The Financial Industry Regulatory Authority Inc.
has censured Newbridge Securities and fined the Boca Raton, Fla.-based firm $225,000 for having failed to adequately supervise the sale of complex securities such as structured notes and leveraged, inverse and inverse-leveraged exchange-traded funds.
In addition, Finra imposed a fine of $5,000 on Bruce Jordan, the firm's director of investment banking, and suspended him for two months for his failure to properly supervise the sale of the complex securities.
In its letter of acceptance, waiver and consent, Finra said that at various times between July 2013 and July 2016, Newbridge failed to establish and maintain a supervisory system, and failed to establish, maintain and enforce written supervisory procedures, concerning the sale of complex securities.
In addition, from November 2015 through March 2016, Newbridge failed to have a reasonable basis to recommend the sale of a private placement offering because it failed to conduct reasonable due diligence on the offering.
In addition, Finra said that Newbridge and Mr. Jordan failed to "reasonably supervise the offering because they allowed the firm to rely primarily on due diligence conducted by the issuer of the offering."
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Newbridge has a history of regulatory problems. In 2017, the
Pennsylvania Department of Banking and Securities fined the firm $499,000 for failing to supervise a broker in connection with sales of structured products to his clients in the state.
According to
BrokerCheck, Newbridge got its start in 2000. Since then, it has amassed 32 "disclosure events," or slightly less than two per year since it opened for business.
The regulatory run-ins have
cast a pall on the firm's financial health.
"The company has a large accumulated deficit and negative cash flows from operations," according to a letter that the firm's auditor, Liggett & Webb, addressed to the board this past March. "These factors raise substantial doubt about the company's ability to continue as a going concern."
