FINRA recently entered a Letter of Acceptance Waiver and Consent regarding Capitol Securities Management Inc. regarding various alleged sales practice violations. The AWC can be found here: http://disciplinaryactions.finra.org/Search/ViewDocument/63638 The issues addressed by the AWC involved supervision, its anti-money laundering program, and the alleged unsuitable sales of Reverse Convertible Notes.
FINRA stated at page 3: “CSM, acting through RS, recommended and effected 24 unsuitable purchases of customized RCNs totaling approximately $4 million for the accounts of eight customers. Most ofthe customers were over the age of 60 and had modest or conservative investment objectives and risk profiles. Furthermore, all of the customers’ accounts were heavily concentrated in RCNs, with the amounts ofthese investments constituting a substantial portion oftheir net worth. RS’s recommendations were unsuitable given the customers’ risk tolerance, investment objectives, ages and net worth.”