The Martinez-Ayme Financial Group Inc. D/B/A Martinez-Ayme Securities was recently sanctioned by the Financial Industry Regulatory Authority (FINRA) for alleged violations of Rule 101 of Regulation M of the Securities Exchange Act of 1934 and the self-regulatory agencies rules in connection with a series of private placement offerings, including a company described as CPWV. This company's business was the development, commercialization and marketing of a series of electric generating power systems designed to produce electrical power with zero omissions or waste byproducts.
Martinez-Ayme Securities has been a broker-dealer since August 6, 2001. The firm had 10 registered representatives during the relevant period with its principal office located in Miami, Florida. The broker-dealer engaged in the business of corporate debt, day trading, market making, mutual funds, internet/online accounts, private placements, proprietary trading inequities and served as an underwriter of corporate securities to the public.
The brokerage firm was the manager and exclusive placement agent for several securities offerings by CPWV. According to FINRA, the broker-dealer raised $2.7 million from investors and was paid a placement agent and management fee of 10% of the gross proceeds but never notified FINRA of its participation in the offerings. FINRA also charged that Martinez-Ayme was subject to prohibitions regarding the bidding for or purchasing of CPWV shares during restricted periods but did so anyway during the period March 1, 2010 through July 31, 2012. FINRA alleged that the broker-dealer also failed to establish, maintain, and enforce written supervisory procedures pertaining to the firm's compliance with Regulation M or FINRA Rule 5190 during that period. Martinez-Ayme Securities consented to a $25,000 fine and censure without admitting or denying the allegations.
This is one of four regulatory sanctions brought against the Miami, Florida based brokerage firm. In 2009 FINRA censured and fined Martinez-Ayme for failing to adequately implement or enforce its Anti-Money Laundering program. In 2005, it was fined for permitting registered representatives whose registrations were inactive due to failure to satisfy continuing education requirements to serve as brokers with the firm. Prior thereto, the broker-dealer was in trouble with the Maryland Division of Securities. In our opinion, the reoccurrence of regulatory violations is symptomatic of poor compliance and supervisory practices and procedures.
Broker-dealers must establish and implement a reasonable supervisory system to protect customers from broker misconduct. If broker-dealers do not establish and implement these protective measures, they may be liable to investors for damages flowing from the misconduct. Therefore, investors who have suffered losses stemming from unsuitable recommendations, material misrepresentations, omissions, and/or other fraudulent activity by their broker can bring forth claims to recover damages against broker-dealers like Martinez-Ayme Securities, which should consistently oversee its employees' activities in order to prevent the above-described prohibited conduct.
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.