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Red Oak Blog

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Tuesday, March 31 2015

Inadequate Written Supervisory Procedures Results in SEC Settlement

On March 4, 2015 the Securities and Exchange Commission (SEC) brought charges to Irving, Texas based Broker Dealer, H.D. Vest Investment Securities (the Firm). The SEC alleged that the Firm failed to supervise two registered representatives, who misappropriated customer funds.

The theft occurred because the Firm lacked sufficient written supervisory procedures regarding registered representatives’ outside business activities. Because of these lack of controls, the two representatives were able to defraud these customer, in one case, by transferring or depositing customer brokerage funds into their outside business accounts.

The Firm, without admitting or denying wrongdoing settled with the SEC. They settled the charges with the SEC by paying a $225,000 fine and engaging the services of an outside compliance consultant. Click here to read the full SEC release.