In the Matter of Stirlingshire Investments

Stirlingshire Investments was censured, fined $40,000, and required to comply with the undertaking enumerated in the AWC. Without admitting or denying the findings, the firm consented to the sanctions and to the entry of findings that it violated Reg BI by failing to establish, maintain, and enforce a reasonable supervisory system, including WSPs, concerning recommendations of inverse or leveraged exchange traded funds (NT-ETFs). The findings stated that three firm registered representatives recommended that more than 25 retail customers purchase NT-ETFs, yet the firm failed to establish, maintain, and enforce written policies or procedures reasonably designed to achieve compliance with Reg BI’s Care Obligation with respect to its recommendations of NT-ETFs, and to supervise such recommendations. The firm’s WSPs prohibited purchases of NT-ETFs in customer accounts and instructed supervisors to cancel all NT-ETF purchases in customer accounts, however the firm did not enforce that prohibition, nor did it put in place any alerts, exception reports, or other supervisory tools or procedures to identify and review NT-ETF recommendations. The findings also stated that the firm failed to file with FINRA offering materials for two private placement offerings issued by the firm’s parent company that a registered representative of the firm sold to 21 investors.

Summary generated from official Financial Industry Regulatory Authority press release