McLean recommended to a customer that he transfer his existing mutual funds to McLean’s member firm, and told the customer that, if he became dissatisfied, he could liquidate the account at no expense.  Shortly thereafter, the customer accepted McLean’s recommendation and transferred the mutual funds. 

Thereafter, the customer had suffered losses in those mutual fund investments and wanted to liquidate his holdings. Accordingly, McLean reimbursed the customer $252 for the charges he incurred in selling the mutual funds, thereby improperly sharing in the customer’s losses. The firm’s written procedures expressly prohibited registered representatives from sharing in any benefits or losses with clients resulting from securities transactions.

Simha borrowed approximately $51,000 from customers at his member firm in order to complete renovations on his house.

The loans were not reduced to writing and had no repayment terms; the customers had been Simha’s friends for many years, and one was his relative. The firm had a policy prohibiting representatives from borrowing money from customers; one of the loans was repaid before Simha disclosed it to the firm and the other loans have since been forgiven by the customers.

Simha sent an email to a former customer requesting a share of the profits that were made in the customer’s account while the account was with the firm. In that email, Simha represented that FINRA was auditing the customer’s account, but this was not correct; the client never sent Simha the share of the profits he requested.

Acting through Searle, the Firm shared approximately $326,000 worth of profits in the account of a customer of another FINRA member firm. Neither the firm nor Searle contributed financially to the customer’s account; and, therefore, neither could share in the profits in direct proportion to their financial contributions to the account.

The Firm failed to establish, maintain, and enforce adequate WSPs related to sharing in profits and losses in FINRA member firms’ customer accounts.

Searle & Co.: Censured; Fined $10,000 jointly/severally with Searle; Fined Additional $5,000

Robert Southworth Searle: Censured; Fined $10,000 jointly/severally with Searle & Co.