FINRA’s Department of Enforcement investigated Wurst and found she failed to reasonably supervise one of her firm’s registered representatives involvement with three outside businesses that operated as unregistered broker-dealers. The purpose of these three outside businesses was to purchase securities for an unregistered proprietary trading firm through delivery-versus-payment brokerage accounts (“DVP accounts”). FINRA alleged the registered representative instructed Wurst to open in the names of the unregistered broker dealers at over 15 different corporate bond dealers. According to FINRA, the unregistered broker dealers engaged in approximately 3,000 bond transactions worth approximately $5.8 billion, of which the unregistered broker dealers earned $4 million and Wurst received $238,982.
In addition to failing to supervise the registered representative’s involvement with the three outside unregistered broker-dealers, Wurst also made material misleading and inaccurate statements to the aforementioned 15 corporate bond dealers in connection with opening the brokerage accounts. For example, Wurst misrepresented the unregistered broker dealers were investment advisers or asset managers who managed a cash bond portfolio for high net worth clients. According to FINRA, this information was false because the unregistered broker dealers were not investment advisers or asset managers who managed a cash bond portfolio for high net worth clients.
Based upon the foregoing misconduct, FINRA alleged Wurst violated several financial industry rules and regulations, including FINRA Rule 2010 and NASD Conduct Rules 3010 and 2110. 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…”
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 losses as a result of investing with Wurst through PMK Securities, you may be eligible to participate in a FINRA arbitration proceeding to recoup your losses. Please complete our contact form below or contact one of our attorneys at (800) 627-2179.