FINRA fined Western International Securities $325,000 for failing to timely update forms to disclose that 52 of its brokers had suffered financial events such as liens, judgments, and/or bankruptcies totaling more than $5.6 million. FINRA also censured Western International Securities (WIS) for supervisory failures and deficiencies related to the disclosures breakdown.
FINRA's AWC #2017056511101 states that from 2011 through 2018, Western International failed to timely disclose 163 financial events for 52 registered representatives, failing to reasonably respond to red flags that indicated the financial events were improperly not being disclosed.
Investigators found the firm's written supervisory procedures (WSPs) and other policy documents designed to achieve compliance with securities laws were deficient and that the firm failed to establish, maintain, and enforce an adequate supervisory system, despite FINRA sending the firm approximately 100 letters between 2015 and 2017 explicitly identifying potentially undisclosed financial events totaling more than $5 million relating to 50+ Western International brokers.
When a broker or firm fails to disclose a reportable financial event (lien, judgment, bankruptcy, etc.), this paints an incomplete picture for an investor who might be under the false impression, based on the broker's BrokerCheck report, that the rep is a reputable, responsible, and trustworthy person.
Misconduct such as conversion, misappropriation, theft, and excessive trading (for extra commissions/fees) can be especially enticing to a broker in personal financial trouble, and concealing these circumstances to prospective investors can help set the table for fraud.
For instance, Francisco Javier Valenzuela, formerly of Morgan Stanley and Merrill Lynch in Tucson, Arizona, earned a FINRA suspension for failing to disclose a $150,000 lien. Valenzuela, who also filed for bankruptcy, previously settled a customer dispute alleging misrepresentation.
Another example is that of suspended broker Murray Gerardo Monroe of Western International Securities' Pasadena, California branch, whom FINRA suspended for disclosure failures after he was named executor of a customer's estate and granted general power of attorney to act on that customer's behalf.
If you have invested with any broker or financial adviser at Western International Securities or another firm whose failure to disclose financial distress such as bankruptcy, a prior customer dispute, termination for misconduct, or who otherwise improperly concealed a reportable event, has proven harmful to your investments or interests, please call an experienced FINRA arbitration attorney at The Law Offices of Jonathan W. Evans & Associates at (800) 699-1881 for an investigation and consultation.