FINRA fined a broker-dealer ("BD") and its vice president for failing to supervise the BD's president regarding the sale of securities in a series of private placements.
According to the FINRA National Adjudicatory Council, Cantone Research, Inc. ("CRI") vice president Christine Cantone failed to properly review emails, maintain CRI's written supervisory procedures ("WSPs") and ensure that representatives under her supervision conducted adequate due diligence. Ms. Cantone was allegedly tasked with supervising CRI president Anthony Cantone, who is her husband. In her role, Ms. Cantone was allegedly required to perform daily reviews of Mr. Cantone's emails to ensure their truthfulness and to ensure he performed due diligence with respect to securities offerings. By failing to direct Mr. Cantone to inform relevant investors of financial issues with the offerings of the securities, Ms. Cantone allegedly failed in her supervisory obligations.
FINRA ordered CRI and Ms. Cantone to pay a fine of $73,000. Ms. Cantone was also suspended in all supervisory roles for two years and must requalify as a securities principal after completing her suspension.
Commentary / Steven Lofchie
It is interesting that a firm's CCO is being disciplined for failing to supervise the CCO's own boss. Given the fact that the firm's president and CCO are married, it's difficult to say how much of a precedent this establishes, if any, but CCOs should be aware that they have upward supervisory obligations.
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