FINRA Censures and Fines Crown Capital $75,000 for Compensation Violations
According to the Financial Industry Regulatory Authority (FINRA) on March 11, the regulator has fined Crown Capital Securities $75,000 after allegations that the firm paid transaction-based compensation to unregistered entities.
The firm was also censured and required to certify that all of its commission and payment arrangements comply with FINRA rules.
From January 2017 to January 2021, Crown Capital Securities, a broker-dealer headquartered in Orange, CA, reportedly paid approximately $19.3 million in commissions earned by 18 of its registered representatives to 18 unregistered entities.
The unregistered entities were reportedly corporations and limited liability companies created by the representatives to serve as “doing business as” names for their securities businesses and were disclosed and approved outside business activities.
FINRA found that Crown Capital made payments to the unregistered entities instead of paying commissions directly to the registered representatives. The firm reportedly agreed to FINRA’s sanctions without admitting or denying the allegations.
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