Newbridge Securities Corporation, Boca Raton, Florida) and registered representative Bruce Howard Jordan were subject of an Acceptance Waiver & Consent (AWC) wherein they were censured, fined $225,000 and required to retain an independent consultant to conduct a comprehensive review of the reasonableness of the firm’s policies, systems and procedures and training with respect to its participation in private placement and minimum contingency offers. Jordan was fined $5,000 and suspended from association with any Financial Industry Regulatory Authority (FINRA) member in any principal capacity for two months. Without admitting or denying the findings, the firm and Jordan consented to the sanctions and to the entry of findings that the firm failed to establish, maintain and enforce a supervisory system reasonably designed to supervise its representative’s recommendations of structured products, despite the fact that structured products comprised a significant portion of the firm’s business. The findings stated that the firm’s representatives solicited retail customers to invest approximately $96.9 million in structured products and the customers invested $54.9 million of those funds in non-principal protected structured notes. The firm failed to establish any supervisory systems or procedures to reasonably ensure that its reviewing principals, who were tasked with supervising structured product recommendations, were reviewing for compliance with the product profiles and seeking approval, where required, for exceptions to the product profiles. The findings also stated that the firm failed to reasonably supervise the sale of leveraged, inverse and inverse-leveraged exchange-traded funds (Non-Traditional ETFs). The firm’s supervisory system and WSPs prohibited solicited sales of Non-Traditional ETFs, but the firm failed to reasonably enforce this prohibition. The firm instituted a surveillance system to detect solicited sales of Non-Traditional ETFs; however, when the firm’s software vendor stopped updating the surveillance system, the firm failed to manually update the system with new Non-Traditional ETF symbols. As a result, the firm failed to detect prohibited Non-Traditional ETF sales. In addition, because the firm’s only system for supervising solicited sales of Non-Traditional ETFs was to prohibit them, it had no system or procedures to review such sales for suitability or to monitor their holding periods. The findings also included that the firm and Jordan failed to reasonably supervise a private placement offering because they allowed the firm to rely primarily on 4 Disciplinary and Other FINRA Actions November 2019 due diligence conducted by the issuer of the offering. As a result of its failure to perform due diligence, Newbridge recommended the sale of the private placement offering without a reasonable basis to believe that the recommendation was suitable for at least some investors. FINRA also found that the firm deposited investor funds into a law firm trust account for the offering instead of requiring that an independent bank be established as the escrow agent. The suspension was in effect from October 21, 2019, through December 20, 2019.
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