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Editor: Eric C. Chaffee
Univ. of Toledo College of Law

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Thursday, October 18, 2012

FINRA Expels EKN for Defying SEC Order

FINRA has expelled EKN Financial Services, Inc. of Melville, NY, for numerous compliance violations and for allowing its CEO, Anthony Ottimo, to act as a supervisor after being barred from acting in that capacity by the SEC in June 2008. FINRA barred Ottimo from the securities industry and barred the firm's former President, Thomas Giugliano, from acting in a principal capacity, suspended him from the securities industry for one year and fined him $150,000. EKN, through Ottimo and Giugliano, also violated numerous NASD/FINRA and SEC rules and federal securities laws, including anti-money laundering (AML) violations, net capital deficiencies and widespread reporting failures.

FINRA found that from 2008 through 2011, Ottimo acted in a supervisory role despite an SEC order that barred him from associating with any broker or dealer in a supervisory capacity, and acted as CEO despite not being registered as a principal. During the relevant period, EKN and Giugliano repeatedly misrepresented to FINRA that Ottimo was no longer acting as EKN's CEO, as a principal or as a supervisor. In 2011, EKN lied to FINRA examiners, reporting that since 2008, it had "never filled" the CEO position when, in fact, FINRA's investigation revealed that EKN's own documents indicated that from 2008 through 2011, Ottimo was listed as EKN's CEO and was operating in that capacity. As CEO, Ottimo supervised other EKN personnel, negotiated and executed agreements, controlled its finances, retained signatory authority over its bank accounts, and represented himself as EKN's CEO to its clearing firm and other third parties.

In addition, FINRA found that EKN, Ottimo and Giugliano, who was aware of EKN and Ottimo's regulatory violations, committed numerous AML violations, including failing to establish an adequate AML compliance program to detect and report suspicious activity, and failed to meet minimum net capital requirements during certain periods from September 2008 to November 2010 

 

 

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