Arive Capital Markets Sanctioned for Supervisory Failures
Arive Capital Markets, a registered brokerage firm, reportedly settled with securities regulators this week. The firm reportedly admitted to failing in its supervisory duties, resulting in significant financial losses for investors.
Excessive Trading and Lack of Supervision – Arive Capital Markets
From August 2016 to June 2020, Arive Capital Markets allegedly neglected to establish, maintain, and enforce a supervisory system to ensure compliance with suitability requirements outlined in FINRA Rule 2111. This failure purportedly led to the oversight of red flags indicating excessive trading in 12 customer accounts. Consequently, investors allegedly paid nearly $640,000 in commissions, costs, and margin interest.
The firm allegedly violated FINRA Rules 3110 and 2010 by neglecting its duty to supervise and reasonably investigate red flags indicating potential misconduct. Arive’s supervisory system lacked adequate procedures to identify or address excessive trading, as indicated by turnover rates and cost-to-equity ratios exceeding acceptable levels.
Unsuitable Trading Allegations
Arive investors reportedly suffered substantial financial losses due to unsuitable trading recommendations. Due to the firm’s allegedly unreasonable supervisory system, it failed to identify or address red flags of excessive trading by six registered representatives in 12 customer accounts, according to FINRA’s findings. The customers allegedly relied on the advice of the representatives and routinely followed their recommendations, and, as a result, the representatives exercised de facto control over the accounts, including reportedly the following:
- A 67-year-old retired pharmacist from Georgia, with limited market knowledge, faced excessive trading resulting in over $88,000 in commissions and fees, and nearly $8,000 in margin interest.
- A 64-year-old Colorado resident and small business owner experienced excessive trading, incurring over $119,000 in commissions and fees, and more than $18,000 in margin interest.
Telemarketing Violations
Additionally, from June 2018 to February 2019, Arive also allegedly failed to comply with FINRA Rule 3230 regarding telemarketing. Representatives purportedly made over 60,000 outbound calls to numbers on the national do-not-call registry, violating regulations and demonstrating a lack of adherence to established procedures.
Sanctions Imposed
Arive Capital Markets agreed to sanctions including a censure, a $300,000 fine, and restitution of $594,928.74 plus interest to affected investors. The firm must also revise its written supervisory procedures (WSPs) and implement a new supervisory system to ensure compliance with FINRA rules.
Securities Fraud Attorneys
If you are concerned about your investments with Arive Capital Markets, please call the securities attorneys at The White Law Group at 1-888-637-5510.
The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm dedicated to helping investors in claims in all 50 states against their financial professional or brokerage firm. Since the firm launched in 2010, it has handled over 700 FINRA arbitration cases.
Our firm represents investors in all types of securities related claims, including claims involving stock fraud, broker misrepresentation, churning, unsuitable investments, selling away, and unauthorized trading, among many others.
With over 30 years of securities law experience, The White Law Group has the expertise to help investors defrauded in securities, investment, and financial business transactions attempt to recover their investment losses.
Arive Capital Markets, FINRA sanctions, excessive trading
