GunnAllen Financial Inc. has settled Financial Industry Regulatory Authority charges that it was allegedly involved in a trade allocation scheme, in addition to several reporting, anti-money laundering, supervisory, and recordkeeping deficiencies. The trade allocation scheme was allegedly conducted by Alexis J. Rivera, the former head trader at GunnAllen.
FINRA says that in 2002 and 2003 and acting through Rivera, GunnAllen participated in a “cherry picking” scam. Rivera took profitable stock trades and put them into his wife’s personal account instead of GunnAllen customer accounts. Rivera allegedly made over $270,000 in illegal profits.
The ex-trader has been barred from FINRA. The trade allocation scheme violated FINRA rules and the federal securities laws’ anti-fraud provisions. Rivera’s supervisor, Kelley McMahon, has agreed to a six-month suspension from taking part in a principal role with any FINRA-registered company. She has also agreed to a $25,000 fine.
Also according to the SRO, GunnAllen Financial “never put any stock of a company on a restricted or watch list” before 2005 nor did the investment firm notify its own compliance department of its investment banking activities. GunnAllen also reportedly did not tell its parent company that it was involved in a consulting contract with someone that had been banned from FINRA in the past.
FINRA also sanctioned GunnAllen Financial for a number of other failures, including complaint reporting and supervisory deficiencies, failure to keep a record of instant messages and e-mails, and neglecting to put in place a proper AML compliance program.
By settling, GunnAllen and McMahon are not admitting to or denying FINRA’s allegations.
Related Web Resources:
GunnAllen Resolves Past FINRA Regulatory Issues; Looks Confidently Toward the Future, PR Newswire, May 8, 2008
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