Publicly available records provided by the Financial Industry Regulatory Authority (FINRA) indicate that broker-dealer, Arive Capital Markets (CRD # 8060) was recently sanctioned by FINRA’s Department of Enforcement after an investigation into its failure to supervise regarding suitability of recommendations.

The Law Office of Kevin J. Deloatch, Esq. is interested in speaking to investors who have complaints regarding Arive Capital Markets.

Registration Background for Arive Capital Markets

Arive Capital Markets Sanctioned by FINRA for Failure to Supervise (1)Arive Capital Markets has been a member firm of FINRA since 1980. It is headquartered in Staten Island, NY. It has 8 registered representatives and one branch office.

FINRA’s Allegations Against Arive Capital Markets

According to FINRA Letter of Acceptance, Waiver and Consent (AWC) dated May 14, 2024 (No. 2018056483905), Arive Capital Markets consented to, without either admitting to or denying, the following findings by FINRA’s Department of Enforcement:

  • From August 2016 to June 2020, the firm failed to establish, maintain, and enforce a supervisory system, including written supervisory procedures (WSPs), reasonably designed to achieve compliance with the suitability requirements of FINRA Rule 2111 as they pertain to excessive trading”;
  • The firm’s WSPs did not provide reasonable guidance addressing how principals should identify or investigate potentially excessive trading. The WSPs required supervisors to review “active” customer accounts but did not define “active” or describe what activity might be concerning in the identified accounts”;
  • Until 2018, the WSPs regarding suitability contained no discussion of excessive trading. When the firm’s WSPs were updated to include a definition of quantitative suitability, they still failed to provide guidance regarding indicators of potentially excessive trading, including benchmarks for turnover rates or cost-to-equity ratios”;
  • [T]he WSPs provided for daily reviews of activity in customer accounts for compliance with the suitability rules but did not require any review of trading over longer periods, which could identify patterns of unsuitable trades over time”;
  • Between January 2017 and October 2018, one registered representative excessively traded the account of a 67-year-old retired pharmacist from Georgia. The customer had limited knowledge of the stock market”;
  • Between August 2016 and July 2018, one registered representative excessively traded the account of a 64-year-old customer from Colorado who owned a small construction business
  • As a result, Arive failed to reasonably identify or address red flags of excessive trading in 12 customer accounts that caused the customers to pay a total of nearly $640,000 in commissions, costs, and margin interest”;
  • By virtue of its actions, Arive Capital Markets violated FINRA Rule 3110 regarding supervision, and FINRA Rule 2010, regarding standards of commercial honor and principles of trade.

FINRA Sanctions Arive Capital Markets

As a result of such violations and in addition to the above-described findings and conclusions, FINRA’s May 14, 2024 AWC also indicates that Arive Capital Markets consented to the following sanction(s):

  • A censure;
  • A fine in the amount of $300,000.00;
  • Restitution of $594,928.74; and
  • An undertaking to review and revise the firm’s WSPs, as necessary, and certify that the firm has remediated the issues identified in this AWC.

Arive Capital Markets Has A History of Securities Industry Regulatory Actions

In addition to Arive Capital Markets being sanctioned by FINRA after an investigation into its failure to supervise, FINRA BrokerCheck for Arive Capital Markets reveals it has a prior history of regulatory actions against it, including but not necessarily limited to the following:

  • On March 27, 2020, Arive Capital Markets entered into FINRA Letter of Acceptance Waiver and Consent (No. 2016048256701), in which it consented to without admitting or denying findings that it failed to develop and implement an anti-money laundering program reasonably designed to achieve and monitor the firm’s compliance with requirements of the Bank Secrecy Act and the implementing regulations thereunder. It was censured and fined $45,000.00.

Have You Lost Money with Arive Capital Markets?

If you or someone you know has or had a brokerage account with Arive Capital Markets and have concerns regarding losses in your investments or possible sales practice violations including fraud, you may be entitled to recover lost funds. The Law Office of Kevin J. Deloatch, Esq. has an extensive securities law practice and over 30 years of experience on Wall Street. Call today at (646) 792-2156 for a free consultation. The time to file your claim may be limited so you should call today to avoid delay.