October 21, 2015
GMS Group, LLC and Carmine Capone, a general securities sales supervisor employed by GMS Group , entered into a Letter of Acceptance Waiver and Consent (AWC) with the Financial Industry Regulatory Authority (FINRA) to resolve allegations that they failed to adequately supervise the sales practices of one of their brokers who recommended and engaged in unsuitable trading in nontraditional exchange traded funds (ETFs) in four customer accounts and who exercised discretion without having obtained prior written authorization in fourteen customer accounts.
NASD Conduct Rule 2510(b) provides that “[n]o member or registered representative shall exercise any discretionary power in a customer’s account unless such customer has given prior written authorization to a stated individual or individuals and the account has been accepted by the member, as evidenced in writing by the member or the partner, officer or manager. duly designated by the member, in accordance with Rule 3010.
NASD Rule 3010(a) requires member firms (and their supervisory personnel) to establish and maintain a supervisory system that is reasonably designed to achieve compliance with applicable securities laws and regulations.
NASD Rule 3010(b) requires that member firms (and their supervisory personnel) establish, maintain and enforce written procedures to supervise their business and registered representatives that are reasonably designed to achieve compliance with applicable securities laws and regulations. An individual to whom supervisory authority is delegated violates Rule 3010(b) by failing to carry out his or her properly delegated responsibilities.
FlNRA Rule 2010 requires that member firms and associated persons observe high standards of commercial honor and just and equitable principles of trade.” A violation ofNASD Rule 3010 also constitutes a violation of FINRA Rule 201 0.
AWC No. 2013038756502
Non-traditional ETFs : Exchange traded funds. or “ETFs” are typically registered investment companies whose shares represent an interest in a portfolio of securities that track an underlying benchmark or index. Unlike traditional mutual funds. shares of ETFs typically trade throughout the day on a securities exchange at prices established by the market. Leveraged ETFs seek to deliver multiples of the performance of the index or benchmark they track. Inverse ETFs (also called “short” funds) seek to deliver the opposite of the performance of the index or benchmark they track. Like traditional ETFs. some leveraged and inverse ETFs (known collectively as “nontraditional ETFs”) track broad indices, some are sector-specific, and others are linked to commodities, currencies, or some other benchmark.
GMS Group was censured and fined $7,500. Capone was fined $10,000 and suspended in all principal capacities from association with a FINRA member for thirty business days.
GMS Group is headquartered in Livingston, New Jersey and has branch offices in Jersey City, New Jersey , Houston, Texas and Boca Raton, Florida. GMS has been a FINRA member since 1979 and has about 109 registered individuals.
Rex Securities Law , with offices in Boca Raton, FL, and Austin, TX, provides representation to investors nationwide who are seeking recovery of investment losses due to the negligence or fraud of stockbrokers and broker dealers. If you have questions about how your account has been handled, call to speak with an experienced securities attorney.
Most cases handled on a contingent fee basis meaning that you do not pay legal fees unless we are successful.
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