SEC Fines Two Brokers for Reg BI Violations
What You Need to Know
The two brokers violated the quantitative prong of Reg BI’s care obligation, the SEC said.
The brokers’ transactions placed their financial interest ahead of the customers.
The strategy involved frequent in-and-out trades.
The Securities and Exchange Commission has charged two Laidlaw brokers with violating Regulation Best Interest’s care obligation through a series of recommendations to four retail customers.
The recommendations, according to the SEC order, were made by brokers Richard Michalski and Michael Murray without a reasonable basis to believe that the transactions “were not excessive when taken together in light of the retail customer’s investment profile, and because the series of recommended transactions placed the financial interest of the registered representatives ahead of the interest of the retail customer,” therefore violating the “quantitative prong” of Reg BI’s care obligation.
Laidlaw has been registered with the SEC as a broker-dealer since July 26, 2002. It is owned by Laidlaw Holding PLC, and is affiliated with Laidlaw Wealth Management, an investment advisor registered with the commission.
The SEC ordered Laidlaw to pay disgorgement of $547,712.36, prejudgment interest of $51,844.22 and civil penalties of $223,328, for a total of $822,884.58, to the SEC for failing to supervise the reps.
Michalski and Murray were both censured.
Michalski, 46, who resides in New York, was suspended from association with any broker, dealer, investment advisor, municipal securities dealer, municipal advisor, transfer agent, or nationally recognized statistical rating organization for six months. He was also ordered to pay a civil money penalty of $44,253 to the SEC.
Murray, 40, who also resides in New York, was ordered to pay disgorgement of $88,506 and prejudgment interest of $4,260.55, for a total of $92,766.55, to the SEC.
He was also ordered to pay disgorgement of $24,414.17 and prejudgment interest of $1,143.91, for a total of $25,558.08, as well as a $20,000 civil money penalty.
Order Details
Michalski has been associated with various broker-dealers since 2002, and with Laidlaw since October 2010. He currently holds Series 7 and 63 licenses.
