FINRA Fines Crown Capital Securities over Commission Payments
The Financial Industry Regulatory Authority has ordered Crown Capital Securities to pay a $75,000 fine to settle allegations that the broker-dealer paid transaction-based compensation to unregistered entities.
The Financial Industry Regulatory Authority has ordered Crown Capital Securities to pay a $75,000 fine to settle allegations that the broker-dealer paid transaction-based compensation to unregistered entities, a violation of FINRA rules.
Between January 2017 and January 2021, Crown Capital reportedly paid approximately $19.3 million in commissions earned by 18 of its registered representatives to 18 unregistered entities.
The unregistered entities were corporations and limited liability companies created by the reps to serve as doing business as names for their securities businesses and were disclosed and approved outside business activities.
According to FINRA, Crown Capital made payments to the unregistered entities instead of paying commissions directly to the registered representatives.
Crown Capital Securities, L.P. has been a FINRA member since 1972. The firm provides financial services to customers, including retail brokerage and wealth management to individuals. Headquartered in Orange, California, the firm has approximately 300 registered representatives and 164 registered branch offices.
In addition to the $75,000 fine, the firm was censured and required to certify that all of its commission and payment arrangements comply with FINRA rules.
A representative for Crown Capital agreed to FINRA’s sanctions without admitting or denying the allegations.
