The American Financial Industry Regulatory Authority (FINRA) announced today that it has ordered Monex Securities Inc. to pay $1,100,000 obtained by unregistered foreign individuals who sold securities on the firm’s behalf.
The financial watchdog also fined the online stocks day-trading broker Monex (no relation to the Japanese group) $175,000 for failing to register the foreign representatives and for related supervisory deficiencies over a period of two and a half years. Additionally, Monex’s President and Chief Compliance Officer Jorge Martin Ramos Landero was suspended from acting in a principal capacity for 45 days and fined $15,000.
FINRA’s rules require any individual engaged in the securities business to be registered and pass a qualification examination. It found that Ramos executed an agreement on behalf of Monex, with its parent company in Mexico, that permitted numerous employees to conduct business on Monex’s behalf by, among other things, collecting client information needed to open accounts, making investment recommendations to clients and transmitting orders. None of these individuals, however, were registered in any capacity.
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This case is important for all online trading firms operating in the US, including forex brokers, as it sets very clear limits as to what non-US registered personnel might do. Collecting client information and transmitting orders are not necessarily activities all brokers might see as requiring an employee to be registered for, but the regulator now clearly does.
Brad Bennett, FINRA executive vice president and head of enforcement, said, “It is imperative that firms such as Monex are diligent in ensuring that all individuals who are acting as representatives of the firm are properly registered and supervised. When individuals are permitted by a firm to sell securities on its behalf without being registered and supervised, investors are at risk because of the lack of regulatory oversight.”
Monex and Ramos neither admitted nor denied the charges but consented to the entry of FINRA’s findings.