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Cantor Fitzgerald to Pay $7.3 Million for Selling Unregistered Stock

By Erwin J.Shutak, Esq.  of Shustak Reynolds & Partners, P.C. posted on Monday, January 4, 2016.

The Financial Industry Regulatory Authority FINRA ordered investment bank Cantor Fitzgerald & Co. to pay $7.3 million in sanctions for allegedly selling billions of unregistered microcap shares and having inadequate supervisory policies and anti-money laundering programs in place. Two executives at the firm  also were suspended and fined. 

According to Finra, Cantor Fitzgerald failed to have an efficient system to determine whether microcap securities were registered with the Securities and Exchange Commission, therefore bypassing potential red flags. As a result, the firm sold billions of unregistered shares between March 2011 and September 2012 without “adequate review and due diligence,” the regulator charge  in its press release.

Cantor Fitzgerald neither admitted nor denied the charges but consented to the regulator's fines of $6 million and an ordered disgorgement of about $1.3 million in commissions, plus interest.

Jarred Kessler, executive managing director of equity capital markets, was suspended for three months in a principal capacity and fined $35,000 for supervisory failures while equity trader Joseph Ludovico was suspended in all capacities for two months and fined $25,000. Mr. Kessler failed to respond to red flags that the system was insufficient and Mr. Ludovico was the broker of record for the sales of the shares, the press release states.

Shustak Reynolds & Partners, P.C. has extensive experience in the area of securities and financial services law and routinely counsels investors, brokers, broker-dealers and registered investment advisors. For more information  contact Erwin J. Shustak, Esq, Managing Partner, at 619.696.9500 or via email at [email protected] or visit our web site at www.shufirm.com

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