TABLE OF CONTENTS

WEEKLY TRENDS & TAKEAWAYS. 3

Number of Cases. 3

Common Violations. 3

Week in Review.. 3

Observation. 3

CASE SUMMARIES. 4

1.       Case: Thomas G. Scheiman & Stephen M. Franko. 4

2.       Case: Robert Galloway. 6

3.       Case: Evan Von Scales. 7

4.       Case: Oakwood Capital Securities, Inc. 9

5.       Case: Barry L. Buchholz. 11

6.       Case: Luis S. Jean-Bart 12

7.       Case: Deutsche Bank Securities Inc. 14

8.       Case: James Daniel Lang. 16

9.       Case: Mark A. Carter. 18

10.    Case: Laidlaw & Company (UK) Ltd. 20

WEEKLY TRENDS & TAKEAWAYS

Number of Cases: TEN

Common Violations:

• Violations of FINRA Rule 2010 (high standards of commercial honor and just principles of trade)
• Regulation Best Interest (Reg BI) / Exchange Act Rule 15l-1(a)
• Unauthorized trading / discretionary authority violations (FINRA Rule 3260,2360)
• FINRA Rule 4511 (Recordkeeping / misreporting violation)
• Supervisory failures and deficient compliance

Week in Review:

Between November 17 and 21, 2025, FINRA took disciplinary actions against both individual registered representatives and firms for a range of violations, including unsuitable investment recommendations, undisclosed outside business activities, falsified expense reports, unauthorized trading, excessive options trading, supervisory failures, deficient disclosure in research reports, and failure to maintain net capital or proper handling of investor funds. Sanctions imposed included suspensions ranging from one to ten months, fines from $5,000 to $2.5 million, disgorgements, censure, partial restitution, and requirements for firms to implement or certify remedial supervisory measures. These cases highlight FINRA’s continued emphasis on ethical conduct, adherence to Regulation Best Interest, compliance with supervisory and reporting obligations, and maintaining robust firm-level oversight to protect investors and ensure market integrity.

Observation:

FINRA Rule 2010 remains the most frequently cited violation, reflecting FINRA’s emphasis on ethical conduct across a wide range of misconduct. Many cases also highlight failures in disclosure, supervision, or suitability obligations, showing that regulatory oversight targets both individual behaviour and firm-level compliance systems. Recurring compliance challenges for registered representatives include high-risk and unsuitable investment recommendations, unauthorized trading, and undisclosed outside activities. Large firms, such as Deutsche Bank and Laidlaw, are held accountable for systemic deficiencies, underscoring that lapses in oversight can impact thousands of transactions and a broad base of investors.

                                           CASE SUMMARIES

1.      Case: Thomas G. Scheiman & Stephen M. Franko

INTRODUCTION:

This summary reviews the disciplinary action against Thomas G. Scheiman and Stephen M. Franko, who recommended unsuitable GWG L Bonds to retail customers in violation of Reg BI and FINRA Rule 2010. The case highlights the obligation of registered representatives to make recommendations that are in the customer’s best interest, consistent with their financial profile, risk tolerance, and investment objectives.

• Date of Action: November 17, 2025
• Respondent: Thomas G. Scheiman, Stephen M. Franko
• Violations: 

A. Exchange Act Rule 15l-1(a) of Regulation BI:

This rule states brokers to act in the best interest of retail customers when making securities recommendations. The Care Obligation requires that recommendations be based on reasonable diligence and an evaluation of the customer’s investment profile, including factors such as age, risk tolerance, financial needs, liquidity needs, and investment experience.

Violation: In 2020, Scheiman recommended a $100,000 GWG L Bond to an 83-year-old customer, resulting in over 50% concentration of her liquid net worth in speculative bonds. Franko recommended GWG L Bonds to three retail customers whose investment profiles were inconsistent with the high risks, illiquidity, and speculative nature of the product. Both failed to meet Reg BI’s Care Obligation.

B. FINRA Rule 2010:

This rule states associated persons to adhere to high standards of commercial honor and just and equitable principles of trade.

Violation: By recommending high-risk, unsuitable securities to retail customers and failing to comply with Reg BI’s best-interest standards, both Scheiman and Franko violated the ethical obligations.

SUMMARY:

Scheiman and Franko recommended GWG L Bonds, speculative and high-risk corporate bonds, to retail customers despite the investments being unsuitable given the customer’s financial profiles and liquidity needs. These recommendations violated Reg BI’s Best Interest and Care Obligations and further constituted misconduct under FINRA Rule 2010. Their failures were particularly consequential given GWG’s ongoing financial losses and eventual default and bankruptcy.

SANCTIONS:

For Thomas G. Scheiman

• Two-month suspension.
• A fine of $5,000.
• $2,600 disgorgement + interest

For Thomas G. Scheiman

• Three-month suspension
• $5,000 fine
• Partial restitution $5,640 + interest

AWC Document:

2022074289901 Thomas G. Scheiman CRD 1508288_Stephen M. Franko CRD 2157707 AWC ks.pdf    

CONCLUSION:
This case reinforces FINRA’s mandate that registered representatives must evaluate the risk, liquidity, and suitability of investment products and ensure recommendations meet Reg BI’s best-interest standards. Recommending highly speculative securities without proper diligence or regard for a customer’s financial profile violates both regulatory obligations and fundamental ethical standards.

2.      Case: Robert Galloway

INTRODUCTION:

This summary reviews a FINRA disciplinary action against Robert Galloway, who falsified six expense reports to obtain reimbursements not permitted under firm rules. His conduct violated FINRA Rule 2010, which requires adherence to high standards of commercial honor.

• Date of Action: November 17, 2025
• Respondent: Robert Galloway
• Violations: 

A. FINRA Rule 2010:

This rule states associated persons to observe high standards of commercial honor and just and equitable principles of trade in the conduct of their business.

Violation: Between January and April 2024, Galloway falsified six marketing reports for marketing expenses by claiming he had already incurred and inflated reimbursement amounts. He improperly received approximately $5,000 in reimbursements. This created false records and misled his firm.

SUMMARY:

Galloway submitted six falsified expense reports over a four-month period, seeking reimbursements for marketing expenses that were not yet incurred and overstating the amounts. This dishonest conduct violated FINRA Rule 2010 and resulted in Country Capital terminating his registration. FINRA determined that his actions demonstrated a failure to uphold required standards of commercial honor.

SANCTIONS:

Robert Galloway:

• Five-month suspension
• a $5,000 fine.

AWC Document:

2025-11-05_AWC_via_DocuSign_Robert_Galloway_2024083324501.pdf

CONCLUSION:
This action underscores FINRA’s expectation that registered representatives maintain integrity and accuracy in all business-related documentation. Falsifying expense reports constitutes unethical conduct and violates the principles of fairness and honesty that Rule 2010 is designed to protect.

3.      Case: Evan Von Scales

INTRODUCTION:

This summary reviews FINRA’s disciplinary action against Scales, who engaged in an undisclosed outside business activity (OBA) involving the promotion and sale of a foreign-exchange trading algorithm. By failing to provide required prior written notice to his member firm, Fidelity, Scales violated both FINRA Rule 3270 and FINRA Rule 2010.

• Date of Action: November 17, 2025
• Respondent: Evan Von Scales
• Violations: 

A. FINRA Rule 3270:

This rule states registered persons must obtain firm approval before engaging in outside compensated business.

Violation: From October to December 2023, Scales operated an LLC selling an automated trading algorithm. He advertised it on social media and sold the product to nine customers for $2,000 each. He earned $13,000 after refunds and fees. He did not notify or obtain approval from Fidelity and violated the Rule.

B. FINRA Rule 2010:

This rule states associated persons to adhere to high standards of commercial honor and just and equitable principles of trade.

Violation: Because a violation of Rule 3270 automatically constitutes a breach of ethical conduct, Scale’s undisclosed OBA violated Rule 2010.

SUMMARY:

Scales established and operated a foreign-exchange algorithm business without notifying or receiving approval from Fidelity, despite firm policies and FINRA rules requiring such disclosure. His failure to provide prior written notice, combined with earning compensation from the activity, violated FINRA Rules 3270 and 2010.

SANCTIONS:

• Three-month suspension
• a $5,000 fine.

AWC Document:

2024083203501 Evan Von Scales CRD 6957770 AWC ks.pdf

CONCLUSION:
Scales established and operated a foreign-exchange algorithm business without notifying or receiving approval from Fidelity, despite firm policies and FINRA rules requiring such disclosure. His failure to provide prior written notice, combined with earning compensation from the activity, violated FINRA Rules 3270 and 2010.

4.      Case: Oakwood Capital Securities, Inc.

INTRODUCTION:

This summary reviews FINRA’s disciplinary action against Oakwood Capital Securities, which, under prior management, failed to establish and maintain adequate supervisory systems and written supervisory procedures for monitoring deferred variable annuity exchange rates.

Date of Action: November 18, 2025

• Respondent: Oakwood Capital Securities, Inc.
• Violations: 

A. FINRA Rule 3110:

This rule states members must maintain systems to ensure compliance with securities laws and FINRA rules.

Violation:  Oakwood failed to establish and maintain a supervisory system, as well as written supervisory procedures, reasonably designed to supervise deferred variable annuity exchange activity. Although the firm’s procedures broadly stated that surveillance would occur, Oakwood had no actual processes or systems to track exchange rates, review trends, or identify representatives with potentially problematic activity. Its supervision consisted solely of manual transaction-by-transaction reviews, which were insufficient to detect patterns or repeated unsuitable recommendations.

B. FINRA Rule 2330:

This rule states firms must implement written supervisory procedures and surveillance to detect inappropriate annuity exchanges.

Violation:  Oakwood also failed to establish specific written supervisory procedures tailored to deferred variable annuities and by failing to implement the required surveillance mechanisms to identify inappropriate or excessive annuity exchanges. The firm did not monitor representative’s exchange activity at all, nor did it maintain any system for tracking exchange rates, which directly caused the firm to overlook a series of short-term and unsuitable variable annuity exchanges recommended by one of its representatives.

B. FINRA Rule 2010:

This rule states associated persons to adhere to high standards of commercial honor and just and equitable principles of trade.

Violation:  Because Oakwood failed to comply with Rules 3110 and 2330(d), it also violated FINRA Rule 2010. Insufficient supervision of complex and high-risk products is considered conduct inconsistent with industry standards.

SUMMARY:

Under prior management, Oakwood Capital Securities failed for more than a year to maintain adequate supervisory systems and procedures for overseeing deferred variable annuity exchanges. The firm had no system for tracking exchange rates or patterns and conducted only basic transactional reviews. As a result, it failed to detect repeated, short-term, and unsuitable variable annuity exchanges recommended by a representative.

SANCTIONS:

• a censure and
• a $20,000 fine.

AWC Document:

2020065145802 Oakwood Capital Securities, Inc. fka Gardner Financial Services, Inc. CRD 21000 AWC ks.pdf

CONCLUSION:
This action underscores FINRA’s expectation that firms maintain effective supervisory systems especially when overseeing complex products such as variable annuities. A failure to monitor exchange activity exposes investors to unsuitable transactions and violates core supervisory and ethical obligations.

5.      Case: Barry L. Buchholz

INTRODUCTION:

This summary reviews the disciplinary action against Barry L. Buchholz for executing unauthorized trades in four customer accounts, violating FINRA Rule 2010. The case highlights the requirement for written or oral customer authorization before placing trades in non-discretionary accounts.

• Date of Action: November 18, 2025
• Respondent: Barry L. Buchholz.
• Violations: 

A. FINRA Rule 2010:

This rule states associated persons, in the conduct of their business, to “observe high standards of commercial honor and just and equitable principles of trade.

Violation: Between September and October 2023, Buchholz executed 10 unauthorized trades totalling $590,795 in the accounts of four beneficiaries of a deceased customer. He generated $16,245.63 in commissions. Two customers suffered losses from liquidating the unauthorized positions.

SUMMARY:

Buchholz executed a series of unauthorized trades in four customer accounts shortly after the accounts were funded from their father’s estate. By placing trades without any written or oral approval and later liquidating one customer’s holdings without consent, he violated FINRA Rule 2010. His actions generated significant commissions for himself and resulted in losses for certain customers, prompting formal complaints and regulatory action.

SANCTIONS:

• One-month suspension.
• $7,500 fine.
• $7,480 disgorgement + interest.

AWC Document:

2024081242701 Barry L. Buchholz CRD 1583582 AWC lp.pdf

CONCLUSION:
This case underscores FINRA’s strict prohibition against unauthorized trading in non-discretionary accounts. Registered representatives must obtain explicit customer authorization before executing any transactions. Failure to do so violates the ethical and professional standards embedded in FINRA Rule 2010 and exposes customers to unauthorized risk and financial harm.

6.      Case: Luis S. Jean-Bart

INTRODUCTION:

This summary reviews FINRA’s action against former registered representative Jean-Bart, who failed to timely respond to multiple FINRA Rule 8210 requests for information over a prolonged period, violating FINRA’s investigative requirements and conduct standards.

• Date of Action: November 19, 2025
• Respondent: Luis S. Jean-Bart
• Violations: 

A. FINRA Rule 8210:

This rule states associated persons to provide information, documents, and records necessary to an investigation, and prohibits failing to comply with such requests.

Violation: Jean-Bart failed to provide complete and timely responses to multiple FINRA Rule 8210 requests issued between October 19, 2023, and January 24, 2025. Despite extensions and repeated follow-up requests, he did not provide all required documents by the established deadlines. Some documents were not produced until more than 15 months after the initial due date. His prolonged lack of cooperation impeded FINRA’s investigation into alleged off-platform crypto-asset activity.

B. FINRA Rule 2010:

This rule requires associated persons to adhere to high standards of commercial honor and just and equitable principles of trade.

Violation: By failing to timely respond to FINRA Rule 8210 requests, Jean-Bart violated FINRA Rule 2010. An untimely or incomplete response to an 8210 request constitutes a breach of the standards of conduct required of registered persons.

SUMMARY:

Jean-Bart repeatedly failed to comply with FINRA’s Rule 8210 information requests over an extended period, delaying and hindering an active investigation. His failure to timely provide the required documents and information resulted in violations of both FINRA Rules.

SANCTIONS:

• Ten-month suspension.
• $5000 fine.

AWC Document:

2023080015803 Luis S. Jean-Bart CRD 5472965 AWC ks.pdf

CONCLUSION:
FINRA’s action highlights the critical importance of full and timely compliance with Rule 8210 requests. Failure to cooperate with regulatory investigations undermines FINRA’s ability to protect investors and enforce industry standards, and such conduct constitutes a serious violation of FINRA rules.

7.      Case: Deutsche Bank Securities Inc.

INTRODUCTION:

This summary reviews FINRA’s action against Deutsche Bank for longstanding failures to include required conflicts-of-interest disclosures in equity and debt research reports and for failing to maintain supervisory systems designed to ensure compliance with research disclosure rules. These failures occurred over an extended period and affected approximately 110,000 research reports.

Date of Action: November 19, 2025

• Respondent: Deutsche Bank Securities Inc.
• Violations: 

A. FINRA Rule 2241:

This rule governs equity research reports and requires member firms to ensure that such reports include complete and accurate conflicts-of-interest disclosures, such as whether the firm or its affiliates expect to receive investment banking compensation from the subject company, whether the subject company is or has been a client of the firm, and whether the research analyst or household members have a financial interest in the securities discussed..

Violation: Deutsche Bank violated FINRA Rule 2241 by publishing approximately 99,000 equity research reports that omitted required disclosures relating to expected investment banking compensation and thousands more that failed to disclose client relationships and analyst ownership interests. The missing disclosures resulted from flawed data feeds, incomplete client information, and inadequate monitoring of analyst trading. These failures spanned from January 2007 through May 2025 and reflect the firm’s inability to ensure that its equity research reports contained accurate, comprehensive, and compliant conflict-of-interest disclosures.

B. FINRA Rule 2242:

This rule governs debt research reports and requires firms to disclose expected investment banking compensation, client relationships, analyst financial interests, and other conflicts that may affect the objectivity of debt research.

Violation: Deutsche Bank violated FINRA Rule 2242 by publishing approximately 9,000 debt research reports containing incomplete or missing conflicts-of-interest disclosures, including failures to disclose expected investment banking compensation, client relationships, and analyst ownership. The firm also released 172 compendium debt research reports lacking the required hyperlink-accessible disclosures due to an incomplete online search tool. These violations, occurring from July 16, 2016, through May 2025, resulted from the firm’s long-standing failure to maintain adequate data systems and supervisory controls to ensure compliance with debt research disclosure requirements.

C. FINRA rule 3110:

This rule states member firms to establish, maintain, and enforce a supervisory system and written supervisory procedures designed to ensure compliance with applicable securities laws and FINRA rules.

Violation: From January 2007 to the present, Deutsche Bank failed to maintain a supervisory system reasonably designed to ensure that its research disclosures were accurate and complete. The firm did not verify the integrity of data feeds used for disclosure triggers and lacked adequate procedures to monitor and restrict research analyst trading in covered securities, including trades in third-party managed accounts. These deficiencies resulted in widespread disclosure omissions and violations of supervision rules.

D. FINRA Rule 2010:

This rule states member firms to observe high standards of commercial honor and just and equitable principles of trade.

Violation: Deutsche Bank’s systemic failures to comply with research disclosure obligations and supervisory requirements constitute violations of Rule 2010, as the firm failed to ensure transparency in areas critical to investor protection and market integrity.

SUMMARY:

For more than a decade, Deutsche Bank operated with defective data systems, inadequate oversight, and incomplete supervisory procedures, resulting in inaccurate or missing conflict-of-interest disclosures in approximately 110,000 research reports. These failures violated multiple research and supervision rules, undermining investor transparency and market integrity.

SANCTIONS:

• a censure.
• $2.5 million fine.
• An undertaking requiring senior management to certify, within 180 days, that Deutsche Bank has remediated the failures and implemented a supervisory system reasonably designed to comply with FINRA Rules.

AWC Document:

2022073416601 Deutsche Bank Securities Inc. CRD 2525 AWC ks.pdf

CONCLUSION:
This action underscores FINRA’s expectation that firms maintain rigorous systems ensuring complete and accurate research disclosures. Effective supervisory controls and transparent conflict-of-interest reporting are essential for investor protection and the integrity of the research process.

8.      Case: James Daniel Lang

INTRODUCTION:

This summary reviews FINRA’s action against Lang, who engaged in multiple outside business activities (OBAs) without providing the required prior written notice to his member firms. His failure to disclose compensated trustee and executor roles over several years resulted in violations of FINRA’s OBA and conduct rules.

• Date of Action: November 19, 2025
• Respondent: James Daniel Lang
• Violations: 

A. FINRA Rule 3270:

This rule prohibits registered persons from engaging in outside business activities or receiving compensation from any business outside their member firm unless they provide prior written notice to the firm.

Violation: Between October 2016 and December 2022, Lang failed to disclose multiple compensated fiduciary roles, including serving as trustee for two customer trusts and as executor of a customer’s estate. Despite being required to disclose all OBAs through LPL’s electronic system, Lang failed to report his trustee roles until after they were discovered during a branch audit, and even after being instructed to relinquish the positions, he continued acting as trustee. After joining IFG in October 2020, Lang again failed to disclose his ongoing trustee activity until December 2022. He also did not disclose his executor role to either firm. Lang repeatedly certified inaccurately on compliance questionnaires that he had no undisclosed outside activities and no fiduciary roles, rendering his conduct a clear violation of Rule 3270.

B. FINRA Rule 2010:

This rule states associated persons to adhere to high standards of commercial honor and just and equitable principles of trade.

Violation: By knowingly failing to disclose required OBAs, inaccurately completing compliance questionnaires, continuing fiduciary activities after direct firm instructions to cease, and withholding material information from both LPL and IFG, Lang violated FINRA Rule 2010, as nondisclosure of OBAs constitutes misconduct inconsistent with ethical industry standards.

SUMMARY:

Lang engaged for years in undisclosed outside business activities, including compensated trustee and executor roles for a long-time customer, despite firm requirements to report all external activities. His failure to disclose these roles and his inaccurate compliance certifications violated FINRA Rules 3270 and 2010.

SANCTIONS:

• Four-month suspension.
• $5000 fine.

AWC Document:

2020067065101 James Daniel Lang CRD 2959057 AWC lp.pdf

CONCLUSION:
This action reaffirms FINRA’s expectation that registered persons fully and accurately disclose all outside business activities. Failure to provide prior written notice undermines firm oversight, introduces undisclosed conflicts, and violates fundamental conduct standards.

9.      Case: Mark A. Carter

INTRODUCTION:

This summary reviews FINRA’s action against Carter, who engaged in excessive and unsuitable options trading, exercised discretion without authorization, and mismarked trades in two retail customer accounts while associated with Pruco Securities. His actions resulted in violations of Regulation Best Interest (Reg BI) and multiple FINRA rules.

• Date of Action: November 19, 2025
• Respondent: Mark A. Carter
• Violations: 

A. Exchange Act Rule 15l-1(a) of Regulation BI:

This rule states brokers to act in the best interest of retail customers when making recommendations, without placing their own interests ahead of the customer’s. It requires reasonable diligence to ensure the recommendation is suitable and not excessive in light of the customer’s investment profile.

Violation: From January to December 2023, Carter recommended more than 2,200 options trades to two retail customers whose profiles reflected long-term, capital-appreciation objectives making highly active and risky options strategies deeply unsuitable. His trading caused over $600,000 in losses, representing more than 99% of the customers’ account value, while generating commissions of $6,773 for himself. Annualized cost-to-equity ratios averaged 42%, demonstrating excessive trading far outside the customer’s best interest. Carter therefore wilfully violated Reg BI’s Best Interest Obligation and FINRA Rule.

B. FINRA Rule 3260:

This rule prohibits the exercise of discretionary trading authority in a customer’s account unless the customer provides prior written authorization and the member firm approves the discretionary arrangement in writing.

Violation: Carter exercised discretion in the customer’s accounts without obtaining any written authorization. Over the course of twelve months, he placed 2,314 options trades without speaking to the customers, violating the rule and exceeding both customer and firm authority.

C. FINRA Rule 2360:

This rule prohibits discretionary trading in options accounts unless it complies with Rule 3260 and specifically authorizes options trading.

Violation: Because Carter lacked written discretionary authority for options transactions, each discretionary trade he placed in the customers’ accounts constituted a separate violation of Rule 2360(b)(18)(A)(i). His extensive pattern of unauthorized discretionary options trades violated this rule repeatedly.

D. FINRA Rule 4511:

This Rule states members and associated persons to maintain accurate books and records, including properly marking whether trades are solicited or unsolicited.

Violation: Carter mismarked all 2,314 solicited options trades as unsolicited. These false markings caused the firm to maintain inaccurate books and records and concealed the magnitude of his excessive trading activity, constituting a direct violation of Rule 4511.

D. FINRA Rule 2010:

This Rule states associated persons to observe high standards of commercial honor and just and equitable principles of trade.

Violation: Because Carter engaged in unsuitable trading, exercised unauthorized discretion, and mismarked order tickets, he failed to meet the high standards of conduct required under Rule 2010. Each underlying violation independently supports a violation of this rule.

SUMMARY:

Carter’s trading activity was excessive, unsuitable, and unauthorized. He breached Regulation Best Interest, FINRA’s suitability rules, discretionary trading rules, and books-and-records requirements. His conduct resulted in severe customer harm and violated multiple FINRA rules.

SANCTIONS:

• Nine-month suspension.
• $20,000 fine.
• Disgorgement of $6,773 plus interest.

AWC Document:

2024081675801 Mark A. Carter CRD 6387371 AWC vr.pdf

CONCLUSION:
Carter’s misconduct demonstrates serious breaches of both suitability and supervisory standards. By recommending excessive and high-risk options trades that were not in the best interest of his retail customers, exercising discretion without proper authorization, and creating inaccurate trade records, Carter violated multiple FINRA rules and Regulation Best Interest. These actions caused significant financial harm to the customers and undermined the integrity of the brokerage process. FINRA’s sanctions including suspension, fines, and disgorgement underscore the critical importance of adhering to suitability obligations, obtaining proper authorizations, and maintaining accurate records to protect investors and uphold market integrity.

10.  Case: Laidlaw & Company (UK) Ltd.

INTRODUCTION:

This summary reviews FINRA’s actions against Laidlaw, which involved failures to maintain minimum net capital, deficient supervisory procedures, and improper handling of investor funds in a contingency offering. These deficiencies violated multiple SEC and FINRA rules, posing risks to investors and the integrity of the securities market.

• Date of Action: November 20, 2025
• Respondent: Laidlaw & Company (UK) Ltd.
• Violations: 

A. Exchange Act §§ 15(c)(3), Exchange Act Rule 15c3-1:

This rule states the minimum net capital standard that must be continuously met by all registered broker-dealers.

Violation: Between September 2022 and March 2023, Laidlaw operated while undercapitalized on at least 108 days, with deficiencies ranging from $53,000 to $1.26 million, sometimes exceeding $1 million. These deficiencies occurred because the firm failed to reconcile bank statements and general ledger entries consistently. By conducting business while undercapitalized, Laidlaw violated the minimum net capital requirements set forth in Exchange Act § 15(c)(3) and Rule 15c3-1.

B. Exchange Act § 17(a) and Exchange Act Rule 17a-11:

This rule states firms to notify FINRA and the SEC immediately if net capital falls below required minimums.

Violation: Laidlaw filed two inaccurate deficiency notices in December 2022 and January 2023, misreporting the start and end dates of net capital deficiencies. Additionally, an April 2023 notice overstated compliance. By failing to provide accurate and timely net capital deficiency notices, Laidlaw violated Exchange Act § 17(a) and Rule 17a-11.

C. FINRA Rule 4110:

This rule states a member firm to suspend all business operations during any period in which it is not in compliance with applicable net capital requirements.

Violation: Laidlaw continued to conduct securities business during the periods it was undercapitalized. By failing to suspend operations during these times.

D. FINRA Rules 3110:

This rule states member firms to establish, maintain, and enforce supervisory systems and written supervisory procedures (WSPs) reasonably designed to ensure compliance with applicable laws and rules.

Violation: Between September 2022 and June 2023, Laidlaw failed to maintain WSPs for general ledger maintenance, reconciliation, intercompany transactions, and net capital calculations. Staffing shortages exacerbated these deficiencies, and no remedial steps were taken until July 2023.

E. Exchange Act § 15(c)(2) and Rule 15c2-4(b)

This rule sates that in contingency offerings, broker-dealers either deposit investor funds into a separate account or transmit funds to an independent escrow agent when the broker is affiliated with the issuer.

Violation: Between November 2020 and January 2021, Laidlaw participated in a contingency offering for an affiliated issuer but failed to establish an independent escrow account, instructing investors to send funds directly to the issuer.

SUMMARY:

Laidlaw’s failures to maintain net capital, submit accurate deficiency notices, establish supervisory systems, and properly handle investor funds in a contingency offering violated multiple SEC and FINRA rules. These lapses created regulatory and investor risks and demonstrate significant supervisory and compliance deficiencies.

SANCTIONS:

• a censure
• $200,000 fine.

AWC Document:

2023077061201 Laidlaw & Company (UK) Ltd. CRD 119037 AWC ks.pdf

CONCLUSION:
Laidlaw’s conduct demonstrates significant failures in financial and supervisory controls. By operating while undercapitalized, submitting inaccurate net capital deficiency notices, failing to suspend business during periods of deficiency, neglecting to maintain adequate supervisory procedures, and mishandling investor funds in a contingency offering, the firm violated multiple SEC and FINRA rules. These violations exposed investors and the marketplace to risk and reflect a breakdown in both compliance and operational oversight. FINRA’s sanctions, including censure and a $200,000 fine, underscore the importance of maintaining adequate capital, accurate reporting, robust supervisory systems, and proper handling of investor funds to protect investors and uphold market integrity.