ALBANY — A finance-industry watchdog has censured and is seeking to fine an Albany-based financial firm $750,000, though the company vows to appeal.
The Financial Industry Regulatory Authority on Tuesday announced the decision by a panel looking into the allegations against broker-dealer C.L. King & Associates: material misrepresentations and omissions to issuers in connection with the firm’s redemptions of debt securities on behalf of a hedge fund customer.
In a news release, FINRA said: “The hearing panel also found that C.L. King and its anti-money-laundering compliance officer, Gregg Alan Miller, who was suspended in a principal capacity for six months and fined $20,000, failed to establish and implement a reasonable AML program and failed to adequately respond to red flags related to the liquidation of billions of shares of penny stocks indicative of potentially suspicious activity by two customers. The decision resolves charges brought by FINRA's Department of Enforcement in April 2016.”
Attorney Chris Robertson of Seyfarth Shaw, representing C.L. King, said the company disagrees with FINRA’s decision on multiple levels and feels there are multiple mitigating factors.
“We’re definitely going to appeal,” he said.
“This whole investigation and ultimately the hearing involves businesses that were terminated back in 2013,” he said, and involves clients that are no longer clients. Robertson added that C.L. King was found guilty of negligence or failure of oversight rather than intentional misconduct.
Beyond that, he said there is a glaring contradiction in the case: The former client that FINRA charged C.L. King had aided and abetted was itself acquitted just weeks ago of any wrongdoing by the U.S. Securities Exchange Commission.
FINRA is a not-for-profit organization authorized by Congress to protect America’s investors by making sure the broker-dealer industry operates fairly and honestly.
In 2016, it brought 1,434 disciplinary actions against registered brokers and firms; levied $176.3 million in fines; ordered $27.9 million in restitution to harmed investors; and referred more than 785 fraud and insider trading cases for litigation and/or prosecution.