FINRA fined Santa Clara-based Foothill Securities, Inc. and its Chief Compliance Officer Stephen Guy Shipp Jr. of San Mateo, California $235,000 and furthermore ordered the firm to retain an outside consultant to conduct a comprehensive review on the firm's inadequate supervisory systems and written supervisory procedures (WSPs). FINRA also suspended Shipp for three months.
The investigation states that Foothill's deficient review and WSP systems violated multiple FINRA and SEC industry regulations, such as allowing two branch office managers supervise each other's activities and failing to maintain several accounts and approval processes. In another instance, Foothill purportedly failed to look into the outside business activities of multiple registered representatives and failed to timely update several forms, including the filing of customer complaints and other disclosures with FINRA.
For example, FINRA found that through Shipp, Foothill approved a representative as sub-advisor to an exchange-traded fund (ETF), classifying the role as an outside business activity instead of as a private securities transaction. According to the report, because this ETF role was classified as outside business, Foothill failed to supervise or record the associated securities transactions, accordingly failing to ensure the ETF transactions complied with industry standards.
Foothill also allegedly failed to supervise a rep's public appearances on daily radio and/or television shows and Shipp specifically failed to direct the firm to supervise private securities transactions and address certain repeated deficiency findings in annual branch inspection reports.
If you have invested with CCO Stephen Shipp's Foothill Securities, Inc. or with any broker or firm whose supervisory, procedural or other policy failures have contributed to transactions or other events that have proven harmful to your investments or interests, please call The Law Offices of Jonathan W. Evans & Associates at (800) 699-1881 for investigation and consultation.