GunnAllen Financial Inc. said it had reached “closure” regarding a variety of compliance and regulatory issues with today’s announcement that Finra had fined the firm $750,000 for a number of violations, which dated from 2000 to 2005.
Finra of Washington and New York tagged the firm over six issues, including a trade allocation scheme by the firm’s former head trader, Alexis J. Rivera.
In 2002 and 2003, the Tampa, Fla.-based GunnAllen, acting through Mr. Rivera, engaged in a “cherry-picking” scheme in which Mr. Rivera allocated profitable stock trades to his wife’s personal account instead of to the accounts of the firm’s customers, Finra said in a statement. Finra barred Mr. Rivera from the industry.
Kelly McMahon, Mr. Rivera’s former supervisor, was suspended for six months from association with a broker-dealer in any role as a principal and fined $25,000, along with the firm.
Over the past few years, GunnAllen has worked closely with Finra to resolve these issues, the company said.
“With this settlement, GunnAllen achieves closure for past regulatory issues,” said chief executive Richard Frueh in a statement.
“For several years now, and long since 2005, GunnAllen has added management talent and invested heavily in compliance and supervisory systems to improve our firm,” he added.
Other issues covered with the settlement were deficiencies in anti-money-laundering systems, reporting, record-keeping and supervisory issues, according to a statement from Finra.
GunnAllen and Ms. McMahon settled these issues without admitting or denying the allegations, as is the custom in such cases.
Both consented to the findings.
Not covered in today’s settlement, however, was any potential legal or regulatory fallout for the firm concerning a former GunnAllen broker, Frank Bluestein, and his role in a $250 million Ponzi scheme in the Detroit area that went bust last summer.
Mr. Bluestein, who was affiliated with GunnAllen from 2005 through last October, is under investigation by Michigan’s office of financial regulation for his alleged role in the sale of phony shares in a number of limited liability companies.
Mr. Bluestein and GunnAllen, along with others, are the subject of numerous arbitration complaints from investors over the matter.
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