Aurel Davina Anderson agreed to a fine and a two-month suspension as part of a settlement with the Financial Industry Regulatory Authority (FINRA).
Anderson first registered with FINRA in January 2016 as a corporate securities representative through an association with former FINRA member Ustocktrade Securities, Inc. (USI). She then signed up to additional capacities through USI, including Chief Asset Officer in January 2018.
Anderson’s registrations through USI expired in August 2022 as a result of FINRA’s delisting of USI.
In April 2021, USI began offering a new product called the “Cash Program,” which was supposed to give customers the chance to earn an annual percentage return of 1.25 percent on their cash balances over $1,000. At the same time, the company also began offering its customers a fully paid-up lending program called the “Stock Loan Program”, which offered the opportunity for customers to receive a commission on lending their securities to USI, so that USI would lend them to continuation to a third party.
USI’s communications about the Cash and Equity Loan Programs were “retail communications” because the company promoted and marketed the Cash and Equity Loan Programs on its website, social media and mobile app.
Anderson was president of USI and was given responsibility for the company’s written oversight procedures for reviewing and approving the company’s communications with the public. According to USI’s written supervisory procedures, Anderson was required to review the firm’s retail communications for compliance with the content standards of FINRA Rule 2210, including to ensure that the communications were fair and balanced and not false or misleading.
Anderson reviewed and approved the company’s retail communications regarding the Cash and Equity Loan Programs in April and May 2021. Anderson’s approval of these retail communications, which were materially false and misleading, was unreasonable.
Although Anderson knew that the funds deposited into the Cash Program constituted an unsecured loan to a USI subsidiary that did not have FDIC insurance or SIPC protection, and that any funds deposited were subject to the risk of total loss, she nevertheless approved the company’s failed communications adequately disclose these facts.
Similarly, Anderson was aware that customers enrolled in the Stock Lending Program could lose their rights to dividends and other distributions if their shares were loaned, but failed to ensure that these facts were adequately explained in the company’s communications to that effect. program.
Therefore, Anderson violated FINRA Rules 3110 and 2010.
In connection with a FINRA examination of USI, FINRA requested copies of USI’s written procedures for its client identification program applicable to foreign clients.
In response, Anderson provided FINRA in August 2021 with written procedures on behalf of the firm that contained identity verification provisions for foreign clients that were supposed to take effect in February 2020. However, the firm did not have such written procedures until after February of 2020. Anderson modified an incomplete draft of the procedures to give the false impression that USI had implemented them in February 2020.
Therefore, Anderson violated FINRA Rule 2010.
The defendant consents to the imposition of the following sanctions:
- two-month suspension from association with any member of FINRA in all capacities;
- a two-month suspension from association with any member of FINRA in all principal capacities, to run consecutively with the suspension in full capacity; and
- $10,000 fine.