R. F. Lafferty & Co., Inc.

Allegations: FINRA RULE 3310(A) AND NASD RULE 3011(A): THE FIRM'S ANTI-MONEY LAUNDERING (AML) POLICIES, PROCEDURES, AND INTERNAL CONTROLS WERE NOT REASONABLY DESIGNED TO MONITOR FOR, DETECT, AND CAUSE THE REPORTING OF SUSPICIOUS TRANSACTIONS, AS REQUIRED BY NASD RULE 3011(A) AND FINRA RULE 3310(A). THE FIRM'S AML SYSTEMS AND PROCEDURES FAILED TO ADDRESS THE INHERENT RISKS ASSOCIATED WITH TRADING IN OTC BULLETIN BOARD AND PINK SHEET SECURITIES. BASED ON THE NATURE AND TYPE OF SECURITIES ITS CUSTOMERS TRADED, THE FIRM SHOULD HAVE HAD PROCEDURES TO ADEQUATELY MONITOR FOR, DETECT, AND REPORT SUSPICIOUS TRADING ACTIVITY, BUT DID NOT. THE FIRM FAILED TO IMPLEMENT ITS EXISTING AML POLICIES AND PROCEDURES, WHICH INCLUDED RELYING ON EXCEPTION REPORTS PRODUCED BY ITS CLEARING FIRM AND MONITORING CUSTOMER ACCOUNT ACTIVITY FOR UNUSUAL SIZE, VOLUME, PATTERN OR TYPE OF TRANSACTIONS WHILE TAKING INTO ACCOUNT RISK FACTORS AND RED FLAGS APPROPRIATE TO THE FIRM'S BUSINESS. THE FIRM DID NOT CONDUCT REVIEWS OF CUSTOMER TRADING ACTIVITIES TO REASONABLY DETECT ANY OF THE RED FLAGS OF SUSPICIOUS ACTIVITY INCLUDED IN ITS PROCEDURES. IN ADDITION, THE FIRM DID NOT HAVE A MEANINGFUL PROCESS FOR INVESTIGATING SUSPICIOUS ACTIVITY AND FILING APPROPRIATE SAR-SFS (SUSPICIOUS ACTIVITY REPORTS FOR THE SECURITIES AND FUTURES INDUSTRY), AS THE FACTS AND CIRCUMSTANCES REQUIRED. TWO CUSTOMERS OPENED APPROXIMATELY 27 PERSONAL AND BUSINESS ACCOUNTS AT THE FIRM. THE TWO CUSTOMERS WERE CONSULTANTS AND ADVISERS TO COMPANIES ENCOMPASSING A NUMBER OF DIFFERENT BUSINESS AREAS, INCLUDING INITIAL PUBLIC OFFERINGS AND CAPITAL STRUCTURE. AFTER THE ACCOUNTS WERE OPENED AT THE FIRM, THE TWO CUSTOMERS PROMPTLY TRANSFERRED INTO THEIR ACCOUNTS MILLIONS OF SHARES OF PENNY STOCKS OF ISSUERS WITH QUESTIONABLE OPERATING HISTORIES. THEY LIQUIDATED THEIR POSITIONS AND WIRED THE PROCEEDS FROM THE ACCOUNTS. THE TWO CUSTOMERS LIQUIDATED APPROXIMATELY $7.3 MILLION OF PENNY STOCKS AS A RESULT OF THESE SALES. FURTHER, WHILE THE CUSTOMERS WERE LIQUIDATING THE STOCKS, SUSPICIOUS INTERNET PROMOTIONAL CAMPAIGNS TOUTED THE SAME SECURITIES. DESPITE THE EXISTENCE OF SPECIFIC RED FLAGS NOTED IN THE FIRM'S AML PROCEDURES, DUE TO THE FIRM'S FAILURE TO IMPLEMENT ITS AML POLICIES AND PROCEDURES, IT DID NOT DETECT THE SUSPICIOUS ACTIVITIES AND CONSIDER WHETHER IT SHOULD HAVE BEEN INVESTIGATED FURTHER AND, IF APPROPRIATE, REPORTED AS SUSPICIOUS ACTIVITY. Status: Final Sanction Detail: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTED TO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS, THEREFORE THE FIRM IS CENSURED, FINED $50,000 AND REQUIRED TO REVIEW AND REVISE, AS NECESSARY, THE FIRM'S AML POLICIES, PROCEDURE, AND INTERNAL CONTROLS IN ORDER TO TAILOR THEM TO ITS BUSINESS MODEL. WITHIN 30 BUSINESS DAYS OF ACCEPTANCE OF THIS AWC BY THE NATIONAL ADJUDICATORY COUNCIL (NAC), THE FIRM'S PRESIDENT SHALL CERTIFY THAT THE FIRM HAS ESTABLISHED AND IMPLEMENTED AML POLICIES, PROCEDURES, AND INTERNAL CONTROLS WITH RESPECT TO MONITORING FOR SUSPICIOUS SECURITIES TRANSACTIONS THAT ARE REASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITH THE REQUIREMENTS OF THE BANK SECRECY ACT AND THE IMPLEMENTING REGULATIONS PROMULGATED THEREUNDER BY THE DEPARTMENT OF THE TREASURY. FINE PAID IN FULL 3/25/13. Summary: A REGISTERED REPRESENTATIVE WHO JOINED R.F. LAFFERTY IN FEBRUARY 2009 TRANSFERRED IN OVER 75 ACCOUNTS INTO THE FIRM. OVER A PERIOD OF 18 MONTHS, THE CLIENTS AT ISSUE IN THE AWC SOLD SHARES IN THE EQUITIES IN QUESTION. IN TOTAL, THE ACCOUNTS' MARKET AND CASH VALUES WERE IN EXCESS OF $50,000,000 AND THESE CLIENTS TRANSACTED OTHER BUSINESS IN NYSE, AMEX AND NASDAQ SECURITIES. THESE CLIENTS ARE UNITED STATES CITIZENS AND ALL MONIES WERE WIRED TO ACCOUNTS IN THEIR NAMEPLATE IN UNITED STATES BANKS DOMICILED IN THE UNITED STATES. WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTED TO THE AWC. SINCE THE PERIOD IN QUESTION, THE FIRM HAS ENHANCED ITS AML POLICIES, PROCEDURES AND INTERNAL CONTROLS AS TAILORED TO ITS BUSINESS MODEL. THE REGISTERED REPRESENTATIVE AND THE ACCOUNTS IN QUESTION ARE NO LONGER WITH THE FIRM.

Allegations: SEC RULE 10B-10, SEC RULES 606, 611(A)(B) AND (C) OF REGULATION NMS, FINRA RULE 2010, NASD RULE 3010 - R.F. LAFFERTY & CO., INC. FAILED TO PROVIDE WRITTEN NOTIFICATION DISCLOSING TO ITS CUSTOMERS THAT THE TRANSACTIONS WERE EXECUTED AT AN AVERAGE PRICE, OR ERRONEOUSLY DISCLOSED THAT THE TRANSACTIONS WERE EXECUTED AT AN AVERAGE PRICE. THE FIRM MADE AVAILABLE PUBLICLY A REPORT OF ITS ROUTING OF NON-DIRECTED ORDERED IN COVERED SECURITIES THAT FAILED TO IDENTIFY ACCURATELY AND COMPLETELY THE MARKET CENTERS TO WHICH THE FIRM ROUTED NON-DIRECTED ORDERS IN COVERED SECURITIES, AND FAILED TO DISCLOSE CORRECTLY THE PERCENTAGE OF TOTAL NON-DIRECTED ORDERS ROUTED TO EACH MARKET CENTER. THE FIRM'S SUPERVISORY SYSTEM DID NOT PROVIDE FOR SUPERVISION REASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITH RULE 611(A), (B), AND (C) OF REGULATION NMS. THE FIRM'S SUPERVISORY SYSTEM DID NOT PROVIDE FOR SUPERVISION REASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITH APPLICABLE SECURITIES LAWS, REGULATIONS AND/OR FINRA AND SEC RULES ADDRESSING TRADING AND MARKET MAKING TOPICS. THE FIRM'S WRITTEN SUPERVISORY PROCEDURES (WSPS) FAILED TO PROVIDE FOR MINIMUM REQUIREMENTS FOR ADEQUATE WSPS IN ORDER HANDLING -DISCLOSURE OF ORDER EXECUTION INFORMATION; BEST EXECUTION -CUSTOMER BLOCK-SIZED ORDERS, NOT HELD ORDERS AND ORDERS WITH SPECIAL PRICING TERMS/CONDITIONS, EXECUTION OF ORDERS ROUTED AS AGENT, REGULAR AND RIGOROUS REVIEW OF ORDERS EXECUTED BY OTHER PARTIES, THREE-QUOTE RULE; TRADE REPORTING - GENERAL TRADE REPORTING, USE OF TRADE MODIFIERS, REPORTING RISKLESS PRINCIPAL TRADES, ACCEPTING/MATCHING TRADES ON THE FIRM'S BEHALF; SALE TRANSACTIONS - RULE 204 OF REGULATION SHO CLOSE-OUT AND PRE-BORROW REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934; TRADE REPORTING FACILITY SALE REPORTING REQUIREMENTS; OTHER TRADING RULES - ENTERING QUOTES FOR OVER-THE-COUNTER SECURITIES INTO MULTIPLE REAL-TIME QUOTE SYSTEMS; ORDER AUDIT TRAIL SYSTEM (OATS)- DETECTION AND REPAIR OF OATS REJECTIONS; OATS/TRADE REPORTING FACILITY DATA MATCHING; OTHER RULES - GENERAL HOUSEKEEPING; MONITORING OF ELECTRONIC COMMUNICATIONS; AND USE OF MULTIPLE MARKET PARTICIPANT IDENTIFIERS (MPIDS). THE FIRM FAILED TO PROVIDE DOCUMENTARY EVIDENCE IT PERFORMED THE SUPERVISORY REVIEWS SET FORTH IN ITS WSPS CONCERNING: ANTI-INTIMIDATION/COORDINATION; OTHER TRADING RULES - ACTIVITY DURING A TRADING HALT; OATS - CLOCK SYNCHRONIZATION, OATS DATA ACCURACY AND TIMELINESS; AND OTHER RULES - INFORMATION BARRIERS, AND ACCEPTANCE/DISPLAY OF SUB-PENNY ORDERS. Status: Final Sanction Detail: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTED TO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS; THEREFORE, THE FIRM IS CENSURED, FINED $22,000 AND REQUIRED TO REVISE ITS WSPS REGARDING SUPERVISION REASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITH RULE 611(A), (B), AND (C) OF REGULATION NMS;ORDER HANDLING -DISCLOSURE OF ORDER EXECUTION INFORMATION; BEST EXECUTION -CUSTOMER BLOCK-SIZED ORDERS, NOT HELD ORDERS AND ORDERS WITH SPECIAL PRICING TERMS/CONDITIONS, EXECUTION OF ORDERS ROUTED AS AGENT, REGULAR AND RIGOROUS REVIEW OF ORDERS EXECUTED BY OTHER PARTIES, THREE-QUOTE RULE; TRADE REPORTING - GENERAL TRADE REPORTING, USE OF TRADE MODIFIERS, REPORTING RISKLESS PRINCIPAL TRADES, ACCEPTING/MATCHING TRADES ON THE FIRM'S BEHALF; SALE TRANSACTIONS - RULE 204 OF REGULATION SHO CLOSE-OUT AND PRE-BORROW REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934; TRADE REPORTING FACILITY SALE REPORTING REQUIREMENTS; OTHER TRADING RULES - ENTERING QUOTES FOR OVER-THE-COUNTER SECURITIES INTO MULTIPLE REAL-TIME QUOTE SYSTEMS; ORDER AUDIT TRAIL SYSTEM (OATS)- DETECTION AND REPAIR OF OATS REJECTIONS; OATS/TRADE REPORTING FACILITY DATA MATCHING; OTHER RULES - GENERAL HOUSEKEEPING; MONITORING OF ELECTRONIC COMMUNICATIONS; AND USE OF MULTIPLE MARKET PARTICIPANT IDENTIFIERS (MPIDS) WITHIN 30 BUSINESS DAYS OF ACCEPTANCE OF THIS AWC BY THE NAC. Summary: THE NOTICE OF ACCEPTANCE OF THE LETTER OF ACCEPTANCE,WAIVER AND CONSENT NO# 2011026111301 HAS BEEN APPROVED ON 11 25 2013. IN ACCORDANCE WITH THE AWC, THE FIRM HAS ISSUED PAYMENT OF THE FINE AND REVISED THE FIRM'S WRITTEN SUPERVISORY PROCEDURES.

Allegations: THE FIRM ALLEGATIONS OF VIOLATIONS OF FINRA RULE 3110 WITH REGARDS TO RECORDKEEPING IN THE PROPERLY MARKETED ORDER TICKETS. DURING JULY 2014 THRU JULY 2017, 56033 OF THE FIRMS ORDER MEMORANDA AND OTHER BOOKS AND RECORDS LACKED INFORMATION INDICATING WHETHER THE TRADE WERE SOLICITED OR UNSOLICITED. FROM JULY 2014 TO JULY 2017, R.F. LAFFERTY'S WSPS REQUIRED THE FIRM TO MAINTAIN ACCURATE ORDER MEMORANDA IN COMPLIANCE WITH THE RECORDKEEPING REQUIREMENTS IMPOSED BY FINRA RULE 451 1 AND THE EXCHANGE ACT AND RULES THEREUNDER. THE FIRM, HOWEVER, FAILED TO ESTABLISH AND MAINTAIN A REASONABLY DESIGNED SUPERVISORY SYSTEM OR ENFORCE ITS WSPS CONCERNING THE ACCURACY OF INFORMATION APPEARING ON ORDER MEMORANDA. THE FIRM ALLOWED INDIVIDUAL REPRESENTATIVES, WHEN ENTERING CUSTOMER TRADES IN THE ORDER MANAGEMENT SYSTEMS MAINTAINED BY THE FIRM'S CLEARING FIRMS, TO SELECT WHETHER OR NOT THEY HAD SOLICITED THE TRADES. R.F. LAFFERTY THEN RETAINED JUST THE INFORMATION IT RECEIVED FROM ITS CLEARING FIRMS AS THE ORDER MEMORANDA IN THE FIRM'S OWN BOOKS AND RECORDS. BUT THE FIRM MAINTAINED NO SUPERVISORY SYSTEM TO ENSURE THE ACCURACY OF ITS ORDER MEMORANDA, AND NO FIRM PRINCIPAL TOOK SUPERVISORY STEPS TO ENSURE THE ACCURACY OF THE FIRM'S ORDER MEMORANDA. TO THE CONTRARY, WHEN FIRM SUPERVISORY PERSONNEL BECAME AWARE OF INACCURATE BLANK OR "N/A" SOLICITATION INFORMATION IN THE FIRM'S BOOKS AND RECORDS, THEY TREATED THE TRADES AS UNSOLICITED FOR PURPOSES OF SUPERVISORY REVIEW. THE LIMITED STEPS THAT THE FIRM TOOK TO CORRECT THE PROBLEM WERE NOT REASONABLE. DURING THE RELEVANT PERIOD, FIRM OPERATIONS PERSONNEL OCCASIONALLY ASKED REGISTERED REPRESENTATIVES ABOUT TRADES IN CUSTOMER ACCOUNTS WITH "N/A" AS THE SOLICITATION INDICATOR; WHEN THAT HAPPENED, OPERATIONS PERSONNEL ON AN AD HOC BASIS WOULD CORRECT THE ORDER MEMORANDA OR ADD A COMMENT TO THE BLOTTER TO SHOW THE TRADES AS EITHER SOLICITED OR UNSOLICITED. THE FIRM DID NOT, HOWEVER, CORRECT ALL OR EVEN MOST TRADES SHOWING "N/A" AS THE SOLICITATION INDICATOR AND TOOK NO OTHER STEPS TO REMEDY THE PROBLEM. AS DESCRIBED ABOVE, BECAUSE OF THE FIRM'S FAILURE TO ESTABLISH AND MAINTAIN A REASONABLY DESIGNED SUPERVISORY SYSTEM OR ENFORCE ITS EXISTING WSPS, THE FIRM'S BOOKS AND RECORDS CONTAINED TENS OF THOUSANDS OF INACCURACIES WITH RESPECT TO WHETHER TRADES WERE SOLICITED OR NOT. R.F. LAFFERTY VIOLATED NASD RULE 3010 (FOR CONDUCT BEFORE DECEMBER L, 2014), FINRA RULE 3110 (FOR CONDUCT ON OR AFTER DECEMBER I, 2014), AND FINRA RULE 2010. Status: Final Sanction Detail: THE FIRM WAS CENSURED AND FINED $55000.00 Summary: THE FIRM WAS CENSURED AND FINED $55000.00

Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTED TO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT REPORTED SECONDARY MARKET (S1) TRANSACTIONS IN TRADE REPORTING AND COMPLIANCE ENGINE (TRACE)-ELIGIBLE CORPORATE DEBT SECURITIES TO TRACE THAT IT WAS NOT REQUIRED TO REPORT, FAILED TO REPORT S1 TRANSACTIONS IN TRACE-ELIGIBLE CORPORATE DEBT SECURITIES TO TRACE THAT IT WAS REQUIRED TO REPORT, FAILED TO REPORT TRANSACTIONS IN TRACE-ELIGIBLE CORPORATE DEBT SECURITIES TO TRACE WITHIN 15 MINUTES OF THE TIME OF EXECUTION, AND REPORTED TRANSACTIONS IN TRACE-ELIGIBLE CORPORATE DEBT SECURITIES TO TRACE THAT IT WAS NOT REQUIRED TO REPORT. Status: Final Sanction Detail: THE FIRM WAS FINED $5000.00. Summary: NO CLIENT AND/OR MARKET IMPACT. FIRM HAS TAKEN CORRECTIVE ACTION TO INSURE COMPLIANCE.

Allegations: SUPERVISION VIOLATIONS Status: Final Sanction Detail: $5,000.00 PAID ON 3/25/1999 BY R. F. LAFFERTY & CO., INC. Summary: SUPERVISION VIOLATIONS