Wednesday, September 3, 2008
FINRA expelled Barron Moore, Inc. and took disciplinary action against seven individuals for violations arising from the illegal sale of unregistered penny stocks. Those sanctions range from fines and suspensions to permanent bars from the securities industry. The individuals include five registered representatives formerly associated with three different firms — Barron Moore, Midas Securities LLC and Milestone Group Management, which is no longer in business — and supervisors from Barron Moore and Milestone. One registered representative was barred for failing to provide documents and testimony in FINRA's investigation.
FINRA found that four of the registered representatives sold large quantities of unregistered stock into the public markets on behalf of customers; neither the representatives nor the supervisors took appropriate steps to determine whether the securities could be sold without violating the registration requirements of the federal securities laws. FINRA found that this conduct occurred despite the presence of numerous red flags indicating that illegal stock distributions might be taking place.
FINRA found that Barron Moore sold more than 6.75 million shares of unregistered stock of three companies, on behalf of seven customers, resulting in unlawful proceeds of more than $975,000. Barron Moore opened accounts for numerous customers who repeatedly deposited large numbers of unregistered shares of thinly-traded securities into those accounts, sold those securities and then wired the proceeds out of the accounts. FINRA also found that Barron Moore and Katherine Moore failed to develop and implement a reasonable anti-money laundering compliance program, and failed to detect and report suspicious activities by a convicted money launderer as well as in accounts ostensibly controlled by a 20-year-old who washed and detailed the cars of Barron Moore employees.
In settling these matters, Barron Moore, Katherine Moore, Lankford, Centeno, Santohigashi, and Kassar neither admitted nor denied the charges, but consented to the entry of FINRA's findings.