A New Rochelle financial broker-dealer has been sanctioned for inadequate policies and procedures on supervising its representatives.
The Financial Industry Regulatory Authority censured and fined Ecoban Securities Corp. for violating rules designed to ensure “high standards of commercial honor and just and equitable principles of trade.”
Ecoban provides services in the equity and debt markets, such as private equity placements and initial public offerings, according to a 2020 financial statement filed with the U.S. Securities and Exchange Commission. It is owned and operated by Stephen P. de Got and has been regulated by FINRA since 1992.
The firm moved in 2020 from a Manhattan office to a house on Decatur Road, New Rochelle, overlooking Long Island Sound. It supervises about 28 outside representatives.
From mid-2016 to early 2020, FINRA found, Ecoban failed to collect outside brokerage account statements from six representatives. As a result, the firm was unable to review the accounts for unacceptable trading practices, such as insider trading.
Several representatives notified the firm that they were engaged in outside business activities and, in one case, private securities transactions, but Ecoban did not review or evaluate the activities for possible conflicts.
From April 2019 through April 2020, the firm failed to acquire, preserve and review messages transmitted on outside email systems by 13 representatives.
It also failed to establish written procedures or test its supervisory controls.
In signing the consent report, de Got accepted FINRA’s findings “without admitting or denying them.”
But he also waived rights to defend against the findings at a disciplinary hearing or appeal the decision. And he understands that the firm may not make any public statement “denying, directly or indirectly, any finding … or create the impression that the (acceptance, waiver and consent) is without factual basis.”
Ecoban paid a $40,000 fine on Dec. 22. FINRA published its findings this month in a report of disciplinary actions.
