Firm Made Misrepresentations to Customers and Violated Reg BI as well as FINRA’s Suitability and Supervision RulesWASHINGTON—FINRA announced today that it has expelled broker-dealer SW Financial for multiple violations, including making misrepresentations to customers in its sales of private placement offerings of pre-initial public offering (pre-IPO) securities, churning customer
Representatives who leave their firms often contact former customers and emphasize the benefits the former customers would experience by transferring their assets to the firm that recruited the registered representative (recruiting firm) and maintaining their relationship with the representative.
In this situation, the former customer's confidence in and prior experience with the
Regulatory ObligationsSEA Rule 15c3-3 (Customer Protection Rule) imposes requirements on firms that are designed to protect customer funds and securities. Firms are obligated to maintain custody of customers’ fully paid and excess margin securities and safeguard customer funds. Firms satisfy these requirements by keeping customer funds in a special reserve bank account and by maintaining customer
