FINRA fines Crown Capital for paying $19.3M to unregistered entities
Crown Capital Securities has agreed to pay a fine as a part of a settlement with FINRA over rule violations.
Between January 2017 and January 2021, Crown Capital 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 registered representatives to serve as doing business as names for their securities businesses and were disclosed and approved outside business activities.
Crown Capital made payments to the unregistered entities instead of paying commissions directly to the registered representatives. Therefore, Crown Capital violated FINRA Rules 2040 and 2010.
The company has agreed to the imposition of the following sanctions:
- a censure;
- a $75,000 fine; and
- a certification signed by an officer and principal of the firm that, as of the date of the certification, all of Crown Capital’s commission and payment arrangements, including but not limited to those paid in connection with any networking agreements, comply with FINRA Rule 2040.
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. The firm is headquartered in Orange, California, has approximately 300 registered representatives, and 164 registered branch offices.