Legend Securities Named Respondent for Various Claims
On February 1, 2017, Legend Securities, Inc. (CRD #44952, New York, New York) was named a respondent in a FINRA complaint alleging various claims arising from failures in the firm’s compliance and supervisory systems and procedures.
The complaint alleges that Legend Securities failed to report to FINRA, or failed to timely report, 96 customer complaints sent primarily by electronic mail (some of which were reported more than two years late), and that the firm also failed to timely file amendments to Forms U4 or U5 to report arbitrations and complaints against Legend Securities and its associated persons asserting sales practice violations. The complaint also alleges that the firm failed to establish, maintain and enforce reasonable supervisory systems regarding these matters and for the review of electronic correspondence. The complaint further alleges that Legend Securities failed to establish, maintain and enforce a reasonable supervisory system for heightened supervision in light of the fact that on numerous occasions it failed to consider whether representatives with histories of customer complaints, disciplinary actions or other allegations of misconduct should be placed on heightened supervision. In addition, the complaint alleges that Legend Securities charged customers “handling fees”—which were identified on customer confirmations separate from commissions charged on the transaction—but failed to disclose that such fees, which totaled $870,000 for the relevant period, were in reality additional commissions retained by the firm and not per-ticket, transactional charges. For this conduct, the complaint alleges that the Firm willfully violated Section 10(b) of the Exchange Act and Rule 10b-10.
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