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Newport Coast Securities, Inc. Fined $100,000 for Poor Anti-Money Laundering Procedures, Branch Office Manager who Served on Board of Pink Sheet Stock Traded Within the Firm

The Financial Industry Regulatory Authority (FINRA) censured Newport Coast Securities, Inc. of Irvine, California, fining the firm $100,000 for inadequate anti-money laundering systems and monitoring procedures and for one of the firm's branch office managers serving on the Board of Directors of a Pink Sheet stock the firm was trading.

FINRA Case #2009017333501

In its investigation, FINRA found that multiple customer accounts traded a stock called HIMC Corporation. This stock was a "no information" Pink Sheet stock, meaning that HIMC was not willing to provide disclosure to public markets.

Though in of itself, this is not a problem, FINRA also found that one of Newport Coast's branch office managers who supervised some of these transactions and accounts also served on the Board of Directors for HIMC, which according to FINRA, is a red flag indicative of suspicious activity that should have been detected by Newport Coast.

Because the branch manager who had responsibility for HIMC trading and identifying unusual trading activity also served on HIMC's board, such trading was subject to manipulation, with FINRA citing multiple examples of suspicious trading activity relating to the HIMC stock and board member/branch manager, including one instance of a Newport Coast account receiving and selling over 500 million HIMC shares over the course of six months in 2009.

Combined with Newport Coast's anti-money laundering system deficiencies such as its failure to implement adequate or consistent activity reporting or monitoring procedures, FINRA alleged the conflict of interest generated by the branch manager's simultaneous service on HIMC's board was worthy of the significant aforementioned sanctions.

If you invested with Newport Coast Securities, Inc., and especially if you purchased, held, or sold the HIMC stock at the advice of registered representatives of Newport Coast Securities, Inc., please call The Law Offices of Jonathan W. Evans & Associates at (800) 699-1881 for an investigation and consultation.

The Law Offices of Jonathan W. Evans & Associates - California Securities Fraud Attorney
Located at 12711 Ventura Boulevard, Suite #440 Studio City, CA 91604. View Map
Phone: (800) 699-1881 | Local Phone: (818) 760-9880.