Rafferty Capital Markets LLC says it will pay over $400,000 in sanctions and abide by a 90-day ban preventing it from opening mutual fund brokerage accounts for customers. The penalties resolve FINRA charges that Rafferty Capital engaged in improper market timing trading practices. FINRA also charged Rafferty Capital with getting rid of e-mails pertaining to the transactions in question and failing to respond to warnings of improper timing practices.
According to FINRA, Rafferty Capital helped six hedge fund customers circumvent market timing restrictions without detection from January 2001 to August 2003. The firm i s accused of using various broker branch codes to engage in market timing.
The firm also allegedly allowed two hedge fund clients to continue market timing from April 2001 through April 2002 and circumvented efforts by mutual fund companies to prevent this type of trading. This alleged misconduct resulted in 118 more mutual fund exchanges. The $59,605 profit was made at the expense of other investors.
Rafferty Capital will pay the $59,605 as restitution.The remaining $350,00 is the fine Rafferty must pay to settle the FINRA charges.
SRO also says that Rafferty Capital did not heed red flags indicating that brokers were participating in market timing, lacked the proper procedures that brokers could follow to report rejected or restricted trades, neglected to preserve company e-mail records for the required two-year period, did not set up proper systems and procedures to detect and prevent late trading, and failed to create and maintain accurate records of mutual fund trades.
Rafferty Capital will also reevaluate its procedures and set up the proper systems to make sure that market timing and specific other practices do not occur. The firm is not admitting to any wrongdoing by agreeing to the settlement.
Shepherd Smith and Edwards represents investors who have lost money because of the misconduct of others in the securities industry. Retaining the services of an experienced stockbroker fraud attorney is the best way to increase your chances of getting your investment back. Contact Shepherd Smith and Edwards today and ask for your free consultation.
Related Web Resources:
Rafferty Capital settles charges for $400K, Crainsnewyork.com, November 29, 2007