Tuesday, August 18, 2009
FINRA announced that it has expelled Maximum Financial Investment Group, Inc. of Southfield, MI, for violations arising out of its retail foreign currency (forex) business, as well as for repeated violations of FINRA registration and related rules. FINRA also permanently barred Maximum's Chief Executive Officer and Chief Compliance Officer, Christopher T. Paganes, from ever serving in any principal capacity at a securities firm and suspended him from associating with a securities firm in any capacity for nine months. No fine was imposed because Paganes evidenced an inability to pay.
FINRA found that in September 2007, Maximum entered into an agreement with a non-registered entity — Boston Trading & Research (BTR) — to engage in a retail forex trading business. Maximum agreed to act as a counterparty to the forex transactions. Beginning in January 2008, and continuing through May 2008, more than $15 million in customer funds to be used for retail forex transactions were deposited in Maximum's bank accounts. The receipt of these funds created a liability for Maximum, which it failed to record on its own books and records. This failure led to the firm having insufficient minimum net capital, in violation of federal securities laws and FINRA rules. The firm also failed to calculate the amount it had to deposit on behalf of the forex customers in a reserve bank account to safeguard the funds. In addition, FINRA found that Maximum failed to establish systems and procedures to monitor for money laundering while engaging in the forex transactions.
FINRA also found that on three occasions, Maximum failed to timely file an application for approval of a material change in its business.
In settling this matter, the firm and Paganes neither admitted nor denied the charges, but consented to the entry of FINRA's findings.