FAILED TOPROVIDE REGISTEREDREPRESENTATIVES AND PRINCIPALS WITH SUFFICIENT GUIDANCE ORSUITABILITYCONSIDERATIONS FOR SALES OF DIFFERENT VA SHARE CLASSES. AS ARESULT, THE REGISTEREDREPRESENTATIVES AND PRINCIPALS WHO WERE RESPONSIBLE FORREVIEWING VA TRANSACTIONS,FAILED TO ADEQUATELY CONSIDER SUITABILITY ISSUES RELATED TOSHARE CLASS SELECTION.THEY ALSO FAILED TO IDENTIFY RED FLAGS IN VA RECOMMENDATIONS,INCLUDING SALES OFL-SHARE CONTRACTS TO CUSTOMERS WITH A LONG-TERM INVESTMENTHORIZON. IN ADDITION,THE FIRM FAILED TO ESTABLISH, MAINTAIN, AND ENFORCE WSPS ORPROVIDE SUFFICIENTGUIDANCE OR TRAINING TO ITS REGISTERED REPRESENTATIVES AND ITSPRINCIPALS ON THE SALEOF LONG-TERM INCOME RIDERS WITH MULTI-SHARE CLASS VAS,PARTICULARLY THE COMBINATIONOF L-SHARE CONTRACTS WITH LONG-TERM INCOME RIDERS. FINRAFOUND THAT THE FIRMOFFERED AND SOLD VARIOUS STRUCTURED PRODUCTS TO RETAILCUSTOMERS WITHOUT HAVINGIN PLACE A SUFFICIENT SUPERVISORY SYSTEM, INCLUDING WSPS,REASONABLY DESIGNED TODETECT AND PREVENT UNSUITABLE SALES OF STRUCTURED PRODUCTS.THE FIRM FAILED TOADEQUATELY ENFORCE THE FIRM'S PROCEDURE REQUIRINGSUPERVISORY POST-TRADE REVIEWSOF STRUCTURED PRODUCT TRANSACTIONS, AND TO FULLY IMPLEMENT ASYSTEM AND ENFORCE ITSPROCEDURES REQUIRING ALL REGISTERED REPRESENTATIVES TOCOMPLETE TRAINING PRIOR TOSOLICITING STRUCTURED PRODUCTS. FINRA ALSO FOUND THAT THEFIRM ENGAGED IN SALES OFINVERSE, LEVERAGED AND INVERSE-LEVERAGED EXCHANGE TRADEDFUNDS (NON-TRADITIONALETFS). WHILE IT PROVIDED SOME TRAINING TO ITS REGISTEREDREPRESENTATIVES ON THESEPRODUCTS AND IMPOSED CERTAIN MINIMUM REQUIREMENTS WITHRESPECT TO CUSTOMER RISKTOLERANCES AND OBJECTIVES, IT DID NOT CREATE AND IMPLEMENTSUPERVISORY PROCEDURESTHAT WERE ADEQUATE TO MONITOR THEIR HOLDING PERIODS. THE FIRMFAILED TO IMPLEMENTSUPERVISORY PROCEDURES TO ADEQUATELY ENSURE SUITABILITY INSALES OF NON-TRADITIONALETFS, AND FAILED TO IDENTIFY OR INVESTIGATE PATTERNS OF NON-TRADITIONAL ETFS HELD FORLONGER THAN ONE DAY. IN ADDITION, FINRA DETERMINED THAT THE FIRMFAILED TO SUPERVISETHE USE OF CONSOLIDATED ACCOUNT REPORTS AND FAILED TOENFORCE ITS BOOKS ANDRECORDS REQUIREMENTS FOR CONSOLIDATED ACCOUNT REPORTS.







WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS ANDTO THE ENTRY OF FINDINGS THAT IT FAILED TO MAINTAIN A PROCESSREASONABLY DESIGNED TOSUPERVISE ITS REGISTERED REPRESENTATIVES' RECOMMENDATION OFMULTI-SHARE CLASSVARIABLE ANNUITIES (VAS) TO ITS CUSTOMERS. THE FINDINGS STATEDTHAT DESPITE THESIGNIFICANT ROLE THAT VA SALES PLAYED IN THE RESPONDENT'SOVERALL BUSINESS, THE FIRMFAILED TO IMPLEMENT A SUPERVISORY SYSTEM AND PROCEDURESDESIGNED TO REASONABLY ENSURE SUITABILITY IN ITS MULTI-SHARECLASS VA SALES, INCLUDING L-SHARE CONTRACTS. THEFINDINGS ALSO STATED THAT THE FIRM FAILED TO REASONABLYSUPERVISE THE SALE OF MULTISHARECLASS VAS BY FAILING TO IDENTIFY AND ADDRESS RED FLAGS. SALES OFSHORTSURRENDER PERIOD L-SHARE CONTRACTS COMBINED WITH A LONG-TERM INCOME RIDER HAVECONFLICTING TIME HORIZONS AND ARE RED FLAGS. THE FIRM DID NOTIDENTIFY SALES OFL-SHARE CONTRACTS COMBINED WITH LONG-TERM INCOME RIDERS ASRED FLAGS DESPITERECURRING PATTERNS OVER THE RELEVANT PERIOD. THE FIRMAPPROVED L-SHARE CONTRACTSSOLD WITH A LONG-TERM INCOME RIDER WITHOUT IDENTIFYING ORSUFFICIENTLY INVESTIGATINGTHE SUITABILITY OF THE POTENTIALLY INCOMPATIBLERECOMMENDATION. THE FINDINGS ALSOINCLUDED THAT DESPITE THE FACT THAT A SIGNIFICANT PORTION OF THEFIRM'S ANNUALREVENUES FROM VAS WERE GENERATED FROM L-SHARE CONTRACTS, ITFAILED TO ESTABLISH,MAINTAIN, AND ENFORCE A REASONABLE SUPERVISORY SYSTEM ANDWSPS RELATED TO THE SALEOF MULTI-SHARE CLASS VAS. THE FIRMS FAILED TO PROVIDE SUFFICIENTTRAINING TO ITSREGISTERED REPRESENTATIVES AND PRINCIPALS ON THE SALE ANDSUPERVISION OF MULTI-SHARECLASS VAS. THE FIRM'S WSPS AND TRAINING MATERIALS FAILED TOPROVIDE REGISTEREDREPRESENTATIVES AND PRINCIPALS WITH SUFFICIENT GUIDANCE ORSUITABILITYCONSIDERATIONS FOR SALES OF DIFFERENT VA SHARE CLASSES. AS ARESULT, THE REGISTEREDREPRESENTATIVES AND PRINCIPALS WHO WERE RESPONSIBLE FORREVIEWING VA TRANSACTIONS,FAILED TO ADEQUATELY CONSIDER SUITABILITY ISSUES RELATED TOSHARE CLASS SELECTION.THEY ALSO FAILED TO IDENTIFY RED FLAGS IN VA RECOMMENDATIONS,INCLUDING SALES OFL-SHARE CONTRACTS TO CUSTOMERS WITH A LONG-TERM INVESTMENTHORIZON. IN ADDITION,THE FIRM FAILED TO ESTABLISH, MAINTAIN, AND ENFORCE WSPS ORPROVIDE SUFFICIENTGUIDANCE OR TRAINING TO ITS REGISTERED REPRESENTATIVES AND ITSPRINCIPALS ON THE SALEOF LONG-TERM INCOME RIDERS WITH MULTI-SHARE CLASS VAS,PARTICULARLY THE COMBINATIONOF L-SHARE CONTRACTS WITH LONG-TERM INCOME RIDERS. FINRAFOUND THAT THE FIRMOFFERED AND SOLD VARIOUS STRUCTURED PRODUCTS TO RETAILCUSTOMERS WITHOUT HAVINGIN PLACE A SUFFICIENT SUPERVISORY SYSTEM, INCLUDING WSPS,REASONABLY DESIGNED TODETECT AND PREVENT UNSUITABLE SALES OF STRUCTURED PRODUCTS.THE FIRM FAILED TOADEQUATELY ENFORCE THE FIRM'S PROCEDURE REQUIRINGSUPERVISORY POST-TRADE REVIEWSOF STRUCTURED PRODUCT TRANSACTIONS, AND TO FULLY IMPLEMENT ASYSTEM AND ENFORCE ITSPROCEDURES REQUIRING ALL REGISTERED REPRESENTATIVES TOCOMPLETE TRAINING PRIOR TOSOLICITING STRUCTURED PRODUCTS. FINRA ALSO FOUND THAT THEFIRM ENGAGED IN SALES OFINVERSE, LEVERAGED AND INVERSE-LEVERAGED EXCHANGE TRADEDFUNDS (NON-TRADITIONALETFS). WHILE IT PROVIDED SOME TRAINING TO ITS REGISTEREDREPRESENTATIVES ON THESEPRODUCTS AND IMPOSED CERTAIN MINIMUM REQUIREMENTS WITHRESPECT TO CUSTOMER RISKTOLERANCES AND OBJECTIVES, IT DID NOT CREATE AND IMPLEMENTSUPERVISORY PROCEDURESTHAT WERE ADEQUATE TO MONITOR THEIR HOLDING PERIODS. THE FIRMFAILED TO IMPLEMENTSUPERVISORY PROCEDURES TO ADEQUATELY ENSURE SUITABILITY INSALES OF NON-TRADITIONALETFS, AND FAILED TO IDENTIFY OR INVESTIGATE PATTERNS OF NON-TRADITIONAL ETFS HELD FORLONGER THAN ONE DAY. IN ADDITION, FINRA DETERMINED THAT THE FIRMFAILED TO SUPERVISETHE USE OF CONSOLIDATED ACCOUNT REPORTS AND FAILED TOENFORCE ITS BOOKS ANDRECORDS REQUIREMENTS FOR CONSOLIDATED ACCOUNT REPORTS.






Initiated By: FINRA


Other





Other Product Type(s): MULTI-SHARE CLASS VARIABLE ANNUITIES(VA): L-SHARE VA'S (L-SHARECONTRACTS) - ANDSTRUCTURED NOTES AND NON-TRADITIONAL ETFS

WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS ANDTO THE ENTRY OF FINDINGS THAT IT FAILED TO MAINTAIN A PROCESSREASONABLY DESIGNED TOSUPERVISE ITS REGISTERED REPRESENTATIVES' RECOMMENDATION OFMULTI-SHARE CLASSVARIABLE ANNUITIES (VAS) TO ITS CUSTOMERS. THE FINDINGS STATEDTHAT DESPITE THESIGNIFICANT ROLE THAT VA SALES PLAYED IN THE RESPONDENT'SOVERALL BUSINESS, THE FIRMFAILED TO IMPLEMENT A SUPERVISORY SYSTEM AND PROCEDURESDESIGNED TO REASONABLY ENSURE SUITABILITY IN ITS MULTI-SHARECLASS VA SALES, INCLUDING L-SHARE CONTRACTS. THEFINDINGS ALSO STATED THAT THE FIRM FAILED TO REASONABLYSUPERVISE THE SALE OF MULTISHARECLASS VAS BY FAILING TO IDENTIFY AND ADDRESS RED FLAGS. SALES OFSHORTSURRENDER PERIOD L-SHARE CONTRACTS COMBINED WITH A LONG-TERM INCOME RIDER HAVECONFLICTING TIME HORIZONS AND ARE RED FLAGS. THE FIRM DID NOTIDENTIFY SALES OFL-SHARE CONTRACTS COMBINED WITH LONG-TERM INCOME RIDERS ASRED FLAGS DESPITERECURRING PATTERNS OVER THE RELEVANT PERIOD. THE FIRMAPPROVED L-SHARE CONTRACTSSOLD WITH A LONG-TERM INCOME RIDER WITHOUT IDENTIFYING ORSUFFICIENTLY INVESTIGATINGTHE SUITABILITY OF THE POTENTIALLY INCOMPATIBLERECOMMENDATION. THE FINDINGS ALSOINCLUDED THAT DESPITE THE FACT THAT A SIGNIFICANT PORTION OF THEFIRM'S ANNUALREVENUES FROM VAS WERE GENERATED FROM L-SHARE CONTRACTS, ITFAILED TO ESTABLISH,MAINTAIN, AND ENFORCE A REASONABLE SUPERVISORY SYSTEM ANDWSPS RELATED TO THE SALEOF MULTI-SHARE CLASS VAS. THE FIRMS FAILED TO PROVIDE SUFFICIENTTRAINING TO ITSREGISTERED REPRESENTATIVES AND PRINCIPALS ON THE SALE ANDSUPERVISION OF MULTI-SHARECLASS VAS. THE FIRM'S WSPS AND TRAINING MATERIALS FAILED TOPROVIDE REGISTEREDREPRESENTATIVES AND PRINCIPALS WITH SUFFICIENT GUIDANCE ORSUITABILITYCONSIDERATIONS FOR SALES OF DIFFERENT VA SHARE CLASSES. AS ARESULT, THE REGISTEREDREPRESENTATIVES AND PRINCIPALS WHO WERE RESPONSIBLE FORREVIEWING VA TRANSACTIONS,FAILED TO ADEQUATELY CONSIDER SUITABILITY ISSUES RELATED TOSHARE CLASS SELECTION.THEY ALSO FAILED TO IDENTIFY RED FLAGS IN VA RECOMMENDATIONS,INCLUDING SALES OFL-SHARE CONTRACTS TO CUSTOMERS WITH A LONG-TERM INVESTMENTHORIZON. IN ADDITION,THE FIRM FAILED TO ESTABLISH, MAINTAIN, AND ENFORCE WSPS ORPROVIDE SUFFICIENTGUIDANCE OR TRAINING TO ITS REGISTERED REPRESENTATIVES AND ITSPRINCIPALS ON THE SALEOF LONG-TERM INCOME RIDERS WITH MULTI-SHARE CLASS VAS,PARTICULARLY THE COMBINATIONOF L-SHARE CONTRACTS WITH LONG-TERM INCOME RIDERS. FINRAFOUND THAT THE FIRMOFFERED AND SOLD VARIOUS STRUCTURED PRODUCTS TO RETAILCUSTOMERS WITHOUT HAVINGIN PLACE A SUFFICIENT SUPERVISORY SYSTEM, INCLUDING WSPS,REASONABLY DESIGNED TODETECT AND PREVENT UNSUITABLE SALES OF STRUCTURED PRODUCTS.THE FIRM FAILED TOADEQUATELY ENFORCE THE FIRM'S PROCEDURE REQUIRINGSUPERVISORY POST-TRADE REVIEWSOF STRUCTURED PRODUCT TRANSACTIONS, AND TO FULLY IMPLEMENT ASYSTEM AND ENFORCE ITSPROCEDURES REQUIRING ALL REGISTERED REPRESENTATIVES TOCOMPLETE TRAINING PRIOR TOSOLICITING STRUCTURED PRODUCTS. FINRA ALSO FOUND THAT THEFIRM ENGAGED IN SALES OFINVERSE, LEVERAGED AND INVERSE-LEVERAGED EXCHANGE TRADEDFUNDS (NON-TRADITIONALETFS). WHILE IT PROVIDED SOME TRAINING TO ITS REGISTEREDREPRESENTATIVES ON THESEPRODUCTS AND IMPOSED CERTAIN MINIMUM REQUIREMENTS WITHRESPECT TO CUSTOMER RISKTOLERANCES AND OBJECTIVES, IT DID NOT CREATE AND IMPLEMENTSUPERVISORY PROCEDURESTHAT WERE ADEQUATE TO MONITOR THEIR HOLDING PERIODS. THE FIRMFAILED TO IMPLEMENTSUPERVISORY PROCEDURES TO ADEQUATELY ENSURE SUITABILITY INSALES OF NON-TRADITIONALETFS, AND FAILED TO IDENTIFY OR INVESTIGATE PATTERNS OF NON-TRADITIONAL ETFS HELD FORLONGER THAN ONE DAY. IN ADDITION, FINRA DETERMINED THAT THE FIRMFAILED TO SUPERVISETHE USE OF CONSOLIDATED ACCOUNT REPORTS AND FAILED TOENFORCE ITS BOOKS ANDRECORDS REQUIREMENTS FOR CONSOLIDATED ACCOUNT REPORTS.


Resolution:


Sanction Details: AMOUNT THAT WILL TOTAL NOT LESS THAN $4.5 MILLION.THE FIRM WAS CENSURED, FINED $950,000, AND REQUIRED TO CONDUCTUNDERTAKINGS. THEFIRM WAS REQUIRED TO REVIEW AND REVISE, AS NECESSARY, THEFIRM'S SYSTEMS, POLICIESAND PROCEDURES (WRITTEN AND OTHERWISE) AND TRAINING WITHRESPECT TO THE AREASDESCRIBED WITHIN SECTION I.A OF THIS AWC. WITHIN 90 BUSINESS DAYSOF THE DATE THISAWC IS ACCEPTED, THE FIRM SHALL CERTIFY IN WRITING TO FINRA THATWITH RESPECT TOTHE AREAS DESCRIBED IN SECTION I.A. OF THIS AWC: (I) THE FIRM HASENGAGED IN THEREVIEW; AND (II) AS OF THE DATE OF THE CERTIFICATION, THE FIRM HASESTABLISHED ANDIMPLEMENTED SYSTEMS AND POLICIES AND PROCEDURES (WRITTEN OROTHERWISE) THAT AREREASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITH THEAPPLICABLE FINRA AND NASDRULES CITED IN THE AWC. THE FIRM, WITHIN 120 DAYS OF THE DATE THISAWC IS ACCEPTEDBY FINRA, IS ORDERED TO PROVIDE PAYMENT TO ITS CUSTOMERS WHOPURCHASED FROM THEFIRM'S REGISTERED REPRESENTATIVE L-SHARE CONTRACTS WITH LONG-TERM INCOME RIDERSAND NO PERSISTENCY CREDITS FROM NOVEMBER 1, 2011 THROUGHOCTOBER 30, 2016 ANDWHO CURRENTLY HOLD THOSE CONTRACTS AT ANY AFFILIATE OF THEFIRM (THE "RESTITUTIONVA CONTRACTS"), ACCORDING TO A PLAN NOT UNACCEPTABLE TO FINRAIN AN AMOUNT THATWILL TOTAL NOT LESS THAN $4.5 MILLION.









AMOUNT THAT WILL TOTAL NOT LESS THAN $4.5 MILLION.THE FIRM WAS CENSURED, FINED $950,000, AND REQUIRED TO CONDUCTUNDERTAKINGS. THEFIRM WAS REQUIRED TO REVIEW AND REVISE, AS NECESSARY, THEFIRM'S SYSTEMS, POLICIESAND PROCEDURES (WRITTEN AND OTHERWISE) AND TRAINING WITHRESPECT TO THE AREASDESCRIBED WITHIN SECTION I.A OF THIS AWC. WITHIN 90 BUSINESS DAYSOF THE DATE THISAWC IS ACCEPTED, THE FIRM SHALL CERTIFY IN WRITING TO FINRA THATWITH RESPECT TOTHE AREAS DESCRIBED IN SECTION I.A. OF THIS AWC: (I) THE FIRM HASENGAGED IN THEREVIEW; AND (II) AS OF THE DATE OF THE CERTIFICATION, THE FIRM HASESTABLISHED ANDIMPLEMENTED SYSTEMS AND POLICIES AND PROCEDURES (WRITTEN OROTHERWISE) THAT AREREASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITH THEAPPLICABLE FINRA AND NASDRULES CITED IN THE AWC. THE FIRM, WITHIN 120 DAYS OF THE DATE THISAWC IS ACCEPTEDBY FINRA, IS ORDERED TO PROVIDE PAYMENT TO ITS CUSTOMERS WHOPURCHASED FROM THEFIRM'S REGISTERED REPRESENTATIVE L-SHARE CONTRACTS WITH LONG-TERM INCOME RIDERSAND NO PERSISTENCY CREDITS FROM NOVEMBER 1, 2011 THROUGHOCTOBER 30, 2016 ANDWHO CURRENTLY HOLD THOSE CONTRACTS AT ANY AFFILIATE OF THEFIRM (THE "RESTITUTIONVA CONTRACTS"), ACCORDING TO A PLAN NOT UNACCEPTABLE TO FINRAIN AN AMOUNT THATWILL TOTAL NOT LESS THAN $4.5 MILLION.

Disclosure 4 of 18

i


Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT FAILED TOIDENTIFY AND APPLY SALES CHARGE DISCOUNTS TO CERTAINCUSTOMERS' ELIGIBLE PURCHASES OF UNIT INVESTMENT TRUSTS (UITS).

ON MARCH 31, 2004, FINRA ISSUED NOTICE TO MEMBERS 04-26, UNITINVESTMENT TRUST SALES, WHICH REMINDED BROKER-DEALERS THATTHEY SHOULD DEVELOP AND IMPLEMENT PROCEDURES TO ENSURECUSTOMERS RECEIVE AVAILABLE SALES CHARGE DISCOUNTS FOR UITS.THE NOTICE FURTHER STATED THAT UIT TRANSACTIONS MUST TAKEPLACE "ON THE MOST ADVANTAGEOUS TERMS AVAILABLE TO THECUSTOMER" AND THAT IT IS THE FIRM'S RESPONSIBILITY TO "TAKEAPPROPRIATE STEPS TO ENSURE THAT THEY AND THEIR EMPLOYEESUNDERSTAND, INFORM CUSTOMERS ABOUT, AND APPLY CORRECTLY ANYAPPLICABLE PRICE BREAKS AVAILABLE TO CUSTOMERS IN CONNECTIONWITH UITS."

THE FINDINGS STATED THAT SPECIFICALLY, THE FIRM FAILED TO APPLYSALES CHARGE DISCOUNTS TO APPROXIMATELY 3,712 ELIGIBLE UITPURCHASES RESULTING IN CUSTOMERS PAYING EXCESSIVE SALESCHARGES OF APPROXIMATELY $689,647.34. THE FIRM HAS MADERESTITUTION PAYMENTS TO AFFECTED CUSTOMERS.

THE FINDINGS ALSO STATED THAT THE FIRM FAILED TO ESTABLISH,MAINTAIN AND ENFORCE A SUPERVISORY SYSTEM AND WRITTENSUPERVISORY PROCEDURES REASONABLY DESIGNED TO ENSURECUSTOMERS RECEIVED SALES CHARGE DISCOUNTS ON ALL ELIGIBLE UITPURCHASES. THE FIRM HAD NO SUPERVISORY PROCEDURESREGARDING UIT SALES CHARGE DISCOUNTS. INSTEAD, THE FIRM RELIEDPRIMARILY ON ITS REGISTERED REPRESENTATIVES TO ENSURE THATCUSTOMERS RECEIVED APPROPRIATE UIT SALES CHARGE DISCOUNTS,DESPITE THE FACT THAT THE FIRM DID NOT EFFECTIVELY TRAINREPRESENTATIVES AND THEIR SUPERVISORS TO IDENTIFY AND APPLYSUCH SALES CHARGE DISCOUNTS.







Initiated By: FINRA





Principal Product Type: Unit Investment Trust(s)


WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT FAILED TOIDENTIFY AND APPLY SALES CHARGE DISCOUNTS TO CERTAINCUSTOMERS' ELIGIBLE PURCHASES OF UNIT INVESTMENT TRUSTS (UITS).

ON MARCH 31, 2004, FINRA ISSUED NOTICE TO MEMBERS 04-26, UNITINVESTMENT TRUST SALES, WHICH REMINDED BROKER-DEALERS THATTHEY SHOULD DEVELOP AND IMPLEMENT PROCEDURES TO ENSURECUSTOMERS RECEIVE AVAILABLE SALES CHARGE DISCOUNTS FOR UITS.THE NOTICE FURTHER STATED THAT UIT TRANSACTIONS MUST TAKEPLACE "ON THE MOST ADVANTAGEOUS TERMS AVAILABLE TO THECUSTOMER" AND THAT IT IS THE FIRM'S RESPONSIBILITY TO "TAKEAPPROPRIATE STEPS TO ENSURE THAT THEY AND THEIR EMPLOYEESUNDERSTAND, INFORM CUSTOMERS ABOUT, AND APPLY CORRECTLY ANYAPPLICABLE PRICE BREAKS AVAILABLE TO CUSTOMERS IN CONNECTIONWITH UITS."

THE FINDINGS STATED THAT SPECIFICALLY, THE FIRM FAILED TO APPLYSALES CHARGE DISCOUNTS TO APPROXIMATELY 3,712 ELIGIBLE UITPURCHASES RESULTING IN CUSTOMERS PAYING EXCESSIVE SALESCHARGES OF APPROXIMATELY $689,647.34. THE FIRM HAS MADERESTITUTION PAYMENTS TO AFFECTED CUSTOMERS.

THE FINDINGS ALSO STATED THAT THE FIRM FAILED TO ESTABLISH,MAINTAIN AND ENFORCE A SUPERVISORY SYSTEM AND WRITTENSUPERVISORY PROCEDURES REASONABLY DESIGNED TO ENSURECUSTOMERS RECEIVED SALES CHARGE DISCOUNTS ON ALL ELIGIBLE UITPURCHASES. THE FIRM HAD NO SUPERVISORY PROCEDURESREGARDING UIT SALES CHARGE DISCOUNTS. INSTEAD, THE FIRM RELIEDPRIMARILY ON ITS REGISTERED REPRESENTATIVES TO ENSURE THATCUSTOMERS RECEIVED APPROPRIATE UIT SALES CHARGE DISCOUNTS,DESPITE THE FACT THAT THE FIRM DID NOT EFFECTIVELY TRAINREPRESENTATIVES AND THEIR SUPERVISORS TO IDENTIFY AND APPLYSUCH SALES CHARGE DISCOUNTS.


Resolution:


No








Other Sanctions Ordered:

Sanction Details: THE FIRM WAS CENSURED, FINED $325,000, AND ORDERED TO PAY$689,647.34 IN RESTITUTION TO CUSTOMERS.

FINE PAID IN FULL ON NOVEMBER 17, 2015.


No

Sanctions Ordered: CensureMonetary/Fine $325,000.00Disgorgement/Restitution


Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT FAILED TOIDENTIFY AND APPLY SALES CHARGE DISCOUNTS TO CERTAINCUSTOMERS' ELIGIBLE PURCHASES OF UNIT INVESTMENT TRUSTS (UITS).ON MARCH 31, 2004, FINRA ISSUED NOTICE TO MEMBERS 04-26, UNITINVESTMENT TRUST SALES, WHICH REMINDED BROKER-DEALERS THATTHEY SHOULD DEVELOP AND IMPLEMENT PROCEDURES TO ENSURECUSTOMERS RECEIVE AVAILABLE SALES CHARGE DISCOUNTS FOR UITS.THE NOTICE FURTHER STATED THAT UIT TRANSACTIONS MUST TAKEPLACE "ON THE MOST ADVANTAGEOUS TERMS AVAILABLE TO THECUSTOMER" AND THAT IT IS THE FIRM'S RESPONSIBILITY TO "TAKEAPPROPRIATE STEPS TO ENSURE THAT THEY AND THEIR EMPLOYEESUNDERSTAND, INFORM CUSTOMERS ABOUT, AND APPLY CORRECTLY ANYAPPLICABLE PRICE BREAKS AVAILABLE TO CUSTOMERS IN CONNECTIONWITH UITS." THE FINDINGS STATED THAT SPECIFICALLY, THE FIRM FAILEDTO APPLY SALES CHARGE DISCOUNTS TO APPROXIMATELY 3,712 ELIGIBLEUIT PURCHASES RESULTING IN CUSTOMERS PAYING EXCESSIVE SALESCHARGES OF APPROXIMATELY $689,647.34. THE FIRM HAS MADERESTITUTION PAYMENTS TO AFFECTED CUSTOMERS. THE FINDINGS ALSOSTATED THAT THE FIRM FAILED TO ESTABLISH, MAINTAIN AND ENFORCE ASUPERVISORY SYSTEM AND WRITTEN SUPERVISORY PROCEDURESREASONABLY DESIGNED TO ENSURE CUSTOMERS RECEIVED SALESCHARGE DISCOUNTS ON ALL ELIGIBLE UIT PURCHASES. THE FIRM HADNO SUPERVISORY PROCEDURES REGARDING UIT SALES CHARGEDISCOUNTS. INSTEAD, THE FIRM RELIED PRIMARILY ON ITS REGISTEREDREPRESENTATIVES TO ENSURE THAT CUSTOMERS RECEIVEDAPPROPRIATE UIT SALES CHARGE DISCOUNTS, DESPITE THE FACT THATTHE FIRM DID NOT EFFECTIVELY TRAIN REPRESENTATIVES AND THEIRSUPERVISORS TO IDENTIFY AND APPLY SUCH SALES CHARGEDISCOUNTS.







Initiated By: FINRA




CENSURE; FINE OF $325,000.00 AND RESTITUTION TO AFFECTEDCUSTOMERS IN THE TOTAL AMOUNT OF $689,647.34



Principal Product Type: Unit Investment Trust(s)


WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT FAILED TOIDENTIFY AND APPLY SALES CHARGE DISCOUNTS TO CERTAINCUSTOMERS' ELIGIBLE PURCHASES OF UNIT INVESTMENT TRUSTS (UITS).ON MARCH 31, 2004, FINRA ISSUED NOTICE TO MEMBERS 04-26, UNITINVESTMENT TRUST SALES, WHICH REMINDED BROKER-DEALERS THATTHEY SHOULD DEVELOP AND IMPLEMENT PROCEDURES TO ENSURECUSTOMERS RECEIVE AVAILABLE SALES CHARGE DISCOUNTS FOR UITS.THE NOTICE FURTHER STATED THAT UIT TRANSACTIONS MUST TAKEPLACE "ON THE MOST ADVANTAGEOUS TERMS AVAILABLE TO THECUSTOMER" AND THAT IT IS THE FIRM'S RESPONSIBILITY TO "TAKEAPPROPRIATE STEPS TO ENSURE THAT THEY AND THEIR EMPLOYEESUNDERSTAND, INFORM CUSTOMERS ABOUT, AND APPLY CORRECTLY ANYAPPLICABLE PRICE BREAKS AVAILABLE TO CUSTOMERS IN CONNECTIONWITH UITS." THE FINDINGS STATED THAT SPECIFICALLY, THE FIRM FAILEDTO APPLY SALES CHARGE DISCOUNTS TO APPROXIMATELY 3,712 ELIGIBLEUIT PURCHASES RESULTING IN CUSTOMERS PAYING EXCESSIVE SALESCHARGES OF APPROXIMATELY $689,647.34. THE FIRM HAS MADERESTITUTION PAYMENTS TO AFFECTED CUSTOMERS. THE FINDINGS ALSOSTATED THAT THE FIRM FAILED TO ESTABLISH, MAINTAIN AND ENFORCE ASUPERVISORY SYSTEM AND WRITTEN SUPERVISORY PROCEDURESREASONABLY DESIGNED TO ENSURE CUSTOMERS RECEIVED SALESCHARGE DISCOUNTS ON ALL ELIGIBLE UIT PURCHASES. THE FIRM HADNO SUPERVISORY PROCEDURES REGARDING UIT SALES CHARGEDISCOUNTS. INSTEAD, THE FIRM RELIED PRIMARILY ON ITS REGISTEREDREPRESENTATIVES TO ENSURE THAT CUSTOMERS RECEIVEDAPPROPRIATE UIT SALES CHARGE DISCOUNTS, DESPITE THE FACT THATTHE FIRM DID NOT EFFECTIVELY TRAIN REPRESENTATIVES AND THEIRSUPERVISORS TO IDENTIFY AND APPLY SUCH SALES CHARGEDISCOUNTS.


Resolution:


Sanction Details: THE FIRM WAS CENSURED, FINED $325,000, AND ORDERED TO PAY$689,647.34 IN RESTITUTION TO CUSTOMERS.



Disclosure 5 of 18

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Initiated By: NEVADA


Docket/Case Number: CI14-120



Allegations: BETWEEN DECEMBER 23, 2011 AND OCTOBER 9, 2014, THE FIRM HAD TWOUNLICENSED BRANCH OFFICES IN NEVADA IN VIOLATION OF NAC 90.392(1).














Resolution:


Sanction Details: ALL FEES HAVE BEEN PAID.


No


Consent


Initiated By: STATE OF NEVADA SECURITIES DIVISION





Docket/Case Number: CI14-120-ST



Allegations: RESPONDENT HAD UNLICENSED BRANCH OFFICES IN THE STATE OFNEVADA BETWEEN DECEMBER 23, 2011 AND OCTOBER 9, 2014 INVIOLATION OF NEVADA ADMINISTRATIVE CODE NAC 90.392(1).



Resolution: Consent







Other Sanctions Ordered: ALL FEES HAVE BEEN PAID.

Sanction Details: RESPONDENT HAS AGREED TO COMPLY WITH THE NEVADA UNIFORMSECURITIES ACT AND LICENSE ALL LOCATIONS IN NEVADA AS AREGISTERED BRANCH OFFICE. RESPONDENT WILL PAY THE NEVADASECRETARY OF STAT A CIVIL PENALTY IN THE AMOUNT OF $6690.80


Disclosure 6 of 18

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Initiated By: FINRA


Other





Allegations: FINRA RULE 2010, NASD RULES 2110, 3010: THE FIRM DID NOT HAVEADEQUATE WRITTEN PROCEDURES REGARDING THE DELIVERY OFEXCHANGE TRADED FUND (ETF) AND UNIT INVESTMENT TRUST (UIT)PROSPECTUSES. THE FIRM FAILED TO ADEQUATELY REVIEW EXCEPTIONREPORTS PUBLISHED BY A COMPANY AND FAILED TO OTHERWISE REVIEWAND MONITOR THE FUNCTIONS IT DELEGATED TO THE COMPANY. AS ARESULT, THE FIRM FAILED TO DETECT THAT THE COMPANY FAILED TODELIVER APPROXIMATELY 1,107 PROSPECTUSES. ACCORDINGLY, THEFIRM FAILED TO DELIVER THE REQUIRED PROSPECTUSES OR WRITTENDESCRIPTIONS IN CONNECTION WITH ETF AND UIT PURCHASES. THEFIRM SIGNED AN AGREEMENT WITH THE COMPANY FOR DELIVERY OF ETFAND UIT PROSPECTUSES. ALTHOUGH THE FIRM RETAINED THE COMPANYTO DELIVER ITS ETF AND UIT PROSPECTUSES, IT REMAINED THE FIRM'SRESPONSIBILITY TO REVIEW TRANSACTION ACTIVITY ON A REGULARBASIS AND VERIFY THAT A PROSPECTUS WAS PROPERLY DELIVEREDWHEN REQUIRED. TO ASSIST THE FIRM IN FULFILLING ITS DELIVERYOBLIGATIONS, THE COMPANY MADE AVAILABLE DAILY AND MONTHLYEXCEPTION REPORTS VIA THE COMPANY'S ONLINE REPORT CENTER.THESE EXCEPTION REPORTS LISTED ALL PROSPECTUSES THAT WERENOT DELIVERED ON A TRADE DATE AND THE REASON EACH PROSPECTUSWAS NOT DELIVERED.









Other


N/A


Resolution:


Sanction Details: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS;THEREFORE IT IS CENSURED AND FINED $40,000. FINE PAID IN FULL ON1/30/2013.


No




Allegations: THE FIRM ENTERED INTO AN ACCEPTANCE WAIVER AND CONSENT WITHFINRA CONSENTING TO FINRA'S FINDINGS OF VIOLATIONS OF FINRA RULE2010, NASD RULES 2110, 3010: THE FIRM DID NOT HAVE ADEQUATEWRITTEN PROCEDURES REGARDING THE DELIVERY OF EXCHANGETRADED FUND (ETF) AND UNIT INVESTMENT TRUST (UIT)PROSPECTUSES. THE FIRM FAILED TO ADEQUATELY REVIEW EXCEPTIONREPORTS PUBLISHED BY A COMPANY AND FAILED TO OTHERWISEREVIEW AND MONITOR THE FUNCTIONS IT DELEGATED TO THE COMPANY.AS A RESULT, THE FIRM FAILED TO DETECT THAT THE COMPANY FAILEDTO DELIVER APPROXIMATELY 1,107 PROSPECTUSES. ACCORDINGLY, THEFIRM FAILED TO DELIVER THE REQUIRED PROSPECTUSES OR WRITTENDESCRIPTIONS IN CONNECTION WITH ETF AND UIT PURCHASES. THEFIRM SIGNED AN AGREEMENT WITH THE COMPANY FOR DELIVERY OFETF AND UIT PROSPECTUSES. ALTHOUGH THE FIRM RETAINED THECOMPANY TO DELIVER ITS ETF AND UIT PROSPECTUSES, IT REMAINEDTHE FIRM'S RESPONSIBILITY TO DELIVER THE PROSPECTUSES AND TOREVIEW TRANSACTION ACTIVITY AND EXCEPTION REPORTS ON AREGULAR BASIS AND VERIFY THAT A PROSPECTUS WAS PROPERLYDELIVERED WHEN REQUIRED.







Initiated By: FINRA


Other


N/A





THE FIRM ENTERED INTO AN ACCEPTANCE WAIVER AND CONSENT WITHFINRA CONSENTING TO FINRA'S FINDINGS OF VIOLATIONS OF FINRA RULE2010, NASD RULES 2110, 3010: THE FIRM DID NOT HAVE ADEQUATEWRITTEN PROCEDURES REGARDING THE DELIVERY OF EXCHANGETRADED FUND (ETF) AND UNIT INVESTMENT TRUST (UIT)PROSPECTUSES. THE FIRM FAILED TO ADEQUATELY REVIEW EXCEPTIONREPORTS PUBLISHED BY A COMPANY AND FAILED TO OTHERWISEREVIEW AND MONITOR THE FUNCTIONS IT DELEGATED TO THE COMPANY.AS A RESULT, THE FIRM FAILED TO DETECT THAT THE COMPANY FAILEDTO DELIVER APPROXIMATELY 1,107 PROSPECTUSES. ACCORDINGLY, THEFIRM FAILED TO DELIVER THE REQUIRED PROSPECTUSES OR WRITTENDESCRIPTIONS IN CONNECTION WITH ETF AND UIT PURCHASES. THEFIRM SIGNED AN AGREEMENT WITH THE COMPANY FOR DELIVERY OFETF AND UIT PROSPECTUSES. ALTHOUGH THE FIRM RETAINED THECOMPANY TO DELIVER ITS ETF AND UIT PROSPECTUSES, IT REMAINEDTHE FIRM'S RESPONSIBILITY TO DELIVER THE PROSPECTUSES AND TOREVIEW TRANSACTION ACTIVITY AND EXCEPTION REPORTS ON AREGULAR BASIS AND VERIFY THAT A PROSPECTUS WAS PROPERLYDELIVERED WHEN REQUIRED.


Resolution:


Sanction Details: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS;THEREFORE IT IS CENSURED AND FINED $40,000.



Disclosure 7 of 18

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Allegations: RULE 10B-10 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF1934, NASD RULES 2110, 2230, 3010(A), 3010(B)-FFP SECURITIES, INC (NKAFIRST ALLIED SECURITIES, INC.) ACTED AS A BROKER ON BEHALF OF ITSCUSTOMERS IN VARIABLE LIFE SETTLEMENT TRANSACTIONS. IN EACH OFTHE TRANSACTIONS, FFP, ACTING THROUGH ONE OF ITS REGISTEREDREPRESENTATIVES, UTILIZED A FIRM-APPROVED LIFE SETTLEMENTBROKER FOR THE TRANSACTION. IN EACH TRANSACTION, THE FIRMPROVIDED THE CUSTOMER WITH A PURCHASE AGREEMENT THAT STATEDTHE NET PURCHASE PRICE THAT THE CUSTOMER WAS TO RECEIVE FORTHE LIFE SETTLEMENT TRANSACTION. AT NO TIME EITHER BEFORE ORAFTER EACH VARIABLE LIFE SETTLEMENT DID THE FIRM INFORM THECUSTOMER OF THE GROSS AMOUNT. IN ADDITION, SINCE VARIABLE LIFESETTLEMENTS ARE SECURITIES TRANSACTIONS, FFP WAS REQUIRED TOPROVIDE THE CUSTOMER WITH A CONFIRMATION OF EACHTRANSACTION; IT DID NOT. FFP ALSO FAILED TO ENFORCE ITS WRITTENSUPERVISORY PROCEDURES RELATING TO VARIABLE LIFE SETTLEMENTTRANSACTIONS AND FAILED TO REASONABLY SUPERVISE THEREGISTERED REPRESENTATIVE WHO HANDLED THE CUSTOMER'S LIFESETTLEMENT TRANSACTIONS.








Initiated By: FINRA






Other Product Type(s): VARIABLE LIFE SETTLEMENT

RULE 10B-10 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF1934, NASD RULES 2110, 2230, 3010(A), 3010(B)-FFP SECURITIES, INC (NKAFIRST ALLIED SECURITIES, INC.) ACTED AS A BROKER ON BEHALF OF ITSCUSTOMERS IN VARIABLE LIFE SETTLEMENT TRANSACTIONS. IN EACH OFTHE TRANSACTIONS, FFP, ACTING THROUGH ONE OF ITS REGISTEREDREPRESENTATIVES, UTILIZED A FIRM-APPROVED LIFE SETTLEMENTBROKER FOR THE TRANSACTION. IN EACH TRANSACTION, THE FIRMPROVIDED THE CUSTOMER WITH A PURCHASE AGREEMENT THAT STATEDTHE NET PURCHASE PRICE THAT THE CUSTOMER WAS TO RECEIVE FORTHE LIFE SETTLEMENT TRANSACTION. AT NO TIME EITHER BEFORE ORAFTER EACH VARIABLE LIFE SETTLEMENT DID THE FIRM INFORM THECUSTOMER OF THE GROSS AMOUNT. IN ADDITION, SINCE VARIABLE LIFESETTLEMENTS ARE SECURITIES TRANSACTIONS, FFP WAS REQUIRED TOPROVIDE THE CUSTOMER WITH A CONFIRMATION OF EACHTRANSACTION; IT DID NOT. FFP ALSO FAILED TO ENFORCE ITS WRITTENSUPERVISORY PROCEDURES RELATING TO VARIABLE LIFE SETTLEMENTTRANSACTIONS AND FAILED TO REASONABLY SUPERVISE THEREGISTERED REPRESENTATIVE WHO HANDLED THE CUSTOMER'S LIFESETTLEMENT TRANSACTIONS.


Resolution:




No




Allegations: RULE 10B-10 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF1934, NASD RULES 2110, 2230, 3010(A), 3010(B)-FFP SECURITIES, INC (NKAFIRST ALLIED SECURITIES, INC.) ACTED AS A BROKER ON BEHALF OF ITSCUSTOMERS IN VARIABLE LIFE SETTLEMENT TRANSACTIONS. IN EACH OFTHE TRANSACTIONS, FFP, ACTING THROUGH ONE OF ITS REGISTEREDREPRESENTATIVES, UTILIZED A FIRM-APPROVED LIFE SETTLEMENTBROKER FOR THE TRANSACTION. IN EACH TRANSACTION, THE FIRMPROVIDED THE CUSTOMER WITH A PURCHASE AGREEMENT THAT STATEDTHE NET PURCHASE PRICE THAT THE CUSTOMER WAS TO RECEIVE FORTHE LIFE SETTLEMENT TRANSACTION. AT NO TIME EITHER BEFORE ORAFTER EACH VARIABLE LIFE SETTLEMENT DID THE FIRM INFORM THECUSTOMER OF THE GROSS AMOUNT. IN ADDITION, SINCE VARIABLE LIFESETTLEMENTS ARE SECURITIES TRANSACTIONS, FFP WAS REQUIRED TOPROVIDE THE CUSTOMER WITH A CONFIRMATION OF EACHTRANSACTION; IT DID NOT. FFP ALSO FAILED TO ENFORCE ITS WRITTENSUPERVISORY PROCEDURES RELATING TO VARIABLE LIFE SETTLEMENTTRANSACTIONS AND FAILED TO REASONABLY SUPERVISE THEREGISTERED REPRESENTATIVE WHO HANDLED THE CUSTOMER'S LIFESETTLEMENT TRANSACTIONS.








Initiated By: FINRA






Other Product Type(s): VIARIABLE LIFE SETTLEMENT

RULE 10B-10 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF1934, NASD RULES 2110, 2230, 3010(A), 3010(B)-FFP SECURITIES, INC (NKAFIRST ALLIED SECURITIES, INC.) ACTED AS A BROKER ON BEHALF OF ITSCUSTOMERS IN VARIABLE LIFE SETTLEMENT TRANSACTIONS. IN EACH OFTHE TRANSACTIONS, FFP, ACTING THROUGH ONE OF ITS REGISTEREDREPRESENTATIVES, UTILIZED A FIRM-APPROVED LIFE SETTLEMENTBROKER FOR THE TRANSACTION. IN EACH TRANSACTION, THE FIRMPROVIDED THE CUSTOMER WITH A PURCHASE AGREEMENT THAT STATEDTHE NET PURCHASE PRICE THAT THE CUSTOMER WAS TO RECEIVE FORTHE LIFE SETTLEMENT TRANSACTION. AT NO TIME EITHER BEFORE ORAFTER EACH VARIABLE LIFE SETTLEMENT DID THE FIRM INFORM THECUSTOMER OF THE GROSS AMOUNT. IN ADDITION, SINCE VARIABLE LIFESETTLEMENTS ARE SECURITIES TRANSACTIONS, FFP WAS REQUIRED TOPROVIDE THE CUSTOMER WITH A CONFIRMATION OF EACHTRANSACTION; IT DID NOT. FFP ALSO FAILED TO ENFORCE ITS WRITTENSUPERVISORY PROCEDURES RELATING TO VARIABLE LIFE SETTLEMENTTRANSACTIONS AND FAILED TO REASONABLY SUPERVISE THEREGISTERED REPRESENTATIVE WHO HANDLED THE CUSTOMER'S LIFESETTLEMENT TRANSACTIONS.


Resolution:



Firm Statement THE ACTIVITY OCCURED AT A DIFFERENT BROKER DEALER BEFORE ITWAS MERGED INTO APPLICANT. THE ADVISOR INVOLVED IS NO LONGERAFFILIATED WITH APPLICANT.



Disclosure 8 of 18

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Reporting Source: Firm

Initiated By: STATE OF NEW YORK INSURANCE DEPT.





Docket/Case Number: 2009-0358-5

Principal Product Type: Insurance


Allegations: APPLICANT PROVIDED INCORRECT INFORMATION IN CONNECTIONS WITHTHE FIRM'S INSURANCE LICENSE.



Resolution:


Sanction Details: CIVIL AND ADMINISTRATIVE PENALTIES AND FINES IN THE AMOUNT OF$10,000.00 WERE PAID ON 02/28/2010 BY THE FIRM.


Stipulation and Consent

Disclosure 9 of 18

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Allegations: SEC ADMINISTRATIVE RELEASES 34-61655 AND IA 40-2995, MARCH 5, 2010:THE SECURITIES AND EXCHANGE COMMISSION ("COMMISSION") DEEMS ITAPPROPRIATE AND IN THE PUBLIC INTEREST THAT PUBLICADMINISTRATIVE AND CEASE-AND-DESIST PROCEEDINGS BE, ANDHEREBY ARE, INSTITUTED PURSUANT TO SECTIONS 15(B) AND 21C OF THESECURITIES EXCHANGE ACT OF 1934 ("EXCHANGE ACT") AND SECTION203(E) OF THE INVESTMENT ADVISERS ACT OF 1940 ("ADVISERS ACT")AGAINST FIRST ALLIED SECURITIES, INC. ("FIRST ALLIED" OR "RESPONDENT"). THESE PROCEEDINGS ARISE OUT OF FIRST ALLIED'SFAILURE TO SUPERVISE A REGISTERED REPRESENTATIVE WHO,BETWEEN MAY 2006 AND MARCH 2008, EXECUTED UNAUTHORIZEDTRANSACTIONS, MADE UNSUITABLE RECOMMENDATIONS, AND CHURNEDHIS CUSTOMERS' ACCOUNTS. DURING THIS TIME, HE WAS ASSOCIATEDWITH FIRST ALLIED. HE VIOLATED SECTION 17(A) OF THE SECURITIES ACTOF 1933 ("SECURITIES ACT") AND SECTION 10(B) OF THE EXCHANGE ACTAND RULE 10B-5 THEREUNDER BY ENGAGING IN AN UNAUTHORIZED HIGHRISK, SHORT TERM TREASURY BOND TRADING STRATEGY ON BEHALF OFHIS CUSTOMERS. HIS CUSTOMERS, THE MUNICIPALITIES, WEREREQUIRED BY ORDINANCE TO INVEST THEIR FUNDS IN ORDER TOPROVIDE FOR SAFETY OF CAPITAL, LIQUIDITY OF FUNDS, ANDINVESTMENT INCOME, IN THAT ORDER OF IMPORTANCE, AND WEREPROHIBITED SPECIFICALLY FROM USING THE PROCEEDS OFREPURCHASE AGREEMENTS AND REVERSE REPURCHASE AGREEMENTSFOR THE PURPOSE OF MAKING INVESTMENTS. DESPITE BEING AWARE OFTHE ORDINANCES, HE ENGAGED IN A HIGH RISK TRADING STRATEGY ANDLEVERAGED THE MUNICIPALITIES' ACCOUNTS IN VIOLATION OF THEORDINANCES. IN ADDITION, HE LIED TO FIRST ALLIED AND TO THEMUNICIPALITIES TO CONCEAL THE RISKY NATURE OF THE INVESTMENTS,HIS USE OF LEVERAGE, AND LARGE UNREALIZED LOSSES THE ACCOUNTSEXPERIENCED AS A RESULT OF HIS MISCONDUCT. FIRST ALLIED FAILED TOESTABLISH A REASONABLE SYSTEM TO IMPLEMENT ITS WRITTENSUPERVISORY POLICIES AND PROCEDURES AND VIOLATED CERTAINBOOKS AND RECORDS PROVISIONS, WHICH HE AIDED AND ABETTED.FIRST ALLIED'S SUPERVISORY FAILURES WERE IN ADDITION TOSUPERVISORY FAILURES OF FIRST ALLIED'S FORMER VICE PRESIDENT OFSUPERVISION.







Initiated By: UNITED STATES SECURITIES AND EXCHANGE COMMISSION




Docket/Case Number: 3-13808



SEC ADMINISTRATIVE RELEASES 34-61655 AND IA 40-2995, MARCH 5, 2010:THE SECURITIES AND EXCHANGE COMMISSION ("COMMISSION") DEEMS ITAPPROPRIATE AND IN THE PUBLIC INTEREST THAT PUBLICADMINISTRATIVE AND CEASE-AND-DESIST PROCEEDINGS BE, ANDHEREBY ARE, INSTITUTED PURSUANT TO SECTIONS 15(B) AND 21C OF THESECURITIES EXCHANGE ACT OF 1934 ("EXCHANGE ACT") AND SECTION203(E) OF THE INVESTMENT ADVISERS ACT OF 1940 ("ADVISERS ACT")AGAINST FIRST ALLIED SECURITIES, INC. ("FIRST ALLIED" OR "RESPONDENT"). THESE PROCEEDINGS ARISE OUT OF FIRST ALLIED'SFAILURE TO SUPERVISE A REGISTERED REPRESENTATIVE WHO,BETWEEN MAY 2006 AND MARCH 2008, EXECUTED UNAUTHORIZEDTRANSACTIONS, MADE UNSUITABLE RECOMMENDATIONS, AND CHURNEDHIS CUSTOMERS' ACCOUNTS. DURING THIS TIME, HE WAS ASSOCIATEDWITH FIRST ALLIED. HE VIOLATED SECTION 17(A) OF THE SECURITIES ACTOF 1933 ("SECURITIES ACT") AND SECTION 10(B) OF THE EXCHANGE ACTAND RULE 10B-5 THEREUNDER BY ENGAGING IN AN UNAUTHORIZED HIGHRISK, SHORT TERM TREASURY BOND TRADING STRATEGY ON BEHALF OFHIS CUSTOMERS. HIS CUSTOMERS, THE MUNICIPALITIES, WEREREQUIRED BY ORDINANCE TO INVEST THEIR FUNDS IN ORDER TOPROVIDE FOR SAFETY OF CAPITAL, LIQUIDITY OF FUNDS, ANDINVESTMENT INCOME, IN THAT ORDER OF IMPORTANCE, AND WEREPROHIBITED SPECIFICALLY FROM USING THE PROCEEDS OFREPURCHASE AGREEMENTS AND REVERSE REPURCHASE AGREEMENTSFOR THE PURPOSE OF MAKING INVESTMENTS. DESPITE BEING AWARE OFTHE ORDINANCES, HE ENGAGED IN A HIGH RISK TRADING STRATEGY ANDLEVERAGED THE MUNICIPALITIES' ACCOUNTS IN VIOLATION OF THEORDINANCES. IN ADDITION, HE LIED TO FIRST ALLIED AND TO THEMUNICIPALITIES TO CONCEAL THE RISKY NATURE OF THE INVESTMENTS,HIS USE OF LEVERAGE, AND LARGE UNREALIZED LOSSES THE ACCOUNTSEXPERIENCED AS A RESULT OF HIS MISCONDUCT. FIRST ALLIED FAILED TOESTABLISH A REASONABLE SYSTEM TO IMPLEMENT ITS WRITTENSUPERVISORY POLICIES AND PROCEDURES AND VIOLATED CERTAINBOOKS AND RECORDS PROVISIONS, WHICH HE AIDED AND ABETTED.FIRST ALLIED'S SUPERVISORY FAILURES WERE IN ADDITION TOSUPERVISORY FAILURES OF FIRST ALLIED'S FORMER VICE PRESIDENT OFSUPERVISION.


Resolution:


Yes

Order







Sanction Details: RESPONDENT HAS SUBMITTED AN OFFER OF SETTLEMENT WHICH THECOMMISSION HAS DETERMINED TO ACCEPT. SOLELY FOR THE PURPOSEOF THESE PROCEEDINGS AND ANY OTHER PROCEEDINGS BROUGHT BYOR ON BEHALF OF THE COMMISSION, OR TO WHICH THE COMMISSION ISA PARTY, AND WITHOUT ADMITTING OR DENYING THE FINDINGS HEREIN,EXCEPT AS TO THE COMMISSION'S JURISDICTION OVER IT AND THESUBJECT MATTER OF THESE PROCEEDINGS, WHICH ARE ADMITTED,RESPONDENT CONSENTS TO THE ENTRY OF THIS ORDER INSTITUTINGADMINISTRATIVE AND CEASE-AND-DESIST PROCEEDINGS, MAKINGFINDINGS, AND IMPOSING REMEDIAL SANCTIONS AND A CEASE-AND-DESIST ORDER, PURSUANT TO SECTIONS 15(B) AND 21C OF THESECURITIES EXCHANGE ACT OF 1934 AND SECTION 203(E) OF THEINVESTMENT ADVISERS ACT OF 1940. AS A RESULT OF ITS CONDUCT,FIRST ALLIED FAILED REASONABLY TO SUPERVISE THE REPRESENTATIVEWITH A VIEW TO DETECTING AND PREVENTING HIS VIOLATIONS OFSECTION 17(A) OF THE SECURITIES ACT AND SECTION 10(B) OF THEEXCHANGE ACT AND RULE 10B-5 THEREUNDER, AND WILLFULLY VIOLATEDSECTION 17(A) OF THE EXCHANGE ACT AND RULE 17A-4(B)(4)THEREUNDER. ACCORDINGLY, PURSUANT TO SECTIONS 15(B) AND 21C OFTHE EXCHANGE ACT AND SECTION 203(E) OF THE ADVISERS ACT, IT ISHEREBY ORDERED THAT RESPONDENT FIRST ALLIED CEASE AND DESISTFROM COMMITTING OR CAUSING ANY VIOLATIONS AND ANY FUTUREVIOLATIONS OF SECTION 17(A) OF THE EXCHANGE ACT AND RULE 17A-4(B)(4) PROMULGATED THEREUNDER; RESPONDENT FIRST ALLIED ISCENSURED. RESPONDENT FIRST ALLIED SHALL, WITHIN 30 DAYS OF THEENTRY OF THIS ORDER, PAY DISGORGEMENT OF $1,224,606 ANDPREJUDGMENT INTEREST OF $233,699, FOR A TOTAL OF $1,458,305, TOTHE UNITED STATES TREASURY. IT IS FURTHER ORDERED THATRESPONDENT SHALL, WITHIN 30 DAYS OF THE ENTRY OF THIS ORDER,PAY A CIVIL MONEY PENALTY IN THE AMOUNT OF $500,000 TO THE UNITEDSTATES TREASURY. RESPONDENT FIRST ALLIED SHALL COMPLY WITH THEENUMERATED UNDERTAKINGS.

Regulator Statement UNDERTAKINGS: RESPONDENT WILL RETAIN, WITHIN 30 DAYS OF THEDATE OF ENTRY OF THE ORDER, AT ITS OWN EXPENSE, THE SERVICES OFAN INDEPENDENT CONSULTANT (IC) ACCEPTABLE TO THE COMMISSION,TO REVIEW FIRST ALLIED'S WRITTEN SUPERVISORY POLICIES ANDPROCEDURES; AND REVIEW FIRST ALLIED'S SYSTEM FOR IMPLEMENTINGITS SUPERVISORY POLICES AND PROCEDURES; REQUIRE THE IC, AT THECONCLUSION OF THE REVIEW, WHICH IN NO EVENT SHALL BE MORE THAN120 DAYS AFTER THE ENTRY OF THE ORDER, TO SUBMIT A REPORT TOFIRST ALLIED AND THE DIVISION. THE REPORT SHALL ADDRESS THESUPERVISORY ISSUES DESCRIBED ABOVE AND SHALL INCLUDE ADESCRIPTION OF THE REVIEW PERFORMED, THE CONCLUSIONSREACHED, THE IC'S RECOMMENDATIONS FOR CHANGES ORIMPROVEMENTS TO THE POLICIES, PROCEDURES, AND PRACTICES OFFIRST ALLIED AND A PROCEDURE FOR IMPLEMENTING THERECOMMENDED CHANGES OR IMPROVEMENTS TO SUCH POLICIES,PROCEDURES, AND PRACTICES; ADOPT, IMPLEMENT, AND MAINTAIN ALLPOLICIES, PROCEDURES, AND PRACTICES RECOMMENDED IN THEREPORT OF THE IC. AS TO ANY OF THE IC'S RECOMMENDATIONS ABOUTWHICH FIRST ALLIED AND THE IC DO NOT AGREE, SUCH PARTIES SHALLATTEMPT IN GOOD FAITH TO REACH AGREEMENT WITHIN 180 DAYS OFTHE DATE OF THE ENTRY OF THE ORDER. IN THE EVENT THAT FIRSTALLIED AND THE IC ARE UNABLE TO AGREE ON AN ALTERNATIVEPROPOSAL, FIRST ALLIED WILL ABIDE BY THE DETERMINATIONS OF THE ICAND ADOPT THOSE RECOMMENDATIONS DEEMED APPROPRIATE BY THEIC; COOPERATE FULLY WITH THE IC IN ITS REVIEW, INCLUDING MAKINGSUCH INFORMATION AND DOCUMENTS AVAILABLE AS THE IC MAYREASONABLY REQUEST, AND BY PERMITTING AND REQUIRING FIRSTALLIED'S EMPLOYEES AND AGENTS TO SUPPLY SUCH INFORMATION ANDDOCUMENTS AS THE IC MAY REASONABLY REQUEST; IN ORDER TOENSURE THE INDEPENDENCE OF THE IC, NOT HAVE THE AUTHORITY TOTERMINATE THE IC WITHOUT THE PRIOR WRITTEN APPROVAL OF THEDIVISION; AND SHALL COMPENSATE THE IC, AND PERSONS ENGAGED TOASSIST THE IC, FOR SERVICES RENDERED PURSUANT TO THE ORDER ATTHEIR REASONABLE AND CUSTOMARY RATES; REQUIRE THE IC TO ENTERINTO AN AGREEMENT THAT PROVIDES THAT, FOR THE PERIOD OFENGAGEMENT AND FOR A PERIOD OF TWO YEARS FROM COMPLETION OFTHE ENGAGEMENT, THE IC SHALL NOT ENTER INTO ANY EMPLOYMENT,CONSULTANT, ATTORNEY-CLIENT, AUDITING, OR OTHER PROFESSIONALRELATIONSHIP WITH FIRST ALLIED, OR ANY OF ITS PRESENT OR FORMERAFFILIATES, DIRECTORS, OFFICERS, EMPLOYEES, OR AGENTS ACTING INTHEIR CAPACITY. THE AGREEMENT WILL ALSO PROVIDE THAT THE IC WILLREQUIRE THAT ANY FIRM WITH WHICH HE/SHE IS AFFILIATED OR OFWHICH HE/SHE IS A MEMBER, AND ANY PERSON ENGAGED TO ASSIST THEIC IN PERFORMANCE OF HIS/HER DUTIES UNDER THIS ORDER SHALL NOT,WITHOUT PRIOR WRITTEN CONSENT OF THE DIVISION OF ENFORCEMENTIN LOS ANGELES, CALIFORNIA, ENTER INTO ANY EMPLOYMENT,CONSULTANT, ATTORNEY-CLIENT, AUDITING OR OTHER PROFESSIONALRELATIONSHIP WITH FIRST ALLIED, OR ANY OF THEIR PRESENT ORFORMER AFFILIATES, DIRECTORS, OFFICERS, EMPLOYEES, OR AGENTSACTING IN THEIR CAPACITY AS SUCH, FOR THE PERIOD OF THEENGAGEMENT AND FOR A PERIOD OF TWO YEARS AFTER THEENGAGEMENT. FOR GOOD CAUSE SHOWN AND UPON TIMELYAPPLICATION BY THE IC OR FIRST ALLIED, THE COMMISSION'S STAFF MAYEXTEND ANY OF THE DEADLINES SET FORTH HEREIN.


Yes

Sanctions Ordered: CensureMonetary/Fine $500,000.00Disgorgement/RestitutionCease and Desist/Injunction






Regulator Statement UNDERTAKINGS: RESPONDENT WILL RETAIN, WITHIN 30 DAYS OF THEDATE OF ENTRY OF THE ORDER, AT ITS OWN EXPENSE, THE SERVICES OFAN INDEPENDENT CONSULTANT (IC) ACCEPTABLE TO THE COMMISSION,TO REVIEW FIRST ALLIED'S WRITTEN SUPERVISORY POLICIES ANDPROCEDURES; AND REVIEW FIRST ALLIED'S SYSTEM FOR IMPLEMENTINGITS SUPERVISORY POLICES AND PROCEDURES; REQUIRE THE IC, AT THECONCLUSION OF THE REVIEW, WHICH IN NO EVENT SHALL BE MORE THAN120 DAYS AFTER THE ENTRY OF THE ORDER, TO SUBMIT A REPORT TOFIRST ALLIED AND THE DIVISION. THE REPORT SHALL ADDRESS THESUPERVISORY ISSUES DESCRIBED ABOVE AND SHALL INCLUDE ADESCRIPTION OF THE REVIEW PERFORMED, THE CONCLUSIONSREACHED, THE IC'S RECOMMENDATIONS FOR CHANGES ORIMPROVEMENTS TO THE POLICIES, PROCEDURES, AND PRACTICES OFFIRST ALLIED AND A PROCEDURE FOR IMPLEMENTING THERECOMMENDED CHANGES OR IMPROVEMENTS TO SUCH POLICIES,PROCEDURES, AND PRACTICES; ADOPT, IMPLEMENT, AND MAINTAIN ALLPOLICIES, PROCEDURES, AND PRACTICES RECOMMENDED IN THEREPORT OF THE IC. AS TO ANY OF THE IC'S RECOMMENDATIONS ABOUTWHICH FIRST ALLIED AND THE IC DO NOT AGREE, SUCH PARTIES SHALLATTEMPT IN GOOD FAITH TO REACH AGREEMENT WITHIN 180 DAYS OFTHE DATE OF THE ENTRY OF THE ORDER. IN THE EVENT THAT FIRSTALLIED AND THE IC ARE UNABLE TO AGREE ON AN ALTERNATIVEPROPOSAL, FIRST ALLIED WILL ABIDE BY THE DETERMINATIONS OF THE ICAND ADOPT THOSE RECOMMENDATIONS DEEMED APPROPRIATE BY THEIC; COOPERATE FULLY WITH THE IC IN ITS REVIEW, INCLUDING MAKINGSUCH INFORMATION AND DOCUMENTS AVAILABLE AS THE IC MAYREASONABLY REQUEST, AND BY PERMITTING AND REQUIRING FIRSTALLIED'S EMPLOYEES AND AGENTS TO SUPPLY SUCH INFORMATION ANDDOCUMENTS AS THE IC MAY REASONABLY REQUEST; IN ORDER TOENSURE THE INDEPENDENCE OF THE IC, NOT HAVE THE AUTHORITY TOTERMINATE THE IC WITHOUT THE PRIOR WRITTEN APPROVAL OF THEDIVISION; AND SHALL COMPENSATE THE IC, AND PERSONS ENGAGED TOASSIST THE IC, FOR SERVICES RENDERED PURSUANT TO THE ORDER ATTHEIR REASONABLE AND CUSTOMARY RATES; REQUIRE THE IC TO ENTERINTO AN AGREEMENT THAT PROVIDES THAT, FOR THE PERIOD OFENGAGEMENT AND FOR A PERIOD OF TWO YEARS FROM COMPLETION OFTHE ENGAGEMENT, THE IC SHALL NOT ENTER INTO ANY EMPLOYMENT,CONSULTANT, ATTORNEY-CLIENT, AUDITING, OR OTHER PROFESSIONALRELATIONSHIP WITH FIRST ALLIED, OR ANY OF ITS PRESENT OR FORMERAFFILIATES, DIRECTORS, OFFICERS, EMPLOYEES, OR AGENTS ACTING INTHEIR CAPACITY. THE AGREEMENT WILL ALSO PROVIDE THAT THE IC WILLREQUIRE THAT ANY FIRM WITH WHICH HE/SHE IS AFFILIATED OR OFWHICH HE/SHE IS A MEMBER, AND ANY PERSON ENGAGED TO ASSIST THEIC IN PERFORMANCE OF HIS/HER DUTIES UNDER THIS ORDER SHALL NOT,WITHOUT PRIOR WRITTEN CONSENT OF THE DIVISION OF ENFORCEMENTIN LOS ANGELES, CALIFORNIA, ENTER INTO ANY EMPLOYMENT,CONSULTANT, ATTORNEY-CLIENT, AUDITING OR OTHER PROFESSIONALRELATIONSHIP WITH FIRST ALLIED, OR ANY OF THEIR PRESENT ORFORMER AFFILIATES, DIRECTORS, OFFICERS, EMPLOYEES, OR AGENTSACTING IN THEIR CAPACITY AS SUCH, FOR THE PERIOD OF THEENGAGEMENT AND FOR A PERIOD OF TWO YEARS AFTER THEENGAGEMENT. FOR GOOD CAUSE SHOWN AND UPON TIMELYAPPLICATION BY THE IC OR FIRST ALLIED, THE COMMISSION'S STAFF MAYEXTEND ANY OF THE DEADLINES SET FORTH HEREIN.






UNDERTAKINGS: RESPONDENT WILL RETAIN, WITHIN 30 DAYS OF THEDATE OF ENTRY OF THE ORDER, AT ITS OWN EXPENSE, THE SERVICES OFAN INDEPENDENT CONSULTANT (IC) ACCEPTABLE TO THE COMMISSION,TO REVIEW FIRST ALLIED'S WRITTEN SUPERVISORY POLICIES ANDPROCEDURES; AND REVIEW FIRST ALLIED'S SYSTEM FOR IMPLEMENTINGITS SUPERVISORY POLICES AND PROCEDURES; REQUIRE THE IC, AT THECONCLUSION OF THE REVIEW, WHICH IN NO EVENT SHALL BE MORE THAN120 DAYS AFTER THE ENTRY OF THE ORDER, TO SUBMIT A REPORT TOFIRST ALLIED AND THE DIVISION. THE REPORT SHALL ADDRESS THESUPERVISORY ISSUES DESCRIBED ABOVE AND SHALL INCLUDE ADESCRIPTION OF THE REVIEW PERFORMED, THE CONCLUSIONSREACHED, THE IC'S RECOMMENDATIONS FOR CHANGES ORIMPROVEMENTS TO THE POLICIES, PROCEDURES, AND PRACTICES OFFIRST ALLIED AND A PROCEDURE FOR IMPLEMENTING THERECOMMENDED CHANGES OR IMPROVEMENTS TO SUCH POLICIES,PROCEDURES, AND PRACTICES; ADOPT, IMPLEMENT, AND MAINTAIN ALLPOLICIES, PROCEDURES, AND PRACTICES RECOMMENDED IN THEREPORT OF THE IC. AS TO ANY OF THE IC'S RECOMMENDATIONS ABOUTWHICH FIRST ALLIED AND THE IC DO NOT AGREE, SUCH PARTIES SHALLATTEMPT IN GOOD FAITH TO REACH AGREEMENT WITHIN 180 DAYS OFTHE DATE OF THE ENTRY OF THE ORDER. IN THE EVENT THAT FIRSTALLIED AND THE IC ARE UNABLE TO AGREE ON AN ALTERNATIVEPROPOSAL, FIRST ALLIED WILL ABIDE BY THE DETERMINATIONS OF THE ICAND ADOPT THOSE RECOMMENDATIONS DEEMED APPROPRIATE BY THEIC; COOPERATE FULLY WITH THE IC IN ITS REVIEW, INCLUDING MAKINGSUCH INFORMATION AND DOCUMENTS AVAILABLE AS THE IC MAYREASONABLY REQUEST, AND BY PERMITTING AND REQUIRING FIRSTALLIED'S EMPLOYEES AND AGENTS TO SUPPLY SUCH INFORMATION ANDDOCUMENTS AS THE IC MAY REASONABLY REQUEST; IN ORDER TOENSURE THE INDEPENDENCE OF THE IC, NOT HAVE THE AUTHORITY TOTERMINATE THE IC WITHOUT THE PRIOR WRITTEN APPROVAL OF THEDIVISION; AND SHALL COMPENSATE THE IC, AND PERSONS ENGAGED TOASSIST THE IC, FOR SERVICES RENDERED PURSUANT TO THE ORDER ATTHEIR REASONABLE AND CUSTOMARY RATES; REQUIRE THE IC TO ENTERINTO AN AGREEMENT THAT PROVIDES THAT, FOR THE PERIOD OFENGAGEMENT AND FOR A PERIOD OF TWO YEARS FROM COMPLETION OFTHE ENGAGEMENT, THE IC SHALL NOT ENTER INTO ANY EMPLOYMENT,CONSULTANT, ATTORNEY-CLIENT, AUDITING, OR OTHER PROFESSIONALRELATIONSHIP WITH FIRST ALLIED, OR ANY OF ITS PRESENT OR FORMERAFFILIATES, DIRECTORS, OFFICERS, EMPLOYEES, OR AGENTS ACTING INTHEIR CAPACITY. THE AGREEMENT WILL ALSO PROVIDE THAT THE IC WILLREQUIRE THAT ANY FIRM WITH WHICH HE/SHE IS AFFILIATED OR OFWHICH HE/SHE IS A MEMBER, AND ANY PERSON ENGAGED TO ASSIST THEIC IN PERFORMANCE OF HIS/HER DUTIES UNDER THIS ORDER SHALL NOT,WITHOUT PRIOR WRITTEN CONSENT OF THE DIVISION OF ENFORCEMENTIN LOS ANGELES, CALIFORNIA, ENTER INTO ANY EMPLOYMENT,CONSULTANT, ATTORNEY-CLIENT, AUDITING OR OTHER PROFESSIONALRELATIONSHIP WITH FIRST ALLIED, OR ANY OF THEIR PRESENT ORFORMER AFFILIATES, DIRECTORS, OFFICERS, EMPLOYEES, OR AGENTSACTING IN THEIR CAPACITY AS SUCH, FOR THE PERIOD OF THEENGAGEMENT AND FOR A PERIOD OF TWO YEARS AFTER THEENGAGEMENT. FOR GOOD CAUSE SHOWN AND UPON TIMELYAPPLICATION BY THE IC OR FIRST ALLIED, THE COMMISSION'S STAFF MAYEXTEND ANY OF THE DEADLINES SET FORTH HEREIN.


Allegations: SEC ADMINISTRATIVE RELEASES 34-61655 AND IA 40-2995, MARCH 5, 2010:THE SECURITIES AND EXCHANGE COMMISSION ("COMMISSION") DEEMS ITAPPROPRIATE AND IN THE PUBLIC INTEREST THAT PUBLICADMINISTRATIVE AND CEASE-AND-DESIST PROCEEDINGS BE, ANDHEREBY ARE, INSTITUTED PURSUANT TO SECTIONS 15(B) AND 21C OF THESECURITIES EXCHANGE ACT OF 1934 ("EXCHANGE ACT") AND SECTION203(E) OF THE INVESTMENT ADVISERS ACT OF 1940 ("ADVISERS ACT")AGAINST FIRST ALLIED SECURITIES, INC. ("FIRST ALLIED" OR "RESPONDENT"). THESE PROCEEDINGS ARISE OUT OF FIRST ALLIED'SFAILURE TO SUPERVISE A REGISTERED REPRESENTATIVE WHO,BETWEEN MAY 2006 AND MARCH 2008, EXECUTED UNAUTHORIZEDTRANSACTIONS, MADE UNSUITABLE RECOMMENDATIONS, AND CHURNEDHIS CUSTOMERS' ACCOUNTS. DURING THIS TIME, HE WAS ASSOCIATEDWITH FIRST ALLIED. HE VIOLATED SECTION 17(A) OF THE SECURITIES ACTOF 1933 ("SECURITIES ACT") AND SECTION 10(B) OF THE EXCHANGE ACTAND RULE 10B-5 THEREUNDER BY ENGAGING IN AN UNAUTHORIZED HIGHRISK, SHORT TERM TREASURY BOND TRADING STRATEGY ON BEHALF OFHIS CUSTOMERS. HIS CUSTOMERS, THE MUNICIPALITIES, WEREREQUIRED BY ORDINANCE TO INVEST THEIR FUNDS IN ORDER TOPROVIDE FOR SAFETY OF CAPITAL, LIQUIDITY OF FUNDS, ANDINVESTMENT INCOME, IN THAT ORDER OF IMPORTANCE, AND WEREPROHIBITED SPECIFICALLY FROM USING THE PROCEEDS OFREPURCHASE AGREEMENTS AND REVERSE REPURCHASE AGREEMENTSFOR THE PURPOSE OF MAKING INVESTMENTS. DESPITE BEING AWARE OFTHE ORDINANCES, HE ENGAGED IN A HIGH RISK TRADING STRATEGY ANDLEVERAGED THE MUNICIPALITIES' ACCOUNTS IN VIOLATION OF THEORDINANCES. IN ADDITION, HE LIED TO FIRST ALLIED AND TO THEMUNICIPALITIES TO CONCEAL THE RISKY NATURE OF THE INVESTMENTS,HIS USE OF LEVERAGE, AND LARGE UNREALIZED LOSSES THE ACCOUNTSEXPERIENCED AS A RESULT OF HIS MISCONDUCT. FIRST ALLIED FAILED TOESTABLISH A REASONABLE SYSTEM TO IMPLEMENT ITS WRITTENSUPERVISORY POLICIES AND PROCEDURES AND VIOLATED CERTAINBOOKS AND RECORDS PROVISIONS, WHICH HE AIDED AND ABETTED.FIRST ALLIED'S SUPERVISORY FAILURES WERE IN ADDITION TOSUPERVISORY FAILURES OF FIRST ALLIED'S FORMER VICE PRESIDENT OFSUPERVISION.







Initiated By: UNITED STATES SECURITIES AND EXCHANGE COMMISSION




Docket/Case Number: 3-13808



SEC ADMINISTRATIVE RELEASES 34-61655 AND IA 40-2995, MARCH 5, 2010:THE SECURITIES AND EXCHANGE COMMISSION ("COMMISSION") DEEMS ITAPPROPRIATE AND IN THE PUBLIC INTEREST THAT PUBLICADMINISTRATIVE AND CEASE-AND-DESIST PROCEEDINGS BE, ANDHEREBY ARE, INSTITUTED PURSUANT TO SECTIONS 15(B) AND 21C OF THESECURITIES EXCHANGE ACT OF 1934 ("EXCHANGE ACT") AND SECTION203(E) OF THE INVESTMENT ADVISERS ACT OF 1940 ("ADVISERS ACT")AGAINST FIRST ALLIED SECURITIES, INC. ("FIRST ALLIED" OR "RESPONDENT"). THESE PROCEEDINGS ARISE OUT OF FIRST ALLIED'SFAILURE TO SUPERVISE A REGISTERED REPRESENTATIVE WHO,BETWEEN MAY 2006 AND MARCH 2008, EXECUTED UNAUTHORIZEDTRANSACTIONS, MADE UNSUITABLE RECOMMENDATIONS, AND CHURNEDHIS CUSTOMERS' ACCOUNTS. DURING THIS TIME, HE WAS ASSOCIATEDWITH FIRST ALLIED. HE VIOLATED SECTION 17(A) OF THE SECURITIES ACTOF 1933 ("SECURITIES ACT") AND SECTION 10(B) OF THE EXCHANGE ACTAND RULE 10B-5 THEREUNDER BY ENGAGING IN AN UNAUTHORIZED HIGHRISK, SHORT TERM TREASURY BOND TRADING STRATEGY ON BEHALF OFHIS CUSTOMERS. HIS CUSTOMERS, THE MUNICIPALITIES, WEREREQUIRED BY ORDINANCE TO INVEST THEIR FUNDS IN ORDER TOPROVIDE FOR SAFETY OF CAPITAL, LIQUIDITY OF FUNDS, ANDINVESTMENT INCOME, IN THAT ORDER OF IMPORTANCE, AND WEREPROHIBITED SPECIFICALLY FROM USING THE PROCEEDS OFREPURCHASE AGREEMENTS AND REVERSE REPURCHASE AGREEMENTSFOR THE PURPOSE OF MAKING INVESTMENTS. DESPITE BEING AWARE OFTHE ORDINANCES, HE ENGAGED IN A HIGH RISK TRADING STRATEGY ANDLEVERAGED THE MUNICIPALITIES' ACCOUNTS IN VIOLATION OF THEORDINANCES. IN ADDITION, HE LIED TO FIRST ALLIED AND TO THEMUNICIPALITIES TO CONCEAL THE RISKY NATURE OF THE INVESTMENTS,HIS USE OF LEVERAGE, AND LARGE UNREALIZED LOSSES THE ACCOUNTSEXPERIENCED AS A RESULT OF HIS MISCONDUCT. FIRST ALLIED FAILED TOESTABLISH A REASONABLE SYSTEM TO IMPLEMENT ITS WRITTENSUPERVISORY POLICIES AND PROCEDURES AND VIOLATED CERTAINBOOKS AND RECORDS PROVISIONS, WHICH HE AIDED AND ABETTED.FIRST ALLIED'S SUPERVISORY FAILURES WERE IN ADDITION TOSUPERVISORY FAILURES OF FIRST ALLIED'S FORMER VICE PRESIDENT OFSUPERVISION.


Resolution:


Sanction Details: RESPONDENT HAS SUBMITTED AN OFFER OF SETTLEMENT WHICH THECOMMISSION HAS DETERMINED TO ACCEPT. SOLELY FOR THE PURPOSEOF THESE PROCEEDINGS AND ANY OTHER PROCEEDINGS BROUGHT BYOR ON BEHALF OF THE COMMISSION, OR TO WHICH THE COMMISSION ISA PARTY, AND WITHOUT ADMITTING OR DENYING THE FINDINGS HEREIN,EXCEPT AS TO THE COMMISSION'S JURISDICTION OVER IT AND THESUBJECT MATTER OF THESE PROCEEDINGS, WHICH ARE ADMITTED,RESPONDENT CONSENTS TO THE ENTRY OF THIS ORDER INSTITUTINGADMINISTRATIVE AND CEASE-AND-DESIST PROCEEDINGS, MAKINGFINDINGS, AND IMPOSING REMEDIAL SANCTIONS AND A CEASE-AND-DESIST ORDER, PURSUANT TO SECTIONS 15(B) AND 21C OF THESECURITIES EXCHANGE ACT OF 1934 AND SECTION 203(E) OF THEINVESTMENT ADVISERS ACT OF 1940. AS A RESULT OF ITS CONDUCT,FIRST ALLIED FAILED REASONABLY TO SUPERVISE THE REPRESENTATIVEWITH A VIEW TO DETECTING AND PREVENTING HIS VIOLATIONS OFSECTION 17(A) OF THE SECURITIES ACT AND SECTION 10(B) OF THEEXCHANGE ACT AND RULE 10B-5 THEREUNDER, AND WILLFULLY VIOLATEDSECTION 17(A) OF THE EXCHANGE ACT AND RULE 17A-4(B)(4)THEREUNDER. ACCORDINGLY, PURSUANT TO SECTIONS 15(B) AND 21C OFTHE EXCHANGE ACT AND SECTION 203(E) OF THE ADVISERS ACT, IT ISHEREBY ORDERED THAT RESPONDENT FIRST ALLIED CEASE AND DESISTFROM COMMITTING OR CAUSING ANY VIOLATIONS AND ANY FUTUREVIOLATIONS OF SECTION 17(A) OF THE EXCHANGE ACT AND RULE 17A-4(B)(4) PROMULGATED THEREUNDER; RESPONDENT FIRST ALLIED ISCENSURED. RESPONDENT FIRST ALLIED SHALL, WITHIN 30 DAYS OF THEENTRY OF THIS ORDER, PAY DISGORGEMENT OF $1,224,606 ANDPREJUDGMENT INTEREST OF $233,699, FOR A TOTAL OF $1,458,305, TOTHE UNITED STATES TREASURY. IT IS FURTHER ORDERED THATRESPONDENT SHALL, WITHIN 30 DAYS OF THE ENTRY OF THIS ORDER,PAY A CIVIL MONEY PENALTY IN THE AMOUNT OF $500,000 TO THE UNITEDSTATES TREASURY. RESPONDENT FIRST ALLIED SHALL COMPLY WITH THEENUMERATED UNDERTAKINGS.

Sanctions Ordered: CensureMonetary/Fine $500,000.00Disgorgement/RestitutionCease and Desist/Injunction

Order






RESPONDENT HAS SUBMITTED AN OFFER OF SETTLEMENT WHICH THECOMMISSION HAS DETERMINED TO ACCEPT. SOLELY FOR THE PURPOSEOF THESE PROCEEDINGS AND ANY OTHER PROCEEDINGS BROUGHT BYOR ON BEHALF OF THE COMMISSION, OR TO WHICH THE COMMISSION ISA PARTY, AND WITHOUT ADMITTING OR DENYING THE FINDINGS HEREIN,EXCEPT AS TO THE COMMISSION'S JURISDICTION OVER IT AND THESUBJECT MATTER OF THESE PROCEEDINGS, WHICH ARE ADMITTED,RESPONDENT CONSENTS TO THE ENTRY OF THIS ORDER INSTITUTINGADMINISTRATIVE AND CEASE-AND-DESIST PROCEEDINGS, MAKINGFINDINGS, AND IMPOSING REMEDIAL SANCTIONS AND A CEASE-AND-DESIST ORDER, PURSUANT TO SECTIONS 15(B) AND 21C OF THESECURITIES EXCHANGE ACT OF 1934 AND SECTION 203(E) OF THEINVESTMENT ADVISERS ACT OF 1940. AS A RESULT OF ITS CONDUCT,FIRST ALLIED FAILED REASONABLY TO SUPERVISE THE REPRESENTATIVEWITH A VIEW TO DETECTING AND PREVENTING HIS VIOLATIONS OFSECTION 17(A) OF THE SECURITIES ACT AND SECTION 10(B) OF THEEXCHANGE ACT AND RULE 10B-5 THEREUNDER, AND WILLFULLY VIOLATEDSECTION 17(A) OF THE EXCHANGE ACT AND RULE 17A-4(B)(4)THEREUNDER. ACCORDINGLY, PURSUANT TO SECTIONS 15(B) AND 21C OFTHE EXCHANGE ACT AND SECTION 203(E) OF THE ADVISERS ACT, IT ISHEREBY ORDERED THAT RESPONDENT FIRST ALLIED CEASE AND DESISTFROM COMMITTING OR CAUSING ANY VIOLATIONS AND ANY FUTUREVIOLATIONS OF SECTION 17(A) OF THE EXCHANGE ACT AND RULE 17A-4(B)(4) PROMULGATED THEREUNDER; RESPONDENT FIRST ALLIED ISCENSURED. RESPONDENT FIRST ALLIED SHALL, WITHIN 30 DAYS OF THEENTRY OF THIS ORDER, PAY DISGORGEMENT OF $1,224,606 ANDPREJUDGMENT INTEREST OF $233,699, FOR A TOTAL OF $1,458,305, TOTHE UNITED STATES TREASURY. IT IS FURTHER ORDERED THATRESPONDENT SHALL, WITHIN 30 DAYS OF THE ENTRY OF THIS ORDER,PAY A CIVIL MONEY PENALTY IN THE AMOUNT OF $500,000 TO THE UNITEDSTATES TREASURY. RESPONDENT FIRST ALLIED SHALL COMPLY WITH THEENUMERATED UNDERTAKINGS.

Firm Statement UNDERTAKINGS: RESPONDENT WILL RETAIN, WITHIN 30 DAYS OF THEDATE OF ENTRY OF THE ORDER, AT ITS OWN EXPENSE, THE SERVICES OFAN INDEPENDENT CONSULTANT (IC) ACCEPTABLE TO THE COMMISSION,TO REVIEW FIRST ALLIED'S WRITTEN SUPERVISORY POLICIES ANDPROCEDURES; AND REVIEW FIRST ALLIED'S SYSTEM FOR IMPLEMENTINGITS SUPERVISORY POLICES AND PROCEDURES; REQUIRE THE IC, AT THECONCLUSION OF THE REVIEW, WHICH IN NO EVENT SHALL BE MORE THAN120 DAYS AFTER THE ENTRY OF THE ORDER, TO SUBMIT A REPORT TOFIRST ALLIED AND THE DIVISION. THE REPORT SHALL ADDRESS THESUPERVISORY ISSUES DESCRIBED ABOVE AND SHALL INCLUDE ADESCRIPTION OF THE REVIEW PERFORMED, THE CONCLUSIONSREACHED, THE IC'S RECOMMENDATIONS FOR CHANGES ORIMPROVEMENTS TO THE POLICIES, PROCEDURES, AND PRACTICES OFFIRST ALLIED AND A PROCEDURE FOR IMPLEMENTING THERECOMMENDED CHANGES OR IMPROVEMENTS TO SUCH POLICIES,PROCEDURES, AND PRACTICES; ADOPT, IMPLEMENT, AND MAINTAIN ALLPOLICIES, PROCEDURES, AND PRACTICES RECOMMENDED IN THEREPORT OF THE IC. AS TO ANY OF THE IC'S RECOMMENDATIONS ABOUTWHICH FIRST ALLIED AND THE IC DO NOT AGREE, SUCH PARTIES SHALLATTEMPT IN GOOD FAITH TO REACH AGREEMENT WITHIN 180 DAYS OFTHE DATE OF THE ENTRY OF THE ORDER. IN THE EVENT THAT FIRSTALLIED AND THE IC ARE UNABLE TO AGREE ON AN ALTERNATIVEPROPOSAL, FIRST ALLIED WILL ABIDE BY THE DETERMINATIONS OF THE ICAND ADOPT THOSE RECOMMENDATIONS DEEMED APPROPRIATE BY THEIC; COOPERATE FULLY WITH THE IC IN ITS REVIEW, INCLUDING MAKINGSUCH INFORMATION AND DOCUMENTS AVAILABLE AS THE IC MAYREASONABLY REQUEST, AND BY PERMITTING AND REQUIRING FIRSTALLIED'S EMPLOYEES AND AGENTS TO SUPPLY SUCH INFORMATION ANDDOCUMENTS AS THE IC MAY REASONABLY REQUEST; IN ORDER TOENSURE THE INDEPENDENCE OF THE IC, NOT HAVE THE AUTHORITY TOTERMINATE THE IC WITHOUT THE PRIOR WRITTEN APPROVAL OF THEDIVISION; AND SHALL COMPENSATE THE IC, AND PERSONS ENGAGED TOASSIST THE IC, FOR SERVICES RENDERED PURSUANT TO THE ORDER ATTHEIR REASONABLE AND CUSTOMARY RATES; REQUIRE THE IC TO ENTERINTO AN AGREEMENT THAT PROVIDES THAT, FOR THE PERIOD OFENGAGEMENT AND FOR A PERIOD OF TWO YEARS FROM COMPLETION OFTHE ENGAGEMENT, THE IC SHALL NOT ENTER INTO ANY EMPLOYMENT,CONSULTANT, ATTORNEY-CLIENT, AUDITING, OR OTHER PROFESSIONALRELATIONSHIP WITH FIRST ALLIED, OR ANY OF ITS PRESENT OR FORMERAFFILIATES, DIRECTORS, OFFICERS, EMPLOYEES, OR AGENTS ACTING INTHEIR CAPACITY. THE AGREEMENT WILL ALSO PROVIDE THAT THE IC WILLREQUIRE THAT ANY FIRM WITH WHICH HE/SHE IS AFFILIATED OR OFWHICH HE/SHE IS A MEMBER, AND ANY PERSON ENGAGED TO ASSIST THEIC IN PERFORMANCE OF HIS/HER DUTIES UNDER THIS ORDER SHALL NOT,WITHOUT PRIOR WRITTEN CONSENT OF THE DIVISION OF ENFORCEMENTIN LOS ANGELES, CALIFORNIA, ENTER INTO ANY EMPLOYMENT,CONSULTANT, ATTORNEY-CLIENT, AUDITING OR OTHER PROFESSIONALRELATIONSHIP WITH FIRST ALLIED, OR ANY OF THEIR PRESENT ORFORMER AFFILIATES, DIRECTORS, OFFICERS, EMPLOYEES, OR AGENTSACTING IN THEIR CAPACITY AS SUCH, FOR THE PERIOD OF THEENGAGEMENT AND FOR A PERIOD OF TWO YEARS AFTER THEENGAGEMENT. FOR GOOD CAUSE SHOWN AND UPON TIMELYAPPLICATION BY THE IC OR FIRST ALLIED, THE COMMISSION'S STAFF MAYEXTEND ANY OF THE DEADLINES SET FORTH HEREIN.






UNDERTAKINGS: RESPONDENT WILL RETAIN, WITHIN 30 DAYS OF THEDATE OF ENTRY OF THE ORDER, AT ITS OWN EXPENSE, THE SERVICES OFAN INDEPENDENT CONSULTANT (IC) ACCEPTABLE TO THE COMMISSION,TO REVIEW FIRST ALLIED'S WRITTEN SUPERVISORY POLICIES ANDPROCEDURES; AND REVIEW FIRST ALLIED'S SYSTEM FOR IMPLEMENTINGITS SUPERVISORY POLICES AND PROCEDURES; REQUIRE THE IC, AT THECONCLUSION OF THE REVIEW, WHICH IN NO EVENT SHALL BE MORE THAN120 DAYS AFTER THE ENTRY OF THE ORDER, TO SUBMIT A REPORT TOFIRST ALLIED AND THE DIVISION. THE REPORT SHALL ADDRESS THESUPERVISORY ISSUES DESCRIBED ABOVE AND SHALL INCLUDE ADESCRIPTION OF THE REVIEW PERFORMED, THE CONCLUSIONSREACHED, THE IC'S RECOMMENDATIONS FOR CHANGES ORIMPROVEMENTS TO THE POLICIES, PROCEDURES, AND PRACTICES OFFIRST ALLIED AND A PROCEDURE FOR IMPLEMENTING THERECOMMENDED CHANGES OR IMPROVEMENTS TO SUCH POLICIES,PROCEDURES, AND PRACTICES; ADOPT, IMPLEMENT, AND MAINTAIN ALLPOLICIES, PROCEDURES, AND PRACTICES RECOMMENDED IN THEREPORT OF THE IC. AS TO ANY OF THE IC'S RECOMMENDATIONS ABOUTWHICH FIRST ALLIED AND THE IC DO NOT AGREE, SUCH PARTIES SHALLATTEMPT IN GOOD FAITH TO REACH AGREEMENT WITHIN 180 DAYS OFTHE DATE OF THE ENTRY OF THE ORDER. IN THE EVENT THAT FIRSTALLIED AND THE IC ARE UNABLE TO AGREE ON AN ALTERNATIVEPROPOSAL, FIRST ALLIED WILL ABIDE BY THE DETERMINATIONS OF THE ICAND ADOPT THOSE RECOMMENDATIONS DEEMED APPROPRIATE BY THEIC; COOPERATE FULLY WITH THE IC IN ITS REVIEW, INCLUDING MAKINGSUCH INFORMATION AND DOCUMENTS AVAILABLE AS THE IC MAYREASONABLY REQUEST, AND BY PERMITTING AND REQUIRING FIRSTALLIED'S EMPLOYEES AND AGENTS TO SUPPLY SUCH INFORMATION ANDDOCUMENTS AS THE IC MAY REASONABLY REQUEST; IN ORDER TOENSURE THE INDEPENDENCE OF THE IC, NOT HAVE THE AUTHORITY TOTERMINATE THE IC WITHOUT THE PRIOR WRITTEN APPROVAL OF THEDIVISION; AND SHALL COMPENSATE THE IC, AND PERSONS ENGAGED TOASSIST THE IC, FOR SERVICES RENDERED PURSUANT TO THE ORDER ATTHEIR REASONABLE AND CUSTOMARY RATES; REQUIRE THE IC TO ENTERINTO AN AGREEMENT THAT PROVIDES THAT, FOR THE PERIOD OFENGAGEMENT AND FOR A PERIOD OF TWO YEARS FROM COMPLETION OFTHE ENGAGEMENT, THE IC SHALL NOT ENTER INTO ANY EMPLOYMENT,CONSULTANT, ATTORNEY-CLIENT, AUDITING, OR OTHER PROFESSIONALRELATIONSHIP WITH FIRST ALLIED, OR ANY OF ITS PRESENT OR FORMERAFFILIATES, DIRECTORS, OFFICERS, EMPLOYEES, OR AGENTS ACTING INTHEIR CAPACITY. THE AGREEMENT WILL ALSO PROVIDE THAT THE IC WILLREQUIRE THAT ANY FIRM WITH WHICH HE/SHE IS AFFILIATED OR OFWHICH HE/SHE IS A MEMBER, AND ANY PERSON ENGAGED TO ASSIST THEIC IN PERFORMANCE OF HIS/HER DUTIES UNDER THIS ORDER SHALL NOT,WITHOUT PRIOR WRITTEN CONSENT OF THE DIVISION OF ENFORCEMENTIN LOS ANGELES, CALIFORNIA, ENTER INTO ANY EMPLOYMENT,CONSULTANT, ATTORNEY-CLIENT, AUDITING OR OTHER PROFESSIONALRELATIONSHIP WITH FIRST ALLIED, OR ANY OF THEIR PRESENT ORFORMER AFFILIATES, DIRECTORS, OFFICERS, EMPLOYEES, OR AGENTSACTING IN THEIR CAPACITY AS SUCH, FOR THE PERIOD OF THEENGAGEMENT AND FOR A PERIOD OF TWO YEARS AFTER THEENGAGEMENT. FOR GOOD CAUSE SHOWN AND UPON TIMELYAPPLICATION BY THE IC OR FIRST ALLIED, THE COMMISSION'S STAFF MAYEXTEND ANY OF THE DEADLINES SET FORTH HEREIN.

Disclosure 10 of 18

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Initiated By: COMMONWEALTH OF MASSACHUSETTS - DIVISION OF INSURANCE


Cease and Desist


$500.00 FINE.


Docket/Case Number: SIU INVESTIGATION # 6227



Allegations: PRODUCING OR WRITING AND RENEWING MA INSURANCE POLICIESAFTER INSURANCE PRODUCER LICENSE EXPIRED ON 10/31/2007 ANDBEFORE MA RECEIVED AN APPLICATION FOR A LICENSE ON 12/10/2007.








$500.00 FINE.


Resolution:


Sanction Details: $500.00 PAID ON 06/30/2008. 100% LEVIED AGAINST APPLICANT.

Firm Statement DUE TO AN ADMINISTRATIVE OVERSIGHT, FIRST ALLIED'S MA INSURANCELICENSE LAPSED FOR A SHORT PERIOD AND HAS SINCE BEENREINSTATED.

Sanctions Ordered: Monetary/Fine $500.00Cease and Desist/Injunction

Settled

Disclosure 11 of 18

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Initiated By: LOUISIANA DEPARTMENT OF INSURANCE


Denial



Docket/Case Number: NONE ASSIGNED.



Allegations: FIRST ALLIED SECURITIES, INC. ANSWERED "YES" TO QUESTION NUMBERTWO (2) ON INVOLVEMENT IN AN ADMINISTRATIVE PROCEEDINGREGARDING ANY PROFESSIONAL OR OCCUPATIONAL LICENSE.



Resolution:


Sanction Details: NOT APPLICABLE

Firm Statement THE DENIAL OF THE FIRM'S INSURANCE LICENSE RENEWAL IN LOUISIANAWAS BASED ON A PREVIOUSLY DISCLOSED 2005 ACCEPTANCE WAIVER &CONSENT (BASED ON ACTIVITY OCCURRING IN 2003 UNDER THE FIRM'SPRIOR OWNERSHIP), THAT THE FIRM ENTERED INTO WITH THE NASDWHEREIN THE FIRM NEITHER ADMITTED NOR DENIED THE ALLEGATIONSCONTAINED THEREIN. THE FIRM HAS MET ALL OF IT'S OBLIGATIONSUNDER THE AWC AND REMAINS IN GOOD STANDING WITH THE NASD. THEFIRM HAS FILED ITS NOTICE OF APPEAL OF THIS LOUISIANA INSURANCELICENSE DENIAL AND BELIEVES THAT IT HAS REASONABLE GROUNDSUPON WHCH THE DENIAL SHOULD BE OVERTURNED. THE FIRM'SINSURANCE LICENSE IN THE STATE OF LOUISANA WAS RENEWED/ISSUEDJUNE 19, 2007 PRIOR TO ANY HEARING ON THE APPEAL.

Sanctions Ordered:

Other






Firm Statement THE DENIAL OF THE FIRM'S INSURANCE LICENSE RENEWAL IN LOUISIANAWAS BASED ON A PREVIOUSLY DISCLOSED 2005 ACCEPTANCE WAIVER &CONSENT (BASED ON ACTIVITY OCCURRING IN 2003 UNDER THE FIRM'SPRIOR OWNERSHIP), THAT THE FIRM ENTERED INTO WITH THE NASDWHEREIN THE FIRM NEITHER ADMITTED NOR DENIED THE ALLEGATIONSCONTAINED THEREIN. THE FIRM HAS MET ALL OF IT'S OBLIGATIONSUNDER THE AWC AND REMAINS IN GOOD STANDING WITH THE NASD. THEFIRM HAS FILED ITS NOTICE OF APPEAL OF THIS LOUISIANA INSURANCELICENSE DENIAL AND BELIEVES THAT IT HAS REASONABLE GROUNDSUPON WHCH THE DENIAL SHOULD BE OVERTURNED. THE FIRM'SINSURANCE LICENSE IN THE STATE OF LOUISANA WAS RENEWED/ISSUEDJUNE 19, 2007 PRIOR TO ANY HEARING ON THE APPEAL.

Disclosure 12 of 18

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Initiated By: UTAH DIVISION OF SECURITIES





Docket/Case Number: SD-05-0023

Principal Product Type: Equity - OTC


Allegations: FAILURE TO SUPERVISE.



Resolution:


Sanction Details: $25,000 FINE; IMPLEMENT SUPERVISION REQUIREMENTS; PROVIDECOOPERATION AND ASSISTANCE TO THE DIVISION IN THE PENDINGACTIONS AGAINST NEBEKER AND/OR BENTON

Firm Statement UTAH REGULATORY ACTION CASE NO. SD-05-0023 FILED AGAINST ROUNDHILL SECURITIES, INC. (CRD #35223) BEFORE THE MERGER WITH FIRSTALLIED SECURITIES ON 06/13/2005 AND RESOLVED AFTER THE MERGER.








UTAH REGULATORY ACTION CASE NO. SD-05-0023 FILED AGAINST ROUNDHILL SECURITIES, INC. (CRD #35223) BEFORE THE MERGER WITH FIRSTALLIED SECURITIES ON 06/13/2005 AND RESOLVED AFTER THE MERGER.

Disclosure 13 of 18

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Initiated By: NASD




Docket/Case Number: EAF0300890002



Allegations: NASD CONDUCT RULES 2110, 3010(A), 3010(B)-RESPONDENT FIRMFACILITATED THE DECEPTIVE EFFORTS OF THREE OF THEIR CUSTOMERSTO ENGAGE IN MARKET TIMING TRANSACTIONS IN MUTUAL FUNDS THATEXCEEDED THE LIMITS OF, AND THEREFORE, VIOLATED THE FUNDS'PROSPECTUSES. THE FIRM ASSISTED THEIR CUSTOMERS IN TWO WAYS.FIRST, AN INDIVIDUAL, ON BEHALF OF FIRST ALLIED SECURITIES, INC.NEGOTIATED OR AUTHORIZED TWO QUID PRO QUO ARRANGEMENTSWITH CERTAIN FUND ADVISORS THAT ENABLED CUSTOMERS TO EXECUTEMORE TRADES THAN ALLOWED BY THE FUND'S PROSPECTUSES.SECONDLY, THE FIRM ENABLED ANOTHER CLIENT TO USE RELATEDACCOUNTS WITH THE SAME BENEFICIAL OWNER TO EVADE ATTEMPTS BYA MUTUAL FUND COMPLEX TO RESTRICT ITS TRADING. THE RESPONDENTFIRM ALSO FAILED TO IMPLEMENT A SUPERVISORY SYSTEM DESIGNEDTO MONITOR THE ACTIVITY OF EMPLOYEES AND MAINTAINED NOWRITTEN SUPERVISORY PROCEDURES ADDRESSING MARKET TIMING OREXCESSIVE TRADING OF MUTUAL FUNDS.



Resolution:


No






https://www.finra.org/rules-guidance/oversight-enforcement/finra-disciplinary-actions?search=EAF0300890002



Sanction Details: WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, RESPONDENT FIRMCONSENTED TO THE DESCRIBED SANCTIONS AND TO THE ENTRY OFFINDINGS; THEREFORE, FIRM IS CENSURED AND FINED $408,459. THEFIRM ALSO SHALL PAY $326,500 TO COMPENSATE THE FUND COMPANIESAND TO RETURN THE ILLICIT PROFITS ENJOYED BY ITS CUSTOMERS INTHE IMPROPER MARKET TIMING ACTIVITY. IN ADDITION, WITHIN 30CALENDAR DAYS AFTER ISSUANCE OF THE AWC, AN OFFICER OF THEFIRM SHALL CERTIFY IN WRITTING TO NASD THAT IT HAS REVIEWED ITSPROCEDURES REGARDING MARKET TIMING AND HAS ESTABLISHEDSYSTEMS AND PROCEDURES REASONABLY DESIGNED TO ACHIEVECOMPLIANCE WITH THE LAWS, REGULATIONS AND RULES CONCERNINGMARKET TIMING AND ENSURE PROSPECTUS FUND EXCHANGE LIMITS ANDPROVISIONS OF SELLING AGREEMENTS ARE ENFORCED.


No



Initiated By: NASD


Docket/Case Number: FIRST ALLIED SECURITIES/EAF 0300890002

Allegations: NASD ENFORCEMENT ISSUED A WELLS NOTICE RECOMMENDINGDISCIPLINARY ACTION AGAINST THE FIRM FOR POTENTIAL VIOLATIONS OF(I) NASD CONDUCT RULES 2110 AND 2120, SECTION 17(A) OF THESECURITIES ACT AND SECTION 10(B) RULE 10B-5 OF THE EXCHANGE ACTFOR KNOWINGLY OR RECKLESSLY AIDING AND ABETTING AND ACTIVELYASSISTING CLIENTS WHO ENGAGED IN MUTUAL FUND MARKET TIMING INA DECEITFUL MANNER AND CONTRARY TO THE PROSPECTUSES, (II) NASDCONDUCT RULES 3010 (A) AND (B) AND 2110 FOR FAILURE TO SUPERVISEMARKET TIMING BUSINESS, AND (III) NASD CONDUCT RULES 3010 (A) AND2110 FOR FAILURE TO RESPOND TO RED FLAGS REGARDING MARKETTIMING BUSINESS.












Resolution:

Other Sanctions Ordered: RESTITUTION TO FUND COMPANIES TOTALING APPROXIMATELY $326,500PAYABLE WITHIN 90 DAYS OF AWC ISSUANCE. WRITTEN SUBMISSION OFREVIEW AND ESTABLISHMENT OF ANTI-MARKET TIMING INTERNALCONTROLS AND CAUTIONARY PROCEDURES WITHIN 30 DAYS OF AWCISSUANCE.

Sanction Details: RESTITUTION TO FUND COMPANIES TOTALING APPROXIMATELY $326,500PAYABLE WITHIN 90 DAYS OF AWC ISSUANCE. WRITTEN SUBMISSION OFREVIEW AND ESTABLISHMENT OF ANTI-MARKET TIMING INTERNALCONTROLS AND CAUTIONARY PROCEDURES WITHIN 30 DAYS OF AWCISSUANCE.



Disclosure 14 of 18

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Initiated By: NASD




Docket/Case Number: C8A030106



Allegations: NASD CONDUCT RULE 2110 AND 3010 - RESPONDENT MEMBER FAILED TOREASONABLY SUPERVISE A REGISTERED REPRESENTATIVE.









Resolution:


Sanction Details: WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, RESPONDENTMEMBER CONSENTED TO THE DESCRIBED SANCTIONS AND TO THEENTRY OF FINDINGS; THEREFORE, THE FIRM IS CENSURED AND FINED$10,000, JOINTLY AND SEVERALLY.


No




Initiated By: NASD


Other


ACCEPTANCE, WAIVER AND CONSENT.


Docket/Case Number: C8A030106



Allegations: WITHOUT ADMISSION OR DENIAL, FASI/RR ENTERED INTO AN AWC WITHNASD FOR FAILURE TO REASONABLY SUPERVISE IN VIOLATION OF RULES2110 AND 3010 AND CONSENTED TO CENSURE, 10 DAY SUPERVISORYSUSPENSION (RR) AND $10,000 JOINT AND SEVERAL FINE.



Resolution: Acceptance, Waiver & Consent(AWC)








Sanction Details: WITHOUT ADMITTING OR DENYING THE ALLEGED ALLEGATIONS, FIRSTALLIED AND RR ZOGBY CONSENTED TO 1) CENSURE FIRST ALLIED 2) 10DAY SUSPENSION FROM ACTING IN ANY PRINCIPAL OR SUPERVISORYCAPACITY WITH ANY MEMBER OF THE ASSOCIATION 3) FINE OF $10,000 TOBE PAID JOINTLY AND SEVERLY BETWEEN FASI AND ZOGBY.

Firm Statement WITHOUT ADMITTING OR DENYING THE ALLEGATIONS FASI/RR ENTEREDINTO AN AWC WITH THE NASD FOR FAILURE TO REASONABLY SUPERVISEAN RR IN VIOLATION OF RULES 2110 AND 3010 AND CONSENTED TO ACENSURE A 10 DAY SUSPENSION OF MR. ZOGBY (FROM SUPERVISING),AND A JOINT AND SEVERAL FINE OF $10,000."

Sanctions Ordered: CensureMonetary/Fine $10,000.00Suspension

Disclosure 15 of 18

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Initiated By: NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.




Docket/Case Number: C02980060

Principal Product Type:


Allegations:



Resolution:


Sanction Details:








Sanction Details:

Regulator Statement ON OCTOBER 23, 1998, DISTRICT NO. 2 NOTIFIED RESPONDENT FIRSTALLIED SECURITIES, INC. THAT THE LETTER OF ACCEPTANCE, WAIVERAND CONSENT NO. C02980060 WAS ACCEPTED; THEREFORE, THE FIRM ISCENSURED AND FINED $7,000 - (NASD RULES 2110, 3010(b), 3110(a)AND MARKETPLACE RULES 4632(a), 4632(c), 4632(f), 6130(b),6130(d)(7), AND 6420 - RESPONDENT MEMBER REPORTED TRANSACTIONSTHROUGH ACT IN VIOLATION OF APPLICABLE SECURITIES LAWS ANDREGULATIONS REGARDING TRADE REPORTING; AND, FAILED TOESTABLISH, MAINTAIN AND ENFORCE WRITTEN SUPERVISORYPROCEDURESREASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITH THEAPPLICABLESECURITIES LAWS PERTAINING TO TRADE REPORTING).

**** $7,000 PAID ON 11/25/98, INVOICE NO. 98-02-917 ****


Initiated By: NASD DISTRICT 2




CENSURE


Docket/Case Number: CO2980060



Allegations: ALLEGED VIOLATION OF APPLICABLE SECURITIES LAWS ANDREGULATIONS REGARDING TRADE REPORTING AND FAILED TO ESTABLISHMAINTAIN AND ENFORCE WRITTEN SUPERVISORY PROCEDURESREASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITH THEAPPLICABLE SECURITES LAWS PERTAINING TO TRADE REPORTING



Resolution:









Sanction Details: LETTER OF ACCEPTANCE, WAIVER AND CONSENT NO. CO2980060 WASACCEPTED. FIRM CENSURED AND FINED $7,000 (NASD RULES 2110,3010(B), 3110(A) AND MARKETPLACE RULES 4632(A) 4632(C) 4632(F) 6130(B) 6130 (D) AND 6420


Disclosure 16 of 18

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Initiated By: ILLINOIS SECURITIES DEPARTMENT








Allegations: ALLEGED SALE OF SECURITIES BY UNREGISTEREDSALESPERSONS.



Resolution:


Sanction Details: SETTLEMENT AGREEMENT ISSUED SEPTEMBER 26, 1997.RESPONDENT HAS AGREED TO PAY 50,000 TO ILLINOIS SECURITIESINVESTORS EDUCATION FUND. RESPONDENT ALSO AGREES THAT FOR APERIOD OF TWO YEARS FROM THE DATE OF THE ENTRY OF THISAGREEMENT IT SHALL MAKE TWO SURPRISE COMPLIANCE EXAMINATIONSINA TWELVE MONTH PERIOD FOR EACH OF ITS ILLINOIS BRANCH OFFICE. AREPORT OF THESE EXAMINATIONS SHALL BE SUBMITTED TO THE ILLINOISSECURITIES DEPARTMENT WITHIN THIRTY DAYS OF THE VISIT.

Sanctions Ordered:

Settled






Regulator Statement CONTACT: 217-785-4948


Initiated By: ILLINOIS SECURITIES DEPARTMENT


Other


REIMBURSED SECRETARY OF STATE FOR CERTAIN COSTS INCURRED AS ARESULT OF THE INVESTIGATION



Principal Product Type: Direct Investment(s) - DPP & LP Interest(s)


Allegations: SELLING SECURITIES AWAY FROM THE FIRM



Resolution: Settled

Disclosure 17 of 18

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Initiated By: NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.







Allegations:


Resolution: Acceptance, Waiver & Consent(AWC)64©2021 FINRA. All rights reserved. Report about FIRST ALLIED SECURITIES, INC.






Resolution:


Sanction Details:

Regulator Statement ON SEPTEMBER 8, 1995, DISTRICT NO. 10 NOTIFIED ARGENT CAPITALGROUP, INC. (N/K/A FIRST ALLIED SECURITIES, INC.) AND THOMAS P.HAUKE THAT THE LETTER OF ACCEPTANCE, WAIVER AND CONSENT NO.C10950058 WAS ACCEPTED: THEREFORE, RESPONDENTS MEMBER ANDHAUKEARE CENSURED AND FINED $4,500, JOINTLY AND SEVERALLY. -(ARTICLE III, SECTION 1 OF THE RULES OF FAIR PRACTICE -RESPONDENT MEMBER, ACTING THROUGH RESPONDENT HAUKE, FAILEDTOMAINTAIN THE REQUIRED NET CAPITAL PURSUANT TO SEC RULE 15c3-1WHILE CONDUCTING A SECURITIES BUSINESS.)

**$4,500.00 J&S PAID ON 9/26/95, INVOICE #95-10-575**




Initiated By: NASD DISTRICT 10




CENSURE





Allegations: RESPONDENT MEMBER ACTING THROUGH RESPONDENT HAUKE FAILEDTO MAINTAIN THE REQUIRED NET CAPITAL PURSUANT TO SEC RULE 15C3-1 WHILE CONDUCTING A SECURITIES BUSINESS.



Resolution: Acceptance, Waiver & Consent(AWC)








Sanction Details: LETTER OF ACCEPTANCE WAIVER AND CONSENT WAS ACCEPTED.RESPONDENT MEMBER AND HAUKE ARE CENSURED AND FINED $4500JOINTLY AND SEVERALLY.

Firm Statement VIOLATION OCCURED UNDER PRIOR OWNERSHIP AND APPLICANT HASMAINTAINED REQUIRED NET CAPITAL EVER SINCE.


Disclosure 18 of 18

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Initiated By: MISSOURI SECRETARY OF STATE/SECURITIESDIVISION




Docket/Case Number: AO-95-08




Allegations: RESPONDENT TRANSACTED BUSINESS IN MISSOURIWHEN NOT REGISTERED AS A BROKER-DEALER.



Resolution:


Sanction Details: STIPULATED CONSENT ORDER. WITHOUT ADMITTING ORDENYING ANY VIOLATION, RESPONDENT AGREED TO OFFER RECISION TOMISSOURI CUSTOMERS, PAID $15,000 FINE AND $300 COSTS OFINVESTIGATION.








Regulator Statement CONTACT: MARY HOSMER (314)751-4704


Initiated By: MISSOURI SECRETARY OF STATE/SECURITIES DIVISION




RECISSION OFFER REIMBURSEMENT TO STATE


Docket/Case Number: AO-95-08



Allegations: RESPONDENT ALLEGEDLY TRANSACTED BUSINESS IN MISSOURI WHENNOT REGISTERED AS A BROKER DEALER



Resolution:

Other Sanctions Ordered: OFFERED RECISSION TO MISSOURI CUSTOMERS AND PAID STATE OFMISSOURI $300 FOR THE COST OF INVESTIGATION

Sanction Details: WITHOUT ADMITTING OF DENYING ANY VOILATION, RESPONDENT AGREEDTO OFFER RECISSION TO MISSOURI CUSTOMERS, PAID $15,000 FINE AND$300 FOR COST OF INVESTIGATION


Consent






Arbitration Award - Award / Judgment

Brokerage firms are not required to report arbitration claims filed against them by customers; however, BrokerCheckprovides summary information regarding FINRA arbitration awards involving securities and commodities disputesbetween public customers and registered securities firms in this section of the report. The full text of arbitration awards issued by FINRA is available at www.finra.org/awardsonline.

Disclosure 1 of 15


Type of Event: ARBITRATION

Arbitration Forum:

Case Initiated:

Case Number:

Allegations:

Disputed Product Type:

Sum of All Relief Requested:

Disposition:

Disposition Date:

Sum of All Relief Awarded:

NASD

04/17/2000

00-01150

ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT RELATED-FAILURE TO SUPERVISE;ACCOUNT RELATED-NEGLIGENCE

COMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE

$870,900.00

AWARD AGAINST PARTY

07/03/2001

$41,500.00

There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.

Disclosure 2 of 15

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Arbitration Forum:

Case Initiated:

Case Number:

Allegations:


NASD

04/10/2000

00-01429

ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT RELATED-FAILURE TO SUPERVISE;ACCOUNT RELATED-NEGLIGENCE

COMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE68©2021 FINRA. All rights reserved. Report about FIRST ALLIED SECURITIES, INC.




www.finra.org/awardsonline

https://www.finra.org/arbitration-mediation/arbitration-awards-online?search=00-01150





Disposition:

Disposition Date:



$93,000.00

AWARD AGAINST PARTY

06/24/2003

$24,000.00


Disclosure 3 of 15

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Arbitration Forum:

Case Initiated:

Case Number:

Allegations:



Disposition:

Disposition Date:


NASD

01/11/2001

01-00099

DO NOT USE-EXECUTIONS-FAILURE TO EXECUTE; DO NOT USE-NO OTHERCONTROVERSY INVOLVED


$9,957.00

AWARD AGAINST PARTY

08/28/2001

$8,480.00


Disclosure 4 of 15

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Arbitration Forum:

Case Initiated:

Case Number:

Allegations:

NASD

04/05/2002

02-01375

ACCOUNT ACTIVITY-CHURNING; ACCOUNT ACTIVITY-SUITABILITY;ACCOUNT ACTIVITY-UNAUTHORIZED TRADING








Case Number:



Disposition:

Disposition Date:


02-01375

COMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE;MUTUAL FUNDS

$164,000.00

AWARD AGAINST PARTY

12/17/2003

$45,000.00


Disclosure 5 of 15

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Arbitration Forum:

Case Initiated:

Case Number:

Allegations:



Disposition:

Disposition Date:


NASD

08/26/2002

02-03170

ACCOUNT RELATED-NEGLIGENCE; ACCOUNT RELATED-TRANSFER; DONOT USE-NO OTHER CONTROVERSY INVOLVED

COMMON STOCK; CORPORATE BONDS; GOVERNMENT SECURITIES;MUTUAL FUNDS

$621,902.60

AWARD AGAINST PARTY

08/26/2004

$120,000.00


Disclosure 6 of 15

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Allegations: DO NOT USE-NO OTHER CONTROVERSY INVOLVED; DO NOT USE-OTHER-OTHER ; EMPLOYMENT-BREACH OF CONTRACT; EMPLOYMENT-COMMISSIONS








Arbitration Forum:

Case Initiated:

Case Number:



Disposition:

Disposition Date:


NASD

03/06/2003

03-01359

DO NOT USE-NO OTHER CONTROVERSY INVOLVED; DO NOT USE-OTHER-OTHER ; EMPLOYMENT-BREACH OF CONTRACT; EMPLOYMENT-COMMISSIONS

DO NOT USE-NO OTHER TYPE OF SEC INVOLVE

$26,600,000.00

AWARD AGAINST PARTY

07/23/2004

$75,000.00


Disclosure 7 of 15

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Arbitration Forum:

Case Initiated:

Case Number:

Allegations:



Disposition:

Disposition Date:


FINRA

03/24/2009

09-01447

ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-SUITABILITY; ACCOUNTRELATED-FAILURE TO SUPERVISE; ACCOUNT RELATED-NEGLIGENCE

MUTUAL FUNDS

$46,238.00

AWARD AGAINST PARTY

02/19/2010

$26,150.01


Disclosure 8 of 15

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Arbitration Forum:

Case Initiated:

Case Number:

Allegations:



Disposition:

Disposition Date:


FINRA

08/23/2011

11-03184

ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-CHURNING; ACCOUNT ACTIVITY-SUITABILITY; ACCOUNT ACTIVITY-UNAUTHORIZED TRADING; ACCOUNT RELATED-BREACH OF CONTRACT;ACCOUNT RELATED-FAILURE TO SUPERVISE; ACCOUNT RELATED-NEGLIGENCE

$25,000.00

AWARD AGAINST PARTY

04/27/2012

$25,425.01


Disclosure 9 of 15

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Arbitration Forum:

Case Initiated:

Case Number:

Allegations:



Disposition:

Disposition Date:


FINRA

03/13/2012

12-00348

ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-UNAUTHORIZED TRADING;ACCOUNT RELATED-BREACH OF CONTRACT; ACCOUNT RELATED-FAILURETO SUPERVISE; ACCOUNT RELATED-NEGLIGENCE

EXCHANGE-TRADED FUNDS; REAL ESTATE INVESTMENT TRUST; VARIABLEANNUITIES

Unspecified Damages

AWARD AGAINST PARTY

03/09/2016

$0.01








Sum of All Relief Awarded: $0.01


Disclosure 10 of 15

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Arbitration Forum:

Case Initiated:

Case Number:

Allegations:



Disposition:

Disposition Date:


FINRA

12/29/2017

17-03439

ACCOUNT ACTIVITY - ELDER ABUSE; ACCOUNT ACTIVITY-BRCH OFFIDUCIARY DT; ACCOUNT ACTIVITY-FRAUD; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-SUITABILITY; ACCOUNTRELATED-FAILURE TO SUPERVISE; ACCOUNT RELATED-NEGLIGENCE

VARIABLE ANNUITIES

$4,750,000.02

AWARD AGAINST PARTY

01/18/2019

$1,488,753.00


Disclosure 11 of 15

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Arbitration Forum:

Case Initiated:

Case Number:

Allegations:



Disposition:

NASD

12/02/1997

97-05575

ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-OMISSION OF FACTS;ACCOUNT RELATED-NEGLIGENCE


$54,687.57

AWARD AGAINST PARTY 73©2021 FINRA. All rights reserved. Report about FIRST ALLIED SECURITIES, INC.







Disposition:

Disposition Date:


AWARD AGAINST PARTY

09/10/1998

$55,187.57


Disclosure 12 of 15

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Arbitration Forum:

Case Initiated:

Case Number:

Allegations:



Disposition:

Disposition Date:


NASD

05/29/1998

98-01439

ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-SUITABILITY; ACCOUNT ACTIVITY-UNAUTHORIZED TRADING; ACCOUNTRELATED-FAILURE TO SUPERVISE

DO NOT USE-NO OTHER TYPE OF SEC INVOLVE; UNKNOWN TYPE OFSECURITIES

$85,000.00

AWARD AGAINST PARTY

06/30/1999

$85,000.00


Disclosure 13 of 15

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Arbitration Forum:

Case Initiated:

Case Number:

Allegations:

NASD

11/30/1998

98-03884

ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT RELATED-BREACHOF CONTRACT; ACCOUNT RELATED-FAILURE TO SUPERVISE; ACCOUNTRELATED-NEGLIGENCE








Case Number:



Disposition:

Disposition Date:


98-03884

COMMON STOCK; CORPORATE BONDS; DO NOT USE-NO OTHER TYPE OFSEC INVOLVE

$10,564.00

AWARD AGAINST PARTY

11/26/1999

$5,619.00


Disclosure 14 of 15

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Arbitration Forum:

Case Initiated:

Case Number:

Allegations:



Disposition:

Disposition Date:


NASD

02/03/1999

99-00056

ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-CHURNING; ACCOUNT ACTIVITY-SUITABILITY; ACCOUNT RELATED-FAILURETO SUPERVISE


$1,072,000.00

AWARD AGAINST PARTY

05/09/2001

$130,000.00


Disclosure 15 of 15

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Allegations: ACCOUNT RELATED-OTHER; DO NOT USE-NO OTHER CONTROVERSYINVOLVED








Arbitration Forum:

Case Initiated:

Case Number:

Allegations:



Disposition:

Disposition Date:


NASD

03/29/1999

99-01179

ACCOUNT RELATED-OTHER; DO NOT USE-NO OTHER CONTROVERSYINVOLVED


$69,905.00

AWARD AGAINST PARTY

02/17/2000

$31,000.00








End of Report

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