The Firm failed to develop and enforce written procedures reasonably designed to achieve compliance with NASD® Rule 3010(d)(2) regarding the review of electronic correspondence. Although the firm had certain relevant procedures in place, it did not have a satisfactory system for providing designated principals with access to such correspondence for review; instead, the firm relied on registered representatives to forward any emails involving customers to a central email address, which was accessible to the firm’s president and chief compliance officer (CCO), for review.
The firm did not have effective procedures to monitor its representatives’ compliance with the email forwarding requirement; instead the firm relied on branch inspections to monitor compliance, but, because the firm’s branch offices were non-Office of Supervisory Jurisdiction’s (OSJs), they were inspected infrequently—once every three years.
During the infrequent branch office inspections, the firm generally failed to conduct adequate reviews of representatives’ personal computers to determine if they were complying with the email forwarding requirement; other than some very limited reviews during the inspections, the firm failed to provide for surveillance and follow-up to ensure that email correspondence review procedures were implemented and adhered to.
The firm failed to enforce its written procedures requiring a designated principal to conduct a daily review of business-related electronic correspondence and to evidence that review by initialing the correspondence.
Acting through Dochinez, the firm’s president, chief executive officer (CEO) and a firm principal, failed to establish, maintain and enforce an adequate system of supervisory control policies and procedures that tested and verified that its supervisory procedures were reasonably designed with respect to the activities of the firm, its registered representatives and associated persons to achieve compliance with applicable securities laws and regulations, and created additional or amended supervisory procedures where the need was identified by such testing and verification. In addition, The firm’s supervisory control policies and procedures failed to address the requirements of designating a principal responsible for the firm’s supervisory control policies and procedures; testing and verification to ensure reasonably-designed supervisory procedures; updating the firm’s written supervisory procedures (WSPs) to address deficiencies noted during testing; designating a principal responsible for the annual report to senior management on the firm’s system of supervisory controls procedures, summary of test results, significant identified exceptions, and any additional or amended procedures; identifying producing managers and assigning qualified principals to supervise such managers; using the “limited size and resources” exception for producing managers’ supervision, including documenting the factors relied on in determining that the exception is necessary; electronically notifying FINRA of its reliance on the limited size and resources exception; reviewing and monitoring all transmittals of customer funds and securities; reviewing, monitoring and validating customer changes of address and customer changes of investment objectives; and providing heightened supervision over each producing manager’s activities. Moreover,acting through Dochinez, the firm failed to conduct independent tests of its AMLCP.
Trustmont Financial Group, Inc.: Censured; Fined $10,000 joint/several; Fined additional $20,000
Peter Daniel Dochinez: Censured; Fined $10,000 joint/several
Acting on the firm’s behalf, NAME REDACTED
NAME REDACTED did not review the transmittal of funds between the principal’s customers and a third party as the firm’s written supervisory procedures required, and failed to obtain details regarding the principal’s outside business activities.
The firm failed to
The Firm's written supervisory procedures were not reasonably designed to ensure principal review of wires from customers to third parties, so it was unaware the principal’s customers were transferring large sums to a third party and that he was executing Letters of Authorization (LOAs) on behalf of multiple customers.
Torrey Pines Securities, Inc.: Censured; Fined $17,500
NAME REDACTED: No Fine in light of financial status; Suspended from association with any FINRA member in any principal capacity, other than the capacity of municipal securities principal, for 10 business days.