Michael Antonio Zurita, a former broker at Orlando, Florida based Orion Trading, LLC, submitted a Letter of Acceptance, Waiver and Consent in which Mr. Zurita consented to the described sanction and to the entry of the Financial Industry Regulatory Authority's (FINRA) findings that he failed to reasonably supervise the sale of unregistered shares of low-priced stock of issuers on behalf of customers. One of the firm's registered representatives effected the sale of the unregistered stocks and failed to conduct a searching inquiry to ensure the sales did not violate Section 5 of the Securities Act of 1933. The representative completed deposited securities request (DSR) forms and submitted them to Mr. Zurita for review. Mr. Zurita's review process primarily involved ensuring the forms had been completed in full, but he failed to ensure that the information was accurate, consistent and did not raise any red flags. Mr. Zurita relied on the representative to obtain all relevant information and documentation and determine on his own that the shares were registered or exempt from registration and, according to FINRA, he failed to ensure the representative complied with the requirements of Section 5 and failed to reasonably supervise the sale of unregistered securities.
In FINRA's findings, the Regulator stated that as the President and CCO of his member firm, Mr. Zurita was responsible for developing and maintaining an adequate supervisory system as well as the firm's written supervisory procedures (WSPs) to ensure compliance with applicable laws. Mr. Zurita failed to have procedures in place to prevent the sale of unregistered securities not exempt from registration and that would have identified which individuals were to perform each step of the review and approval process. The findings also stated that Mr. Zurita failed to establish an adequate supervisory system to ensure that unregistered securities were freely tradable. The system was inadequate because it simply required that a principal ensure a DSR form was completed in full, rather than investigate each transaction to determine the existence of any red flags.
Thus, Mr. Zurita, of Orlando, Florida, was suspended from association with any FINRA member in any principal capacity for six months for failure to establish and implement a supervisory system. The suspension is in effect from April 15, 2013, through October 14, 2013.
Broker-dealers must establish and implement a reasonable supervisory system to protect customers from broker misconduct. If broker-dealers do not establish and implement a reasonable supervisory system, they may be liable to investors for damages flowing from the misconduct. Therefore, investors who have suffered damages due to inadequate supervisory systems can bring forth claims to recover losses against broker-dealers such as Orion Trading.
The most important of investors' rights is the right to be informed! This Investors' Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. Please see our Instablog profile (left column) for ways to contact us and get answers to any of your questions about this blog post and/or any related matter.