Expelled New York BD to Pay $235K for Reg BI Violations
What You Need to Know
FINRA expelled SW Financial in mid-May.
The SEC fined the BD for violating Reg BI’s care and compliance obligations.
SW Financial and its reps recommended a high-volume trading strategy, collecting over $660,000 in commissions while clients lost over $1 million, the SEC said.
The Securities and Exchange Commission has ordered SW Financial, which was expelled by the Financial Industry Regulatory Authority in mid-May, to pay more than $235,000 for violating Regulation Best Interest’s compliance and care obligations.
FINRA expelled SW Financial for “multiple violations” related to Reg BI.
FINRA found that between January 2018 and December 2021, Melville, New York-based SW Financial and Thomas Diamante, the firm’s co-owner, made material misrepresentations and omitted material information in connection with the sale of private placement offerings of pre-IPO securities in violation of both FINRA rules and Reg BI’s disclosure obligation.
According to the SEC’s order, issued on Sept. 28, from at least August 2018 through June 2022 SW Financial, through several of its registered representatives, recommended a short-term, high-volume investment strategy to at least 16 of its customers without a reasonable basis.
High Transaction Costs
Specifically, these registered reps recommended and executed over 2,000 trades in these customers’ accounts during the relevant period “without regard for the high transaction costs incurred by the customers.”
