According to an article from InvestmentNews.com, the Financial Industry Regulatory Authority (FINRA) has ordered Southwest Securities Inc to pay $650,000 to “resolve claims over improper short sales.” FINRA said that the improper sale caused a $6.3 million loss for the firm.
Deficiencies in “due diligence, risk assessment and written supervisory procedures” allowed Cutler Securities to “establish a 2.5 million share short position on a stock, creating an unsecured debit balance that it was unable to cover.” FINRA’s enforcement chief described Cutler’s behavior as “reckless” and the failure of Southwest to “effectively monitor” the situation threatened their ability to “meet its obligations to its other correspondent firms and counterparties.”
FINRA expelled Cutler Securities and barred its president due to the violations discovered. Southwest was also fined $500,000 on March 7 by FINRA for “violating regulations including a ban on paying outside consultants to win municipal-bond work.”
Page Perry has over 125 years collective experience representing institutional and individual investors in securities-related litigation and arbitration all over the country. While past results are not indicative of future success, Page Perry’s attorneys have recovered over $1,000,000 for clients on more than 40 occasions.