INDUSTRIAL AND COMMERCIAL BANK OF CHINA FINANCIAL · PDF filebrokercheck report industrial and...

BrokerCheck Report

INDUSTRIAL AND COMMERCIAL BANK OF CHINA FINANCIAL SERVICES LLC

Section Title

Report Summary

Firm History

CRD# 131487

1 - 2

10

Firm Profile 3 - 9

Page(s)

Firm Operations 11 - 18

Disclosure Events 19

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INDUSTRIAL AND COMMERCIALBANK OF CHINA FINANCIALSERVICES LLC

CRD# 131487

SEC# 8-66471

Main Office Location

1633 BROADWAY28TH FLOORNEW YORK, NY 10019Regulated by FINRA New York Office

Mailing Address

1633 BROADWAY28TH FLOORNEW YORK, NY 10019

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

(212) 993-7305

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 3

Firm Profile

This firm is classified as a limited liability company.

This firm was formed in Delaware on 02/11/2004.

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 2 types of businesses.

This firm is affiliated with financial or investmentinstitutions.

This firm does not have referral or financialarrangements with other brokers or dealers.

This firm is registered with:

• the SEC• 11 Self-Regulatory Organizations• 12 U.S. states and territories

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This firm is classified as a limited liability company.

This firm was formed in Delaware on 02/11/2004.

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.

INDUSTRIAL AND COMMERCIAL BANK OF CHINA FINANCIAL SERVICES LLC

SEC#

131487

8-66471

Main Office Location

Mailing Address

Business Telephone Number

Doing business as INDUSTRIAL AND COMMERCIAL BANK OF CHINA FINANCIAL SERVICES LLC

(212) 993-7305

Regulated by FINRA New York Office








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?

INDUSTRIAL AND COMMERCIAL BANK OF CHINA LIMITED

OWNER

75% or more

No

Foreign Entity

07/2010

Yes

Is this a domestic or foreignentity or an individual?

Legal Name & CRD# (if any):

Position



Position Start Date


FERONE, DONATO PETER

CHIEF OPERATING OFFICER

Less than 5%

No

Individual

03/2018

Yes

2678900



Position


Position Start Date

FERRARO, FREDERICK GERARD

CHIEF FINANCIAL OFFICER

Less than 5%

Individual

11/2010

2219326








Direct Owners and Executive Officers (continued)

Firm Profile




Less than 5%

No

Yes

Position



Position Start Date


HUI, JIANG

CHIEF COMPLIANCE OFFICER - INVESTMENT ADVISER

Less than 5%

No

Individual

06/2016

No

6364827



Position



Position Start Date


LEVY, ALAN BRAD

CHIEF COMMERCIAL OFFICER

Less than 5%

No

Individual

10/2010

Yes

1666516



LU, YI

5837061








Firm Profile

Position



Position Start Date


EXECUTIVE MANAGING DIRECTOR

Less than 5%

No

Individual

05/2016

Yes

5837061


Position



Position Start Date


WLASENKO, OLEH

CHIEF COMPLIANCE OFFICER - BROKER-DEALER

Less than 5%

No

Individual

11/2010

Yes

2829854



Position


Position Start Date


XIAO, YUQIANG

CHAIRMAN, BOARD OF MANAGERS

Less than 5%

Individual

06/2014

Yes

6371962









Firm Profile



No

Yes

Position



Position Start Date


XING, YINGHUA

CHIEF EXECUTIVE OFFICER AND MANAGER

Less than 5%

No

Individual

02/2018

Yes

6592654



Position



Position Start Date


ZHANG, WEILIANG

MANAGER, BOARD OF MANAGERS

Less than 5%

Individual

07/2017

Yes

6840538








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

Indirect Owners

Firm Profile

CHINA INVESTMENT CORPORATION

OWNER

CENTRAL HUIJIN INVESTMENT LTD.

75% or more

No

Foreign Entity

07/2010

No



Company through whichindirect ownership isestablished

Relationship to Direct Owner

Relationship Established




MINISTRY OF FINANCE OF THE PRC

OWNER

CHINA INVESTMENT CORPORATION

75% or more

No

Foreign Entity

07/2010

No









CENTRAL HUIJIN INVESTMENT LTD.


Foreign Entity









Indirect Owners (continued)

Firm Profile

OWNER


25% but less than 50%

No

07/2010

No







MINISTRY OF FINANCE OF THE PRC

OWNER


25% but less than 50%

No

Foreign Entity

07/2010

No














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, 11 SROs and 12 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

No

No

No

Federal Regulator Status Date Effective

SEC Approved 11/11/2004

Self-Regulatory Organization Status Date Effective

FINRA Approved 11/11/2004

Cboe BYX Exchange, Inc. Approved 05/15/2014

Cboe BZX Exchange, Inc. Approved 05/15/2014

Chicago Stock Exchange Approved 10/30/2015

Investors' Exchange LLC Approved 08/12/2016

NYSE American LLC Approved 11/11/2013

NYSE Arca, Inc. Approved 05/16/2013

Nasdaq BX, Inc. Approved 08/08/2014

Nasdaq PHLX LLC Approved 11/02/2015

Nasdaq Stock Market Approved 02/20/2013

New York Stock Exchange Approved 11/11/2013






Firm Operations

Registrations (continued)

U.S. States &Territories

Status Date Effective

Alabama Approved 06/14/2016

California Approved 11/22/2013

Connecticut Approved 10/16/2017

Delaware Approved 12/07/2017

Florida Approved 09/21/2017

Illinois Approved 02/27/2017

Missouri Approved 11/17/2016

Nebraska Approved 11/18/2016

New Jersey Approved 11/23/2004

New York Approved 10/07/2004

Virginia Approved 10/21/2016

Wisconsin Approved 10/24/2016






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 not engage in other non-securities business.

Non-Securities Business Description:

This firm currently conducts 2 types of businesses.

Types of Business

Exchange member engaged in exchange commission business other than floor activities

Other - THE FIRM CLEARS AND SETTLES SECURITIES.THE FIRM CONDUCTS ACTIVITIES IN REPURCHASE AGREEMENTS AND REVERSE REPURCHASEAGREEMENTS.THE FIRM CONDUCTS A SECURITIES LENDING BUSINESS.THE FIRM PROVIDES PRIME BROKERAGE SERVICES.






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 not refer or introduce customers to other brokers and dealers.






Firm Operations

Industry Arrangements

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

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






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.

No

Yes

THAILAND

Yes

07/12/2010

HEADQUARTER, 11-13FL, EMPORIUM TOWER622 SUKHUMVIT ROAD, KHLONG TONKHLONG TOEI, BANGKOK, THAILAND

ACL BANK PUBLIC COMPANY LIMITED is under common control with the firm.

THE INDUSTRIAL AND COMMERCIAL BANK OF CHINA LIMITED IS AMAJORITY OWNER OF THE ENTITY AND THEREFORE THE ENTITY ISUNDER COMMON CONTROL WITH THE U.S. BROKER-DEALER, INDUSTRIALAND COMMERCIAL BANK OF CHINA FINANCIAL SERVICES LLC.

Description:

Investment AdvisoryActivities:

Securities Activities:

Country:

Foreign Entity:

Effective Date:

Business Address:

No

Yes

PEOPLE'S REPUBLIC OF CHINA

Yes

07/12/2010

HEADQUARTER, LEVEL 17 & 18, 3 PACIFIC PL.QUEEN'S ROAD EASTHONG KONG, SAR, HONG KONG

ICBC INTERNATIONAL HOLDINGS LIMITED is under common control with the firm.

THIS ENTITY IS 100% OWNED BY THE INDUSTRIAL AND COMMERCIAL BANKOF CHINA LIMITED AND THEREFORE UNDER COMMON CONTROL WITHTHE U.S. BROKER-DEALER, INDUSTRIAL AND COMMERCIAL BANK OFCHINA FINANCIAL SERVICES LLC.

Description:



Country:

Foreign Entity:

Effective Date:

Business Address:






Firm Operations

Organization Affiliates (continued)THIS ENTITY IS 100% OWNED BY THE INDUSTRIAL AND COMMERCIAL BANKOF CHINA LIMITED AND THEREFORE UNDER COMMON CONTROL WITHTHE U.S. BROKER-DEALER, INDUSTRIAL AND COMMERCIAL BANK OFCHINA FINANCIAL SERVICES LLC.

Description:

No

Yes


Yes

07/12/2010

MAIN BRANCH, 18/F, MACAU LANDMARK555 AVENIDA AMIZADEMACAU SAR, MACAU

INDUSTRIAL AND COMMERCIAL BANK OF CHINA (MACAU) LIMITED is under common control with the firm.


Description:



Country:

Foreign Entity:

Effective Date:

Business Address:

No

Yes


Yes

07/12/2010

HEADQUARTER, 33/F, ICBC TOWER3 GARDEN ROAD, CENTRALHONG KONG SAR, HONG KONG

INDUSTRIAL AND COMMERCIAL BANK OF CHINA (ASIA) LIMITED is under common control with the firm.


Description:



Country:

Foreign Entity:

Effective Date:

Business Address:

8/F BANK OF BEIJING BLDG. NO. 17CFINANCIAL ST, XICHENG DISTRICTBEIJING, PRC

ICBC CREDIT SUISSE ASSET MANAGEMENT CO.,LTD is under common control with the firm.

Business Address:






Firm Operations

Organization Affiliates (continued)

Yes

No


Yes

07/12/2010

8/F BANK OF BEIJING BLDG. NO. 17CFINANCIAL ST, XICHENG DISTRICTBEIJING, PRC


Description:



Country:

Foreign Entity:

Effective Date:

Business Address:

This firm is 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

Effective Date:

Business Address:

Description: THIS ENTITY OWNS 100% OF THE THE U.S. BROKER-DEALER, INDUSTRIALAND COMMERCIAL BANK OF CHINA FINANCIAL SERVICES LLC.

INDUSTRIAL AND COMMERCIAL BANK OF CHINA LIMITED is a Foreign Bank and controls the firm.

07/12/2010

NO. 55 FUXINGMENNEL AVENUE, XICHENG DISTRICTBEIJING, PRC 100140






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 3 0






Disclosure Event Details

What you should know about reported disclosure events:

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

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

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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 3

Reporting Source: Regulator

Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT ITS ANTI-MONEY LAUNDERING (AML) PROGRAM WAS NOT REASONABLY DESIGNEDTO DETECT AND REPORT POTENTIALLY SUSPICIOUS ACTIVITY, INCLUDINGCUSTOMER TRADING IN PENNY STOCKS. THE FINDINGS STATED THAT THEFIRM STARTED A NEW BUSINESS LINE INVOLVING THE CLEARANCE ANDSETTLEMENT OF EQUITY TRANSACTIONS. THE FIRM BEGAN CARRYINGAND CLEARING FOR DOZENS OF NEW CORRESPONDENT BROKER-DEALERS, INCLUDING THOUSANDS OF NEW INTRODUCED CUSTOMERS.MANY OF THESE NEW CUSTOMERS BEGAN PURCHASING AND SELLINGMILLIONS OF DOLLARS' WORTH OF LOW-PRICED EQUITY SECURITIES(PENNY STOCKS) WITHIN A FEW MONTHS AFTER THE BUSINESS WASLAUNCHED. DESPITE ADDING THE EQUITY CLEARING AS A NEW BUSINESSLINE, THE FIRM FAILED TO DESIGN AN AML PROGRAM THAT WASREASONABLY TAILORED TO IDENTIFY POTENTIALLY SUSPICIOUS ACTIVITY,INVOLVING PENNY STOCK LIQUIDATIONS OR RED FLAGS OF POTENTIALLYMANIPULATIVE TRADING. THE FINDINGS ALSO STATED THAT THE FIRMFAILED TO TRACK WHETHER CUSTOMER ACCOUNTS WERE RELATED, ORDETERMINE WHETHER OR NOT ACCOUNT HOLDERS WERE ACTING INCONCERT TO LIQUIDATE PENNY STOCKS. THE FIRM LACKED SYSTEMSAND PROCEDURES TO MONITOR WHETHER CERTAIN ACTIVITIES -INCLUDING THE OPENING OF MULTIPLE ACCOUNTS, WIRE TRANSFERSOUT OF AN ACCOUNT, OR FUNDS TRANSFERS AMONG ACCOUNTS - WEREUNUSUAL FOR ANY GIVEN CUSTOMER, DESPITE THE FIRM'S WRITTEN AMLPROCEDURES SPECIFICALLY IDENTIFYING SUCH ITEMS AS RED FLAGSREQUIRING MONITORING. THE FIRM'S AML PROGRAM ALSO WASUNREASONABLE IN THAT IT ASSIGNED A SIGNIFICANT NUMBER OF THEFIRM'S SUSPICIOUS ACTIVITY MONITORING FUNCTIONS TO A NON-EXISTENT EMPLOYEE TITLE. THE FIRM'S WRITTEN AML PROCEDURESDELEGATED THE RESPONSIBILITY FOR INVESTIGATING POTENTIALLYSUSPICIOUS ACTIVITY TO AN UNNAMED EMPLOYEE IDENTIFIED BY THETITLE "OPERATIONS MANAGER." THE TITLE "OPERATIONS MANAGER" DIDNOT EXIST AT THE FIRM AND NO FIRM EMPLOYEES EFFECTIVELY CARRIEDOUT THE INVESTIGATION OF SUSPICIOUS ACTIVITY ASSIGNED TO THEOPERATIONS MANAGER. AS A RESULT, THE FIRM FAILED TO REASONABLYDETECT AND INVESTIGATE RED FLAGS OF POTENTIALLY SUSPICIOUSPENNY STOCK LIQUIDATIONS THAT MAY HAVE REQUIRED THE FILING OF ASUSPICIOUS ACTIVITY REPORT (SAR), DESPITE CLEARING THELIQUIDATION OF OVER 33 BILLION PENNY STOCK SHARES VALUED INEXCESS OF $210 MILLION. THE FINDINGS ALSO INCLUDED THAT AFTERBEING PLACED ON NOTICE BY THE SECURITIES AND EXCHANGECOMMISSION (SEC) THAT ITS SURVEILLANCE SYSTEM FAILED TO DETECTPOTENTIALLY SUSPICIOUS PENNY STOCK LIQUIDATIONS BY INTRODUCEDCUSTOMERS, THE FIRM DID NOT AMEND ITS AML PROGRAM TOADEQUATELY MONITOR THIS ACTIVITY. ALTHOUGH THE FIRMIMPLEMENTED TWO NEW SURVEILLANCE REPORTS THAT TARGETEDPENNY STOCK TRANSACTIONS, IT FAILED TO AMEND ITS WRITTEN AMLPROCEDURES TO PROVIDE GUIDANCE TO ITS EMPLOYEES REGARDINGTHE PURPOSE OF THE REPORTS, HOW TO USE THE REPORTS AND HOWTO ESCALATE MATTERS OF CONCERN TO SENIOR MANAGEMENT.MOREOVER, THE FIRM DID NOT REQUIRE ITS EMPLOYEES TO DOCUMENTEITHER THEIR REVIEW OF THE SURVEILLANCE REPORTS ORESCALATIONS TO SENIOR MANAGEMENT. FINRA FOUND THAT THE FIRMHAD CUSTOMER RESERVE HINDSIGHT DEFICIENCIES AND ALSOPERFORMED INACCURATE CUSTOMER RESERVE FORMULACOMPUTATIONS. THE FIRM PERFORMED INACCURATE SEGREGATIONCALCULATIONS AND COMMITTED POSSESSION OR CONTROL VIOLATIONS,AND IMPROPERLY USED THREE FOREIGN CUSTODY ACCOUNTS WITHOUTFIRST REQUESTING THE SEC TO DESIGNATE THE CUSTODIAL ACCOUNTSAS GOOD CONTROL LOCATIONS. FURTHERMORE, THE FIRM FILED THREEINACCURATE FOCUS REPORTS, AND EMPLOYED AN INDIVIDUAL WHOWORKED AS A FINANCIAL AND OPERATIONS LIMITED PRINCIPAL (FINOP)BUT WHO LACKED THE APPROPRIATE LICENSE. FINALLY, THE FIRM'SSUPERVISORY SYSTEM AND WRITTEN PROCEDURES GOVERNINGCOMPLIANCE WITH THE POSSESSION OR CONTROL PROVISIONS OFSECTION 15(C) OF THE SECURITIES EXCHANGE ACT OF 1934 (EXCHANGEACT) AND RULE 15C3-3 THEREUNDER WERE NOT REASONABLYDESIGNED.

Current Status: Final






Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT ITS ANTI-MONEY LAUNDERING (AML) PROGRAM WAS NOT REASONABLY DESIGNEDTO DETECT AND REPORT POTENTIALLY SUSPICIOUS ACTIVITY, INCLUDINGCUSTOMER TRADING IN PENNY STOCKS. THE FINDINGS STATED THAT THEFIRM STARTED A NEW BUSINESS LINE INVOLVING THE CLEARANCE ANDSETTLEMENT OF EQUITY TRANSACTIONS. THE FIRM BEGAN CARRYINGAND CLEARING FOR DOZENS OF NEW CORRESPONDENT BROKER-DEALERS, INCLUDING THOUSANDS OF NEW INTRODUCED CUSTOMERS.MANY OF THESE NEW CUSTOMERS BEGAN PURCHASING AND SELLINGMILLIONS OF DOLLARS' WORTH OF LOW-PRICED EQUITY SECURITIES(PENNY STOCKS) WITHIN A FEW MONTHS AFTER THE BUSINESS WASLAUNCHED. DESPITE ADDING THE EQUITY CLEARING AS A NEW BUSINESSLINE, THE FIRM FAILED TO DESIGN AN AML PROGRAM THAT WASREASONABLY TAILORED TO IDENTIFY POTENTIALLY SUSPICIOUS ACTIVITY,INVOLVING PENNY STOCK LIQUIDATIONS OR RED FLAGS OF POTENTIALLYMANIPULATIVE TRADING. THE FINDINGS ALSO STATED THAT THE FIRMFAILED TO TRACK WHETHER CUSTOMER ACCOUNTS WERE RELATED, ORDETERMINE WHETHER OR NOT ACCOUNT HOLDERS WERE ACTING INCONCERT TO LIQUIDATE PENNY STOCKS. THE FIRM LACKED SYSTEMSAND PROCEDURES TO MONITOR WHETHER CERTAIN ACTIVITIES -INCLUDING THE OPENING OF MULTIPLE ACCOUNTS, WIRE TRANSFERSOUT OF AN ACCOUNT, OR FUNDS TRANSFERS AMONG ACCOUNTS - WEREUNUSUAL FOR ANY GIVEN CUSTOMER, DESPITE THE FIRM'S WRITTEN AMLPROCEDURES SPECIFICALLY IDENTIFYING SUCH ITEMS AS RED FLAGSREQUIRING MONITORING. THE FIRM'S AML PROGRAM ALSO WASUNREASONABLE IN THAT IT ASSIGNED A SIGNIFICANT NUMBER OF THEFIRM'S SUSPICIOUS ACTIVITY MONITORING FUNCTIONS TO A NON-EXISTENT EMPLOYEE TITLE. THE FIRM'S WRITTEN AML PROCEDURESDELEGATED THE RESPONSIBILITY FOR INVESTIGATING POTENTIALLYSUSPICIOUS ACTIVITY TO AN UNNAMED EMPLOYEE IDENTIFIED BY THETITLE "OPERATIONS MANAGER." THE TITLE "OPERATIONS MANAGER" DIDNOT EXIST AT THE FIRM AND NO FIRM EMPLOYEES EFFECTIVELY CARRIEDOUT THE INVESTIGATION OF SUSPICIOUS ACTIVITY ASSIGNED TO THEOPERATIONS MANAGER. AS A RESULT, THE FIRM FAILED TO REASONABLYDETECT AND INVESTIGATE RED FLAGS OF POTENTIALLY SUSPICIOUSPENNY STOCK LIQUIDATIONS THAT MAY HAVE REQUIRED THE FILING OF ASUSPICIOUS ACTIVITY REPORT (SAR), DESPITE CLEARING THELIQUIDATION OF OVER 33 BILLION PENNY STOCK SHARES VALUED INEXCESS OF $210 MILLION. THE FINDINGS ALSO INCLUDED THAT AFTERBEING PLACED ON NOTICE BY THE SECURITIES AND EXCHANGECOMMISSION (SEC) THAT ITS SURVEILLANCE SYSTEM FAILED TO DETECTPOTENTIALLY SUSPICIOUS PENNY STOCK LIQUIDATIONS BY INTRODUCEDCUSTOMERS, THE FIRM DID NOT AMEND ITS AML PROGRAM TOADEQUATELY MONITOR THIS ACTIVITY. ALTHOUGH THE FIRMIMPLEMENTED TWO NEW SURVEILLANCE REPORTS THAT TARGETEDPENNY STOCK TRANSACTIONS, IT FAILED TO AMEND ITS WRITTEN AMLPROCEDURES TO PROVIDE GUIDANCE TO ITS EMPLOYEES REGARDINGTHE PURPOSE OF THE REPORTS, HOW TO USE THE REPORTS AND HOWTO ESCALATE MATTERS OF CONCERN TO SENIOR MANAGEMENT.MOREOVER, THE FIRM DID NOT REQUIRE ITS EMPLOYEES TO DOCUMENTEITHER THEIR REVIEW OF THE SURVEILLANCE REPORTS ORESCALATIONS TO SENIOR MANAGEMENT. FINRA FOUND THAT THE FIRMHAD CUSTOMER RESERVE HINDSIGHT DEFICIENCIES AND ALSOPERFORMED INACCURATE CUSTOMER RESERVE FORMULACOMPUTATIONS. THE FIRM PERFORMED INACCURATE SEGREGATIONCALCULATIONS AND COMMITTED POSSESSION OR CONTROL VIOLATIONS,AND IMPROPERLY USED THREE FOREIGN CUSTODY ACCOUNTS WITHOUTFIRST REQUESTING THE SEC TO DESIGNATE THE CUSTODIAL ACCOUNTSAS GOOD CONTROL LOCATIONS. FURTHERMORE, THE FIRM FILED THREEINACCURATE FOCUS REPORTS, AND EMPLOYED AN INDIVIDUAL WHOWORKED AS A FINANCIAL AND OPERATIONS LIMITED PRINCIPAL (FINOP)BUT WHO LACKED THE APPROPRIATE LICENSE. FINALLY, THE FIRM'SSUPERVISORY SYSTEM AND WRITTEN PROCEDURES GOVERNINGCOMPLIANCE WITH THE POSSESSION OR CONTROL PROVISIONS OFSECTION 15(C) OF THE SECURITIES EXCHANGE ACT OF 1934 (EXCHANGEACT) AND RULE 15C3-3 THEREUNDER WERE NOT REASONABLYDESIGNED.






Initiated By: FINRA

Principal Sanction(s)/ReliefSought:

Other Sanction(s)/ReliefSought:

Date Initiated: 05/16/2018

Docket/Case Number: 2015045550801

Principal Product Type: Penny Stock(s)

Other Product Type(s):

WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT ITS ANTI-MONEY LAUNDERING (AML) PROGRAM WAS NOT REASONABLY DESIGNEDTO DETECT AND REPORT POTENTIALLY SUSPICIOUS ACTIVITY, INCLUDINGCUSTOMER TRADING IN PENNY STOCKS. THE FINDINGS STATED THAT THEFIRM STARTED A NEW BUSINESS LINE INVOLVING THE CLEARANCE ANDSETTLEMENT OF EQUITY TRANSACTIONS. THE FIRM BEGAN CARRYINGAND CLEARING FOR DOZENS OF NEW CORRESPONDENT BROKER-DEALERS, INCLUDING THOUSANDS OF NEW INTRODUCED CUSTOMERS.MANY OF THESE NEW CUSTOMERS BEGAN PURCHASING AND SELLINGMILLIONS OF DOLLARS' WORTH OF LOW-PRICED EQUITY SECURITIES(PENNY STOCKS) WITHIN A FEW MONTHS AFTER THE BUSINESS WASLAUNCHED. DESPITE ADDING THE EQUITY CLEARING AS A NEW BUSINESSLINE, THE FIRM FAILED TO DESIGN AN AML PROGRAM THAT WASREASONABLY TAILORED TO IDENTIFY POTENTIALLY SUSPICIOUS ACTIVITY,INVOLVING PENNY STOCK LIQUIDATIONS OR RED FLAGS OF POTENTIALLYMANIPULATIVE TRADING. THE FINDINGS ALSO STATED THAT THE FIRMFAILED TO TRACK WHETHER CUSTOMER ACCOUNTS WERE RELATED, ORDETERMINE WHETHER OR NOT ACCOUNT HOLDERS WERE ACTING INCONCERT TO LIQUIDATE PENNY STOCKS. THE FIRM LACKED SYSTEMSAND PROCEDURES TO MONITOR WHETHER CERTAIN ACTIVITIES -INCLUDING THE OPENING OF MULTIPLE ACCOUNTS, WIRE TRANSFERSOUT OF AN ACCOUNT, OR FUNDS TRANSFERS AMONG ACCOUNTS - WEREUNUSUAL FOR ANY GIVEN CUSTOMER, DESPITE THE FIRM'S WRITTEN AMLPROCEDURES SPECIFICALLY IDENTIFYING SUCH ITEMS AS RED FLAGSREQUIRING MONITORING. THE FIRM'S AML PROGRAM ALSO WASUNREASONABLE IN THAT IT ASSIGNED A SIGNIFICANT NUMBER OF THEFIRM'S SUSPICIOUS ACTIVITY MONITORING FUNCTIONS TO A NON-EXISTENT EMPLOYEE TITLE. THE FIRM'S WRITTEN AML PROCEDURESDELEGATED THE RESPONSIBILITY FOR INVESTIGATING POTENTIALLYSUSPICIOUS ACTIVITY TO AN UNNAMED EMPLOYEE IDENTIFIED BY THETITLE "OPERATIONS MANAGER." THE TITLE "OPERATIONS MANAGER" DIDNOT EXIST AT THE FIRM AND NO FIRM EMPLOYEES EFFECTIVELY CARRIEDOUT THE INVESTIGATION OF SUSPICIOUS ACTIVITY ASSIGNED TO THEOPERATIONS MANAGER. AS A RESULT, THE FIRM FAILED TO REASONABLYDETECT AND INVESTIGATE RED FLAGS OF POTENTIALLY SUSPICIOUSPENNY STOCK LIQUIDATIONS THAT MAY HAVE REQUIRED THE FILING OF ASUSPICIOUS ACTIVITY REPORT (SAR), DESPITE CLEARING THELIQUIDATION OF OVER 33 BILLION PENNY STOCK SHARES VALUED INEXCESS OF $210 MILLION. THE FINDINGS ALSO INCLUDED THAT AFTERBEING PLACED ON NOTICE BY THE SECURITIES AND EXCHANGECOMMISSION (SEC) THAT ITS SURVEILLANCE SYSTEM FAILED TO DETECTPOTENTIALLY SUSPICIOUS PENNY STOCK LIQUIDATIONS BY INTRODUCEDCUSTOMERS, THE FIRM DID NOT AMEND ITS AML PROGRAM TOADEQUATELY MONITOR THIS ACTIVITY. ALTHOUGH THE FIRMIMPLEMENTED TWO NEW SURVEILLANCE REPORTS THAT TARGETEDPENNY STOCK TRANSACTIONS, IT FAILED TO AMEND ITS WRITTEN AMLPROCEDURES TO PROVIDE GUIDANCE TO ITS EMPLOYEES REGARDINGTHE PURPOSE OF THE REPORTS, HOW TO USE THE REPORTS AND HOWTO ESCALATE MATTERS OF CONCERN TO SENIOR MANAGEMENT.MOREOVER, THE FIRM DID NOT REQUIRE ITS EMPLOYEES TO DOCUMENTEITHER THEIR REVIEW OF THE SURVEILLANCE REPORTS ORESCALATIONS TO SENIOR MANAGEMENT. FINRA FOUND THAT THE FIRMHAD CUSTOMER RESERVE HINDSIGHT DEFICIENCIES AND ALSOPERFORMED INACCURATE CUSTOMER RESERVE FORMULACOMPUTATIONS. THE FIRM PERFORMED INACCURATE SEGREGATIONCALCULATIONS AND COMMITTED POSSESSION OR CONTROL VIOLATIONS,AND IMPROPERLY USED THREE FOREIGN CUSTODY ACCOUNTS WITHOUTFIRST REQUESTING THE SEC TO DESIGNATE THE CUSTODIAL ACCOUNTSAS GOOD CONTROL LOCATIONS. FURTHERMORE, THE FIRM FILED THREEINACCURATE FOCUS REPORTS, AND EMPLOYED AN INDIVIDUAL WHOWORKED AS A FINANCIAL AND OPERATIONS LIMITED PRINCIPAL (FINOP)BUT WHO LACKED THE APPROPRIATE LICENSE. FINALLY, THE FIRM'SSUPERVISORY SYSTEM AND WRITTEN PROCEDURES GOVERNINGCOMPLIANCE WITH THE POSSESSION OR CONTROL PROVISIONS OFSECTION 15(C) OF THE SECURITIES EXCHANGE ACT OF 1934 (EXCHANGEACT) AND RULE 15C3-3 THEREUNDER WERE NOT REASONABLYDESIGNED.

Resolution Date: 05/16/2018

Resolution:

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

No

Acceptance, Waiver & Consent(AWC)





https://www.finra.org/industry/disciplinary-actions/finra-disciplinary-actions-online?search=2015045550801


Other Sanctions Ordered: UNDERTAKINGS

Sanction Details: THE FIRM WAS CENSURED, FINED $5,300,000 AND SHALL, AMONG OTHERTHINGS, RETAIN, WITHIN 60 DAYS OF THE DATE OF THE NOTICE OFACCEPTANCE OF THIS AWC, AN INDEPENDENT CONSULTANT, NOTUNACCEPTABLE TO FINRA STAFF, TO CONDUCT A COMPREHENSIVEREVIEW OF THE ADEQUACY OF THE FIRM'S POLICIES, SYSTEMS ANDPROCEDURES (WRITTEN AND OTHERWISE) AND TRAINING RELATING TOCOMPLIANCE WITH FINRA RULE 3310 AND THE REQUIREMENTS OF THEBANK SECRECY ACT, 31 U.S.C. § 5311, ET. SEQ., AND THE REGULATIONSPROMULGATED THEREUNDER. AT THE CONCLUSION OF THE REVIEW,WHICH SHALL BE NO MORE THAN 120 DAYS AFTER THE DATE OF THENOTICE OF ACCEPTANCE OF THIS AWC, REQUIRE THE INDEPENDENTCONSULTANT TO SUBMIT TO THE FIRM AND FINRA STAFF A WRITTENREPORT ADDRESSING AT A MINIMUM, THE ADEQUACY OF THE FIRM'SPOLICIES, SYSTEMS AND PROCEDURES (WRITTEN AND OTHERWISE) ANDTRAINING RELATING TO COMPLIANCE. IN ADDITION, WITHIN 30 DAYSAFTER THE ISSUANCE OF THE INDEPENDENT CONSULTANT'S WRITTENREPORT OR WRITTEN DETERMINATION REGARDING ALTERNATIVEPROCEDURES (IF ANY), THE FIRM SHALL PROVIDE FINRA STAFF WITH AWRITTEN IMPLEMENTATION REPORT, CERTIFIED BY AN OFFICER OF THEFIRM, ATTESTING TO, CONTAINING DOCUMENTATION OF, AND SETTINGFORTH THE DETAILS OF THE FIRM'S IMPLEMENTATION OF THEINDEPENDENT CONSULTANT'S RECOMMENDATIONS.

Sanctions Ordered: CensureMonetary/Fine $5,300,000.00

Disclosure 2 of 3

i


Allegations: SEC ADMIN RELEASE 34-82533 / JANUARY 18, 2018: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").THE COMMISSION FINDS THAT ICBCFS IS A BROKER-DEALER ANDPARTICIPANT OF THE DEPOSITORY TRUST COMPANY, A REGISTEREDCLEARING AGENCY. AS SUCH, ICBCFS PROVIDES EQUITY CLEARINGSERVICES TO A WIDE RANGE OF INSTITUTIONAL CLIENTS. IN PROVIDINGTHOSE SERVICES, ICBCFS HAS OBLIGATIONS UNDER REGULATION SHOTO CLOSE OUT ITS CONTINUOUS NET SETTLEMENT ("CNS") FAILS TODELIVER. FROM APRIL 2013 UNTIL AUGUST 2016, ICBCFS FAILED TO CLOSEOUT CERTAIN CNS FAILS TO DELIVER BECAUSE IT IMPROPERLY CLAIMEDCREDIT AGAINST ITS CLOSE-OUT OBLIGATIONS WHILE NOT MEETING THEREQUIREMENTS OF RULE 204(E).AS A RESULT OF THE CONDUCT DESCRIBED ABOVE, ICBCFS WILLFULLYVIOLATED RULE 204(A) OF REGULATION SHO, WHICH REQUIRESPARTICIPANTS OF REGISTERED CLEARING AGENCIES TO CLOSEOUT CNSFAILURES TO DELIVER RESULTING FROM SALES OF EQUITY SECURITIESBY THE BEGINNING OF REGULAR TRADING HOURS ON T+4 IN THE CASEOF SHORT SALES, AND T+6 IN THE CASE OF LONG SALES AND BONA FIDEMARKET MAKING ACTIVITY.







Initiated By: UNITED STATES SECURITIES AND EXCHANGE COMMISSION


Other


N/A


Docket/Case Number: 3-18341

Principal Product Type: Other

Other Product Type(s): UNSPECIFIED SECURITIES

SEC ADMIN RELEASE 34-82533 / JANUARY 18, 2018: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").THE COMMISSION FINDS THAT ICBCFS IS A BROKER-DEALER ANDPARTICIPANT OF THE DEPOSITORY TRUST COMPANY, A REGISTEREDCLEARING AGENCY. AS SUCH, ICBCFS PROVIDES EQUITY CLEARINGSERVICES TO A WIDE RANGE OF INSTITUTIONAL CLIENTS. IN PROVIDINGTHOSE SERVICES, ICBCFS HAS OBLIGATIONS UNDER REGULATION SHOTO CLOSE OUT ITS CONTINUOUS NET SETTLEMENT ("CNS") FAILS TODELIVER. FROM APRIL 2013 UNTIL AUGUST 2016, ICBCFS FAILED TO CLOSEOUT CERTAIN CNS FAILS TO DELIVER BECAUSE IT IMPROPERLY CLAIMEDCREDIT AGAINST ITS CLOSE-OUT OBLIGATIONS WHILE NOT MEETING THEREQUIREMENTS OF RULE 204(E).AS A RESULT OF THE CONDUCT DESCRIBED ABOVE, ICBCFS WILLFULLYVIOLATED RULE 204(A) OF REGULATION SHO, WHICH REQUIRESPARTICIPANTS OF REGISTERED CLEARING AGENCIES TO CLOSEOUT CNSFAILURES TO DELIVER RESULTING FROM SALES OF EQUITY SECURITIESBY THE BEGINNING OF REGULAR TRADING HOURS ON T+4 IN THE CASEOF SHORT SALES, AND T+6 IN THE CASE OF LONG SALES AND BONA FIDEMARKET MAKING ACTIVITY.


Resolution:

Other Sanctions Ordered:

Sanction Details: ICBCFS IS CENSURED, ORDERED TO CEASE AND DESIST FROMCOMMITTING OR CAUSING ANY VIOLATIONS AND ANY FUTURE VIOLATIONSOF RULE 204(A) OF EXCHANGE ACT REGULATION SHO, AND ORDERED TOPAY A CIVIL MONEY PENALTY IN THE AMOUNT OF $1,250,000.00.

Regulator Statement RESPONDENT HAS SUBMITTED AN OFFER OF SETTLEMENT (THE "OFFER")WHICH THE COMMISSION HAS DETERMINED TO ACCEPT.ICBCFS WILLFULLY VIOLATED RULE 204(A) OF REGULATION SHO.IT IS ORDERED THAT ICBCFS IS CENSURED AND SHALL CEASE ANDDESIST FROM COMMITTING OR CAUSING ANY VIOLATIONS AND ANYFUTURE VIOLATIONS OF RULE 204(A) OF EXCHANGE ACT REGULATIONSHO.ICBCFS IS ALSO ORDERED TO PAY A CIVIL MONEY PENALTY IN THEAMOUNT OF $1,250,000.00 TO THE SECURITIES AND EXCHANGECOMMISSION.


No

Sanctions Ordered: CensureMonetary/Fine $1,250,000.00Cease and Desist/Injunction

Order






RESPONDENT HAS SUBMITTED AN OFFER OF SETTLEMENT (THE "OFFER")WHICH THE COMMISSION HAS DETERMINED TO ACCEPT.ICBCFS WILLFULLY VIOLATED RULE 204(A) OF REGULATION SHO.IT IS ORDERED THAT ICBCFS IS CENSURED AND SHALL CEASE ANDDESIST FROM COMMITTING OR CAUSING ANY VIOLATIONS AND ANYFUTURE VIOLATIONS OF RULE 204(A) OF EXCHANGE ACT REGULATIONSHO.ICBCFS IS ALSO ORDERED TO PAY A CIVIL MONEY PENALTY IN THEAMOUNT OF $1,250,000.00 TO THE SECURITIES AND EXCHANGECOMMISSION.

iReporting Source: Firm

Initiated By: THE U.S. SECURITIES AND EXCHANGE COMMISSION


Censure


MONETARY/FINE $1,250,000.00CEASE AND DESIST/INJUNCTION




Other Product Type(s):

Allegations: THE U.S. SECURITIES AND EXCHANGE COMMISSION ("COMMISSION")ALLEGED THAT ICBCFS, FROM APRIL 2013 UNTIL AUGUST 2106, FAILED TOCLOSE OUT CERTAIN CNS FAILS TO DELIVER BECAUSE ICBCFSIMPROPERLY CLAIMED CREDIT AGAINST ITS CLOSE-OUT OBLIGATIONSWHILE NOT MEETING THE REQUIREMENT OF EXCHANGE ACT RULE 204(E).



Resolution:

Other Sanctions Ordered:

Sanction Details: WITHOUT ADMITTING OR DENYING THE VIOLATIONS, THE FIRMCONSENTED TO THE ENTRY BY THE SEC OF AN ORDER (THE "ORDER")INSTITUTING ADMINISTRATIVE CEASE-AND-DESIST PROCEEDINGSRELATED TO CERTAIN TECHNICAL VIOLATIONS OF EXCHANGE ACT RULE204(A) (EXCHANGE ACT RELEASE NO. 34-82533, JAN. 18, 2018). PURSUANTTO THE ORDER, THE FIRM MUST CEASE AND DESIST FROM COMMITTINGOR CAUSING ANY VIOLATIONS AND ANY FUTURE VIOLATIONS OFEXCHANGE ACT RULE 204(A). ALSO PURSUANT TO THE ORDER, THE FIRMWAS CENSURED AND PAID A CIVIL MONEY PENALTY IN THE AMOUNT OF$1,250,000.

Sanctions Ordered: CensureMonetary/Fine $1,250,000.00Cease and Desist/Injunction

Decision & Order of Offer of Settlement






WITHOUT ADMITTING OR DENYING THE VIOLATIONS, THE FIRMCONSENTED TO THE ENTRY BY THE SEC OF AN ORDER (THE "ORDER")INSTITUTING ADMINISTRATIVE CEASE-AND-DESIST PROCEEDINGSRELATED TO CERTAIN TECHNICAL VIOLATIONS OF EXCHANGE ACT RULE204(A) (EXCHANGE ACT RELEASE NO. 34-82533, JAN. 18, 2018). PURSUANTTO THE ORDER, THE FIRM MUST CEASE AND DESIST FROM COMMITTINGOR CAUSING ANY VIOLATIONS AND ANY FUTURE VIOLATIONS OFEXCHANGE ACT RULE 204(A). ALSO PURSUANT TO THE ORDER, THE FIRMWAS CENSURED AND PAID A CIVIL MONEY PENALTY IN THE AMOUNT OF$1,250,000.

Firm Statement WITHOUT ADMITTING OR DENYING THE VIOLATIONS, THE FIRMCONSENTED TO THE ENTRY BY THE SEC OF AN ORDER (THE "ORDER")INSTITUTING ADMINISTRATIVE CEASE-AND-DESIST PROCEEDINGSRELATED TO CERTAIN TECHNICAL VIOLATIONS OF EXCHANGE ACT RULE204(A) (EXCHANGE ACT RELEASE NO. 34-82533, JAN. 18, 2018). PURSUANTTO THE ORDER, THE FIRM MUST CEASE AND DESIST FROM COMMITTINGOR CAUSING ANY VIOLATIONS AND ANY FUTURE VIOLATIONS OFEXCHANGE ACT RULE 204(A). ALSO PURSUANT TO THE ORDER, THE FIRMWAS CENSURED AND PAID A CIVIL MONEY PENALTY IN THE AMOUNT OF$1,250,000.

Disclosure 3 of 3

i


Initiated By: FINRA




Docket/Case Number: 2014041831901


Other Product Type(s): UNSPECIFIED SECURITIES

Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT SUBMITTEDINACCURATE SHORT INTEREST POSITION REPORTS TO FINRA ONSEVERAL SETTLEMENT DAYS. THE FINDINGS STATED THAT THE FIRM'SSUPERVISORY SYSTEM DID NOT PROVIDE FOR SUPERVISIONREASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITH RESPECT TOTHE APPLICABLE SECURITIES LAWS AND REGULATIONS, AND FINRARULES, CONCERNING SHORT INTEREST REPORTING.



Resolution:


No






https://www.finra.org/industry/disciplinary-actions/finra-disciplinary-actions-online?search=2014041831901


Other Sanctions Ordered: UNDERTAKINGS

Sanction Details: THE FIRM WAS CENSURED, FINED $32,500, AND UNDERTAKES TO REVISEITS WRITTEN SUPERVISORY PROCEDURES (WSPS) WITH RESPECT TOTHE AREAS DESCRIBED IN THE AWC AND WITHIN 90 BUSINESS DAYS OFACCEPTANCE OF THE AWC, A REGISTERED PRINCIPAL SHALL SUBMIT ASIGNED, DATED LETTER, OR AN E-MAIL, PROVIDING A REFERENCE TO THEMATTER, A REPRESENTATION THAT THE FIRM REVISED ITS WSPS TOADDRESS THE DEFICIENCIES DESCRIBED IN THE AWC, AND THE DATE THEREVISED PROCEDURES WERE IMPLEMENTED.FINE PAID IN FULL ON OCTOBER 6, 2016.


No

Sanctions Ordered: CensureMonetary/Fine $32,500.00

iReporting Source: Firm

Initiated By: FINRA


Censure


MONETARY FINE $32,500



Principal Product Type: No Product

Other Product Type(s): N/A

Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT, ON 18SETTLEMENT DAYS BETWEEN OCTOBER 31, 2013 AND JULY 15, 2104, ITREPORTED 54 SHORT INTEREST POSITIONS TOTALING 11,322,707 SHARESWHEN IT SHOULD HAVE REPORTED 11 SHORT INTEREST POSITIONSTOTALING 154,242 SHARES, AND THAT THE FIRM'S SUPERVISORY SYSTEMDID NOT PROVIDE FOR SUPERVISION REASONABLY DESIGNED TOACHIEVE COMPLIANCE WITH RESPECT TO FINRA RULES CONCERNINGSHORT INTEREST REPORTING.








MONETARY FINE $32,500


Resolution:

Other Sanctions Ordered: UNDERTAKING

Sanction Details: THE FIRM WAS CENSURED, FINED $32,500 AND AGREED TO ANUNDERTAKING TO REVISE ITS WRITTEN SUPERVISORY PROCEDURESWITH REGARDS TO SHORT INTEREST REPORTING. THE FIRM PAID ITSFINE, IN FULL, ON OCTOBER 6, 2016.

WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM AGREED TOTHE SANCTIONS NOTED ABOVE.

Firm Statement FINAL

Sanctions Ordered: CensureMonetary/Fine $32,500.00







End of Report

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