SECURITIES EXCHANGE ACT OF 1934Release No. 74527 / March 18, 2015ADMINISTRATIVE PROCEEDING File No. 3-16424In the Matter of LEK SECURITIES CORPEXTENSION ORDERThe Financial Industry Regulatory Authority ("FINRA") has requested an extension of time to file the certified record, now due March 20, 2015. FINRA cites they did not maintain the voluminous record and it contains approximately 15,000 pages. Extensions of time are disfavored. It appears appropriate, however, to grant FINRA's request. Therefore,It is ORDERED that the time for filing the certified record is extended to April 1, 2015.For the Commission, by its Secretary, pursuant to delegated authority.Lynn M. Powalski Deputy Secretary
SIDE BAR: Could it be one of these FINRA matters being appealed to the SEC?
Lek Securities Corporation (CRD #33135, New York, New York) was censured and fined $100,000. The sanctions were based on findings that the firm failed to establish and implement AML policies and procedures, and internal controls that could be reasonably expected to detect and cause the reporting of suspicious transactions and that were reasonably designed to achieve compliance with the Bank Secrecy Act and the implementing regulations promulgated by the Department of the Treasury. The findings stated that the firm depended upon an ad hoc, undocumented, manual system of surveillance for potential wash trades and other types of manipulative activities that was inadequate in the high-volume electronic trading environment in which the firm operated. Although the firm later instituted new surveillance procedures and mechanisms, its approach to its AML responsibilities remained inadequate in design and implementation since it did not document the actual review, investigation and determination with respect to any particular potential suspicious trading, and did not specify the procedures for investigating suspicious trading and determining whether a suspicious activity report (SAR) should be filed. The findings also stated that the Department of Enforcement failed to prove that the firm's supervisory systems and WSPs relating to portfolio margining for a particular customer violated NASDŽ/FINRA rules. As a result, that allegation was dismissed.This matter has been appealed to the NAC and the sanctions are not in effect pending review. (FINRA Case #2009020941801).
Page 31 - 32 of FINRA's March 2015 "Disciplinary and Other FINRA Actions" Report
SEE FINRA Department of Enforcement, Complainaint, v. Lek Securities Corporation and Samuel Frederik Lek, Respondent (OHO Decision, Disciplinary Proceeding No. 2009020941801 / December 30,2014):
The Respondent Firm failed to establish and implement anti-money laundering policies and procedures that were reasonably designed to achieve compliance with the Bank Secrecy Act and the implementing regulations promulgated by the Department of the Treasury. This misconduct violated NASD Conduct Rules 3011(a) and 2110 and FINRA Rules 3310(a) and 2010, as alleged in the First Cause of Action. For this misconduct, the Firm is censured, fmed $100,000, and ordered to pay costs.The Department of Enforcement failed to prove that Respondents' supervisory systems and written supervisory procedures relating to portfolio margining for a particular customer violated NASD Conduct Rules 3010 and 2110 and FINRA Rule 2010, as alleged in the Second Cause of Action. That Cause ofAction is dismissed.Page 1 of the OHO Decision
SIDE BAR: Note how the charges for administering the hearing and maintaining a transcript are often set forth:In FINRA Department of Enforcement, Complainaint, v. Lek Securities Corporation and Samuel Frederik Lek, Respondent (OHO Decision, Disciplinary Proceeding No. 2009020941801 / December 30,2014) [Ed: highlighting provided]:For failing to establish and implement anti-money laundering policies and procedures that were reasonably designed to achieve compliance with the Bank Secrecy Act and its implementing regulations, in violation of NASD Conduct Rules 3011(a) and 2110 and FINRA Rules 3310(a) and 2010, as alleged in the First Cause of Action, Lek Securities Corporation is censured, fined $100,000, and ordered to pay costs. The costs are in the amount of $14776.34, which includes a $750 administrative fee and the cost of the transcript.184 The fine and assessed costs shall be due on a date set by FINRA, but not sooner than thirty days after this decision becomes FINRA's final disciplinary action in this proceeding.Page 46 of the OHO Decision
Rule 420. Appeal of Determinations by Self-Regulatory Organizations.(a) Application for Review; When Available. An application for review by the Commission may be filed by any person who is aggrieved by a determination of a self-regulatory organization with respect to any
(i) final disciplinary sanction;(ii) denial or conditioning of membership or participation;(iii) prohibition or limitation in respect to access to services offered by that self-regulatory organization or a member thereof; or (iv) bar from association as to which a notice is required to be filed with the Commission pursuant to Section 19(d)(1) of the Exchange Act, 15 U.S.C. 78s(d)(1).
(b) Procedure. As required by section 19(d)(1) of the Securities Exchange Act of 1934, 15 U.S.C. 78s(d)(1), an applicant must file an application for review with the Commission within 30 days after the notice of the determination is filed with the Commission and received by the aggrieved person applying for review. The Commission will not extend this 30-day period, absent a showing of extraordinary circumstances. This rule is the exclusive remedy for seeking an extension of the 30-day period.(c) Application. The application shall be filed with the Commission pursuant to Rule 151. The applicant shall serve the application on the self-regulatory organization. The application shall identify the determination complained of and set forth in summary form a brief statement of the alleged errors in the determination and supporting reasons therefor. The application shall state an 8 address where the applicant can be served. The application should not exceed two pages in length. If the applicant will be represented by a representative, the application shall be accompanied by the notice of appearance required by Rule 102(d).(d) Determination Not Stayed. Filing an application for review with the Commission pursuant to paragraph (b) of this rule shall not operate as a stay of the complained of determination made by the self-regulatory organization unless the Commission otherwise orders either pursuant to a motion filed in accordance with Rule 401 or on its own motion.(e) Certification of the Record; Service of the Index. Fourteen days after receipt of an application for review or a Commission order for review, the self regulatory organization shall certify and file with the Commission one copy of the record upon which the action complained of was taken, and shall file with the Commission three copies of an index to such record, and shall serve upon each party one copy of the index.
SIDE BAR: In the Matter of the Application of Caryl Trewyn Lenahan for Review of Disciplinary Action Taken by FINRA (SEC Order Granting Motion To Dismiss Application for Review, '34 Act Release No. 73146; Admin. Proc. File No. 3-15833 / September 19, 2014), FINRA moved to dismiss Respondent Lenahan's appeal to the SEC. FINRA, which had barred Lenahan for failing to respond to its investigative requests, argued that her appeal to the SEC was filed about 18 months beyond Rule 420's 30-day deadline. In granting FINRA's Motion and finding Lenahan's appeal untimely, the SEC asserted:Even if Lenahan had exhausted her administrative remedies, we must dismiss her application for review because it was untimely. Under Section 19(d)(2) of the Securities Exchange Act of 1934, an applicant has thirty days to submit an application to the Commission for review of a disciplinary action imposed by a self-regulatory organization. 11 Lenahan's application was due October 25, 2012, but she waited until April 10, 2014, to file. Only in extraordinary circumstances does the Commission provide an exception for late filings, 12 and Lenahan has failed to show any extraordinary circumstances here. 13 Her professed ignorance of the bar's consequences and alleged reliance on advice from a FINRA examiner-the only reasons she offers for the untimeliness of her application-do not constitute extraordinary circumstances that would excuse her late filing.14 Lenahan's application is thus properly dismissed on this ground as well.Page 5 of the SEC Order