Aurel Davina Anderson has agreed to a fine and a two-month suspension as a part of a settlement with the Financial Industry Regulatory Authority (FINRA).
Anderson first became registered with FINRA in January 2016 as a Corporate Securities Representative through an association with former FINRA member Ustocktrade Securities, Inc. (USI). She then became registered in additional capacities through USI, including as a General Securities Principal in January 2018.
Anderson’s registrations through USI terminated in August 2022 as a result of FINRA’s expulsion of USI from FINRA membership.
In April 2021, USI began offering a new product called the “Cash Program,” which purported to give customers the opportunity to earn a 1.25 percent annual percentage yield on cash balances in their accounts greater than $1,000. At the same time, the firm also began to offer its customers a fully-paid lending program called the “Stock Loan Program” that offered the opportunity for customers to obtain a fee from lending their securities to USI so that USI could then lend them to a third-party.
USI’s communications concerning the Cash and the Stock Loan Programs constituted “retail communications” because the firm promoted and marketed the Cash and Stock Loan Programs on its website, social media and mobile application.
Anderson was USI’s president and was delegated responsibility in the firm’s written supervisory procedures for reviewing and approving the firm’s communications with the public. Under USI’s written supervisory procedures, Anderson was required to review the firm’s retail communications for compliance with FINRA Rule 2210’s content standards, including to ensure that the communications were fair and balanced and not false or misleading.
Anderson reviewed and approved the firm’s retail communications concerning the Cash and Stock Loan Programs in April and May 2021. Anderson’s approval of these retail communications, which were materially false and misleading, was unreasonable.
Although Anderson knew that funds deposited into the Cash Program constituted an unsecured loan to a USI affiliate that lacked FDIC insurance or SIPC protection, and that any funds deposited were subject to the risk of complete loss, she nevertheless approved the firm’s communications which failed to adequately disclose those facts.
Similarly, Anderson knew that customers enrolled in the Stock Loan Program could lose their rights to dividends and other distributions if their shares were borrowed, but she did not ensure that those facts were adequately explained in the firm’s communications concerning that program.
Therefore, Anderson violated FINRA Rules 3110 and 2010.
In connection with a FINRA examination of USI, FINRA requested copies of USI’s written procedures for its customer identification program applicable to foreign customers.
In response, Anderson provided FINRA in August 2021 with written procedures on behalf of the firm that contained identity verification provisions for foreign customers that purportedly went into effect in February 2020. However, the firm had no such written procedures in place until after February 2020. Anderson altered an incomplete draft of the procedures to give the false impression that USI had implemented them in February 2020.
Therefore, Anderson violated FINRA Rule 2010.
The respondent consents to the imposition of the following sanctions:
- a two-month suspension from associating with any FINRA member in all capacities;
- a two-month suspension from associating with any FINRA member in all principal capacities, to run consecutively with the all-capacity suspension; and
- a $10,000 fine.
