Brokerage Firm Investigation: M Holdings Securities

M Holdings Securities (CRD#: 43285) is a FINRA regulated brokerage firm and investment advisory firm based in Portland, Oregon.

On July 9th, 2018, FINRA censured M Holdings Securities and fined the firm $135,000 for its failure to supervise its representatives.

Supervisory Failures: M Holdings Securities

The relevant time period in this case runs from December of 2013 until March of 2015. The disciplinary proceeding centered around two supervisory failures:

Failure to Supervise: Consolidated Reports:

M Holdings Securities brokers failure to properly supervise its brokers’ use of consolidated reports. A consolidated report is a document that brokers provide to customers that provide a basic accounting of their assets held at and away from the firm. When using such reports, brokerage firms must ensure that all information is clear and accurate. Material misrepresentations and material omissions must be avoided.

However, during the review period, M Holdings Securities brokers provided more than 400 consolidated reports to its customers. Yet, the company had no written supervisory system in place that governed how these reports were to be drafted and presented to customers.

Failure to Supervise: Private Securities Transactions

In addition, FINRA found that M Holdings Securities failed to properly supervise the private securities offering of one of its brokers. FINRA alleges that an unnamed M Holdings Securities broker solicited more than $18 million from 20 different investors for a real estate development project. M Holdings Securities failed to record these private securities transactions in its books, as is required by industry rules.

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