FINRA panel expels Alpine Securities, orders $2.3 million in restitution

On Behalf of | Apr 1, 2022 | FINRA Compliance

Alpine Securities Corp., a broker-dealer based in Utah, has been expelled from membership in the Financial Industry Regulatory Authority for various violations, reports Investment News.

A FINRA extended hearing panel made the decision last week to expel the firm and also ordered it to pay over $2.3 million in restitution to clients. The authority said it took the action after Alpine Securities converted and misused customer funds and securities, engaged in unauthorized trading, charged customers unfair prices in securities transactions and unreasonable fees, and made an unauthorized capital withdrawal.

The panel, which heard the case for 19 days, also ordered the firm to permanently cease and desist from converting or misusing customer funds or securities.

FINRA noted that Alpine Securities had been one of the largest clearing firms in the United States, but its profits declined in 2018 due to rising expenses. As a result, the firm told customers it would stop carrying retail accounts and would impose additional fees, including a $5,000 monthly account fee, on retail customers who did not close their accounts.

Alpine Securities provided minimal notice to customers of its change in business plan and additional fees, the authority said. Customers also found it difficult to ask questions of the firm due to a change in the back-office system, reduced staffing, and an inadequate telephone system. Many customers had trouble logging into their accounts online and were unable to reach Alpine staff to resolve issues.

The hearing panel concluded that Alpine Securities’ $5,000 monthly account fee, 1% per day illiquidity and volatility fee, and $1,500 certificate withdrawal fee were unreasonable and the $5,000 fee was applied in a discriminatory manner. In addition, Alpine’s appropriation of customer positions valued at $1,500 or less for one penny per position and 2.5% market-making/execution fee led to unfair prices and commissions, according to FINRA’s decision document.

In announcing its decision the hearing panel said, “Individually, the violations in this case are amongst the most egregious in the securities industry.” The panel’s decision becomes final after 45 days unless it is appealed to FINRA’s National Adjudicatory Council, or is called for review by the NAC.

At Lewitas Hyman, we represent clients nationwide who are the victims of unauthorized trading, breaches of fiduciary duty and other forms of financial adviser misconduct and securities fraud. Having worked for financial institutions, including Morgan Stanley and UBS Financial Services, and regulators such as the SEC, we have deep insight in all aspects of securities law. If your financial adviser made trades without your consent, you may be able to pursue a lawsuit to recoup your losses. We’ll help you understand your rights and options. Contact us at (888) 655 6002 or email our team to learn more. 

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