FINRA Expels Fox Financial Firm
Fox Financial Management Corporation (CRD® #134277, Carrollton, Texas), Brian Murphy (CRD #4743164, Frisco, Texas) and James Rooney Jr. (CRD #1857754, Carrollton, Texas) were expelled from FINRA® membership and fined $100,000.
Murphy was fined $25,000, barred from association with any FINRA member in any principal or supervisory capacity, and suspended from association with any FINRA member in any capacity for three months. Rooney was fined $50,000, barred from association with any FINRA member in any principal or supervisory capacity, and suspended from association with any FINRA member in any capacity for six months. The National Adjudicatory Council (NAC) affirmed the findings and modified the sanctions following appeal of an Office of Hearing Officers (OHO) decision.
The sanctions were based on findings that the firm, Murphy as the chief compliance officer (CCO) of Fox Financial, and Rooney as the Fox Financial president, failed to reasonably supervise the private securities transaction of a firm registered representative and failed to record the transactions on the firm’s books and records. The findings stated that the representative engaged in private securities transactions and received selling compensation (both transaction-based compensation and profit participation interests). Nevertheless, the firm, Murphy and Rooney failed to record the representative’s private securities transactions on the firm’s books and records, and failed to supervise the transactions as if they were executed though Fox Financial.
The findings also stated that the firm failed to establish, maintain, and enforce written supervisory systems and procedures that were reasonably designed to ensure compliance with NASD Rule 3040. The firm, Murphy and Rooney failed to conduct a reasonable inquiry into the representative’s registered investment adviser (RIA) and hedge fund businesses, and make a determination, documented in writing, as to whether such businesses constituted an outside business activity or outside securities activity. Further, the firm, Murphy and Rooney failed to enforce the firm’s procedures by failing to ensure that all the requirements of Rule 3040 were met, and to request copies of duplicate statements from the executing broker-dealer with respect to the representative’s RIA and hedge fund activities.
Murphy’s suspension is in effect from March 6, 2017, through June 6, 2017. Rooney’s suspension is in effect from March 6, 2017, through September 6, 2017.
For further information about this securities law blog post, please contact Brenda Hamilton, Securities Attorney at 101 Plaza Real S, Suite 202 N, Boca Raton, Florida, (561) 416-8956 or by email at [email protected]. This securities law blog post is provided as a general informational service to clients and friends of Hamilton & Associates Law Group and should not be construed as, and does not constitute, legal and compliance advice on any specific matter, nor does this message create an attorney-client relationship. Please note that the prior results discussed herein do not guarantee similar outcomes.
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