Publicly available records provided by the Financial Industry Regulatory Authority (FINRA) indicate that broker-dealer, National Securities Corporation (CRD # 7569) was recently sanctioned by FINRA’s Department of Enforcement after an investigation into multiple securities violations.
The Law Office of Kevin J. Deloatch, Esq. is interested in speaking to investors who have complaints regarding National Securities Corporation.
Registration Background for National Securities Corporation
National Securities Corporation has been a member firm of FINRA since 1947. It is headquartered in Boca Raton, FL. It conducts a general securities business that operates out of 119 branch offices with approximately 574 registered representatives.
FINRA’s Allegations Against National Securities Corporation
According to FINRA Letter of Acceptance, Waiver and Consent (AWC) dated June 23, 2022 (No. 2019061652404), National Securities Corporation consented to, without either admitting to or denying, the following findings by FINRA’s Department of Enforcement:
- “Between June 2016 and December 2018, [National Securities Corporation] engaged in misconduct intended to influence artificially the market for securities offered by the firm’s corporate affiliates and investment banking clients”;
- “Between April 2018 and July 2018, [National Securities Corporation] negligently omitted to tell investors in two offerings related to GPB Capital Holdings, LLC (GPB Capital) that the issuers failed to timely make required filings with the Securities and Exchange Commission (SEC), including filing audited financial statements”;
- “In October 2019, [National Securities Corporation] acted as a lead underwriter of a public offering, and in connection with that offering received common stock warrants. Although [National Securities Corporation] represented to FINRA that certain of these warrants would not be sold for a period of 360 days, [National Securities Corporation] permitted certain warrants to be sold within the 360-day period”;
- “Between September 2013 and May 2017, [National Securities Corporation] failed to reasonably supervise one of its registered representatives (Representative A) by failing to reasonably respond to red flags that he was causing [National Securities Corporation] to record false and significant increases in the value of customer assets, as well as false suitability information on record with the firm…”;
- “Between January 2005 and April 2020, … [National Securities Corporation] … failed to establish, maintain, and enforce a supervisory system, including [written supervisory procedures], reasonably designed to achieve compliance with the locate requirements of Regulation SHO”;
- By virtue of its actions, National Securities Corporation violated FINRA Rule 5131 regarding new issue allocations and distributions; FINRA Rule 2262 regarding disclosure of control relationship with issuer; FINRA Rule 3110 regarding supervision; FINRA Rule 3010 regarding supervision; and FINRA Rule 2010, regarding standards of commercial honor and principles of trade.
FINRA Sanctions National Securities Corporation
As a result of such violations and in addition to the above-described findings and conclusions, FINRA’s June 23, 2022 AWC also indicates that National Securities Corporation consented to the following sanction(s):
- A censure;
- A fine in the amount of $100,000.00;
- Disgorgement in the amount of $4,700,000.00; and
- Partial restitution in the amount of $625,480.00 to certain customers.
National Securities Corporation Has A History of Customer Complaints
In addition to National Securities Corporation being sanctioned by FINRA after an investigation into multiple securities violations, FINRA BrokerCheck for National Securities Corporation reveals it has a prior history of customer-initiated complaints and/or arbitrations, including but not necessarily limited to the following:
- On April 9, 2015 a customer initiated an arbitration naming National Securities Corporation as a respondent. The customer alleged breach of fiduciary duty, fraud, suitability, unauthorized trading, breach of contract, failure to supervise and negligence. The customer also alleged damages in the amount of $1,800,000.00. On July 25, 2016, the arbitration panel issued an award in favor of the customer in the amount of $504,431.01.
If you or someone you know has or had a brokerage account with National Securities Corporation 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.