Gwn Securities Inc.

Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTED TO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT FAILED TO IDENTIFY AND APPLY SALES CHARGE DISCOUNTS TO CERTAIN CUSTOMERS WITH ELIGIBLE PURCHASES OF UNIT INVESTMENT TRUSTS (UITS) RESULTING IN CUSTOMERS PAYING EXCESSIVE SALES CHARGES OF $72,715.82. THE FINDINGS STATED THAT MANY OF THE FIRM'S UIT SALES WITH MISSED DISCOUNTS INVOLVED ROLLOVERS. THE FINDINGS ALSO STATED THAT THE FIRM FAILED TO ESTABLISH, MAINTAIN AND ENFORCE A SUPERVISORY SYSTEM AND WSPS REASONABLY DESIGNED TO ENSURE CUSTOMERS RECEIVED SALES CHARGE DISCOUNTS ON ALL ELIGIBLE UIT PURCHASES AND TO MONITOR SHORT-TERM TRADING IN UITS. WHILE THE FIRM'S WSPS ADDRESSED UITS, THEY DID NOT PROVIDE GUIDANCE ON THE PROPER CALCULATION AND APPLICATION OF SALES CHARGE DISCOUNTS FOR UIT PURCHASES AND DID NOT INCLUDE ANY LANGUAGE SPECIFIC TO ROLLOVER DISCOUNTS. ADDITIONALLY, ACROSS APPROXIMATELY 50 ACCOUNTS, AT LEAST ONE FIRM REPRESENTATIVE RECOMMENDED SHORT-TERM TRADING OF UITS TO HIS CUSTOMERS, RESULTING IN AN AVERAGE HOLDING PERIOD OF 205 DAYS. THE FINDINGS ALSO INCLUDED THAT THE FIRM FAILED TO ESTABLISH AND MAINTAIN A SUPERVISORY SYSTEM AND FAILED TO ESTABLISH, MAINTAIN AND ENFORCE WSPS REASONABLY DESIGNED TO IDENTIFY AND DETERMINE IF ANY OF THEIR REGISTERED REPRESENTATIVES HAD INAPPROPRIATE RATES OF VARIABLE ANNUITY EXCHANGES. THE FIRM HAD NUMEROUS REPRESENTATIVES WITH HIGH PERCENTAGES OF VARIABLE ANNUITY EXCHANGES TO THEIR OVERALL VARIABLE ANNUITY TRANSACTIONS. YET THE FIRM MANUALLY REVIEWED VARIABLE ANNUITY EXCHANGES AS PART OF ITS SUITABILITY REVIEW OF VARIABLE ANNUITY TRANSACTIONS AND CONDUCTED ONLY A ONE-MONTH LOOKBACK OF VARIABLE ANNUITY TRANSACTIONS. THE FIRM'S WSPS FAILED TO DOCUMENT THE ONE-MONTH LOOKBACK PROCESS; IT FAILED TO TRACK ANY TREND ANALYSIS OR HAVE ANY SURVEILLANCE REPORT THAT WOULD HAVE IDENTIFIED HIGH RATES OF EXCHANGES BY INDIVIDUAL REPRESENTATIVES; AND HAD NO SYSTEM OR PROCEDURES TO MAINTAIN HISTORIC INFORMATION ABOUTRATES OF VARIABLE ANNUITY EXCHANGES. Status: Final Sanction Detail: THE FIRM WAS CENSURED, FINED $100,000, ORDERED TO PAY $72,715.82, PLUS INTEREST, IN RESTITUTION TO AFFECTED CUSTOMERS, AND REQUIRED TO SUBMIT TO FINRA A WRITTEN CERTIFICATION INDICATING THAT IT HAS REVIEWED AND REVISED ITS WSPS TO ENSURE CUSTOMERS RECEIVE SALES CHARGE DISCOUNTS ON ALL ELIGIBLE UIT PURCHASES, TO MONITOR SHORT-TERM TRADING IN UITS AND TO IMPLEMENT PROCEDURES TO IDENTIFY AND MONITOR HIGH RATES OF VARIABLE ANNUITY EXCHANGES BY INDIVIDUAL REPRESENTATIVES, IN ORDER TO ACHIEVE COMPLIANCE WITH FINRA RULES. FINES PAID IN FULL ON MARCH 2, 2018. Summary: PLEASE SEE RESPONSE ABOVE.

Allegations: N/A Status: Final Sanction Detail: 8/12/2016 - $20,000 ADMINISTRATIVE FINE PAID IN FULL. Summary: ON AUGUST 12, 2016, THE OFFICE OF FINANCIAL REGULATION ENTERED A FINAL ORDER AGAINST GWN SECURITIES, INC., FOR VIOLATION OF RULES. GWN SECURITIES, INC., FAILED TO PROVIDE CHRISTINE CHEW A COPY OF HER ORIGINALLY SIGNED REGISTERED REPRESENTATIVE AGREEMENT, PROVIDE PRINCIPAL APPROVAL OF DANIEL L. REY'S ADVERTISING MATERIALS AND TIMELY PROVIDE AND REQUIRE THE SECURITIES INVESTOR PROTECTION CORPORATION (SIPC) SIGNAGE FOR A BRANCH OFFICE. GWN SECURITIES, INC. AGREED TO PAY AN ADMINISTRATIVE FINE OF $20,000.