Tampa-based GunnAllen Financial Inc. will pay a $750,000 fine to settle multiple violations of securities industry rules.
The Financial Industry Regulatory Authority, or FINRA, said Thursday that GunnAllen's lax supervision allowed its former head trader, Alexis Rivera, to defraud customers by putting profitable trades in his wife's personal account instead of customers' accounts. The brokerage firm fired Rivera in September 2005 and regulators barred him from the securities industry in December 2006. His supervisor, Kelley McMahon, was barred for six months.
FINRA said it found other serious violations in GunnAllen's investment banking department. The brokerage firm failed to restrict employees from trading the stocks of its investment banking clients, creating the potential for misuse of insider information. Further, FINRA said Gunn-
Allen failed to disclose a consulting contract with Richard J. Gladstone, who had been barred from the securities industry.
GunnAllen said the settlement provides closure for past regulatory issues. "GunnAllen has added management talent and invested heavily in compliance and supervisory systems to improve our firm," chief executive Richard Frueh said. He said the firm is "confident in our prospects for the future."
Frueh said the company's 2006 and 2007 annual exams "did not result in further enforcement actions." However, the company still has to resolve issues related to one of its former brokers, Frank Bluestein, who put hundreds of clients into a Detroit-area investment scheme that collapsed last year. Numerous arbitration cases, a federal lawsuit and a state investigation in Michigan are pending.
GunnAllen has a network of more than 800 financial advisers who work as independent contractors.
Helen Huntley can be reached at firstname.lastname@example.org or