FINRA’s Department of Enforcement recently investigated Buckman (FINRA CRD No. 23407) and determined its supervisory systems and procedures were inadequate and contributed to several specific supervisory failures. FINRA cited the following supervisory deficiencies as evidence Buckman’s supervisory and compliance functions were faulty, among other things:
- Participated in the unlawful distributions of the shares of two issuers whose securities were not registered (Tactical Air Defense Services, Inc. a/k/a TADF and Fresh Harvest Products, Inc. a/k/a FRHV);
- Failed to establish and implement a reasonable supervisory system and written supervisory procedures designed to achieve compliance with Section 5 of the Securities Act of 1933;
- Failed to establish, maintain and enforce adequate supervisory systems, including written procedures, relating to supervision of its customers’ trading activity through one of its clearing firms;
- Increased the number of sales personnel beyond the “safe harbor” parameters without first obtaining approval from FINRA;
- Paid transaction-based compensation to an unregistered entity;
- Failed to ensure compliance with the requirements of the national do-not-call registry and to institute a firm-specific do-not-call list; and
- Failed to review and retain business related emails sent and received from two of its registered representatives' personal email accounts and supervise their business-related email usage.
As a result of the aforementioned misconduct, FINRA alleges Buckman engaged in multiple violations of federal securities laws and industry rules and regulations. Specifically, under NASD Rule 3010, a brokerage firm owes a duty to all of its clients to monitor and supervise its employees properly. The rule states: “[e]ach member shall establish and maintain a system to supervise the activities of each registered representative…that is reasonably designed to achieve compliance with applicable securities laws and regulations…” If a FINRA-member fails to supervise its employees or conduct proper due diligence on investment products, then the firm may be liable to the customer for damages or disciplined by FINRA, or both.
Lufrano Law, LLC is a national securities litigation firm and has experience representing investors who have investment disputes with brokers and broker-dealers. If you suffered investment losses as a Buckman customer, you may be able to recover your losses through FINRA arbitration. Our firm only receives a fee if you recover money. Please complete the contact form below or contact one of our attorneys at (800) 627-2179 to schedule a free consultation.