santander securities llc · 2020-06-13 · santander securities llc crd# 41791 sec# 8-49571 main...

BrokerCheck Report

SANTANDER SECURITIES LLC

Section Title

Report Summary

Firm History

CRD# 41791

1

9

Firm Profile 2 - 8

Page(s)

Firm Operations 10 - 25

Disclosure Events 26

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CRD# 41791

SEC# 8-49571

Main Office Location

2 MORRISSEY BOULEVARDMAIL CODE: MA1-MB2-03-17DORCHESTER, MA 02125Regulated by FINRA Boston Office

Mailing Address

2 MORRISSEY BOULEVARDMAIL CODE: MA1-MB2-03-17DORCHESTER, MA 02125

This firm is a brokerage firm and an investmentadviser firm. For more information aboutinvestment adviser firms, visit the SEC'sInvestment Adviser Public Disclosure website at:

Business Telephone Number

866-736-6475

https://www.adviserinfo.sec.gov

Report Summary for this Firm

This report summary provides an overview of the brokerage firm. Additional information for this firm can be foundin the detailed report.

Disclosure Events

Brokerage firms are required to disclose certaincriminal matters, regulatory actions, civil judicialproceedings and financial matters in which the firm orone of its control affiliates has been involved.

Are there events disclosed about this firm? Yes

The following types of disclosures have beenreported:

Type Count

Regulatory Event 12

Civil Event 1

Arbitration 7

Firm Profile

This firm is classified as a limited liability company.

This firm was formed in Puerto Rico on 11/03/2011.

Its fiscal year ends in December.

Firm History

Information relating to the brokerage firm's historysuch as other business names and successions(e.g., mergers, acquisitions) can be found in thedetailed report.

Firm Operations

Is this brokerage firm currently suspended with anyregulator? No

This firm conducts 21 types of businesses.

This firm is affiliated with financial or investmentinstitutions.

This firm has referral or financial arrangements withother brokers or dealers.

This firm is registered with:

• the SEC• 1 Self-Regulatory Organization• 53 U.S. states and territories

www.finra.org/brokercheck User Guidance

1©2020 FINRA. All rights reserved. Report about SANTANDER SECURITIES LLC

https://adviserinfo.sec.gov/firm/summary/41791


http://www.finra.org/brokercheck

http://www.finra.org/brokercheck_reports


This firm is classified as a limited liability company.

This firm was formed in Puerto Rico on 11/03/2011.

CRD#

This section provides the brokerage firm's full legal name, "Doing Business As" name, business and mailingaddresses, telephone number, and any alternate name by which the firm conducts business and where such name isused.

Firm Profile

Firm Names and Locations

Its fiscal year ends in December.


SEC#

41791

8-49571

Main Office Location

Mailing Address

Business Telephone Number

Doing business as SANTANDER SECURITIES LLC

866-736-6475

Regulated by FINRA Boston Office



Other Names of this Firm

Name Where is it used

SANTANDER INVESTMENT SERVICES AK, AL, AR, AZ, CA,CO, CT, DC, DE, FL,GA, HI, IA, ID, IL, IN,KS, KY, LA, MA, MD,ME, MI, MN, MO,MS, MT, NC, ND, NE,NH, NJ, NM, NV, NY,OH, OK, OR, PA, PR,RI, SC, SD, TN, TX,UT, VA, VI, VT, WA,WI, WV, WY 2©2020 FINRA. All rights reserved. Report about SANTANDER SECURITIES LLC





AK, AL, AR, AZ, CA,CO, CT, DC, DE, FL,GA, HI, IA, ID, IL, IN,KS, KY, LA, MA, MD,ME, MI, MN, MO,MS, MT, NC, ND, NE,NH, NJ, NM, NV, NY,OH, OK, OR, PA, PR,RI, SC, SD, TN, TX,UT, VA, VI, VT, WA,WI, WV, WY





This section provides information relating to all direct owners and executive officers of the brokerage firm.

Direct Owners and Executive Officers

Firm Profile

Position

Percentage of Ownership

Is this a public reportingcompany?

Position Start Date

Does this owner direct themanagement or policies ofthe firm?

SANTANDER HOLDINGS USA, INC.

DIRECT OWNER

75% or more

Yes

Domestic Entity

07/2016

Yes

Is this a domestic or foreignentity or an individual?

Legal Name & CRD# (if any):

Position



Position Start Date


ALVAREZ DE SOTO, JUAN CARLOS

DIRECTOR

Less than 5%

No

Individual

03/2020

Yes

2589842



Position


Position Start Date

CANNY, COLLEEN

DIRECTOR

Less than 5%

Individual

11/2019

6533423








Direct Owners and Executive Officers (continued)

Firm Profile




Less than 5%

No

Yes

Position



Position Start Date


CARTER, LAWRENCE ANDREW

CHIEF COMPLIANCE OFFICER

Less than 5%

No

Individual

01/2013

Yes

2113682



Position



Position Start Date


DRAGO, FRANK P

DIRECTOR

Less than 5%

No

Individual

05/2020

Yes

1488658



FAIRBANKS, MAURA KEEGAN

5738071








Firm Profile

Position



Position Start Date


CHIEF OPERATIONS OFFICER

Less than 5%

No

Individual

06/2018

Yes

5738071


Position



Position Start Date


JULIANO, WILLIAM JOSEPH

DIRECTOR

Less than 5%

No

Individual

11/2019

Yes

7203100



Position


Position Start Date


SNYDER, JONATHAN ANDREW

CHIEF FINANCIAL OFFICER

Less than 5%

Individual

09/2016

Yes

6514215









Firm Profile



No

Yes

Position



Position Start Date


VANNAH, JAMES

CHIEF LEGAL OFFICER & SECRETARY

Less than 5%

No

Individual

12/2016

Yes

5679595



Position



Position Start Date


WEINER, JEFFREY STEPHEN

PRESIDENT & CEO

Less than 5%

No

Individual

11/2019

Yes

2323856








This section provides information relating to any indirect owners of the brokerage firm.

Indirect Owners

Firm Profile

No information reported.






Firm History

This section provides information relating to any successions (e.g., mergers, acquisitions) involving the firm.

11/03/2011Date of Succession:

This firm was previously: SANTANDER SECURITIES CORPORATION

41791Predecessor CRD#:

Description SANTANDER SECURITIES CONVERSION OF CORPORATION TO LLC.SANTANDER SECURITIES LLC ASSUMES ALL LIABILITIES AND ASSETS.THERE IS NO CHANGE IN CONTROL OR OWNERSHIP.






Firm Operations

RegistrationsThis section provides information about the regulators (Securities and Exchange Commission (SEC), self-regulatoryorganizations (SROs), and U.S. states and territories) with which the brokerage firm is currently registered andlicensed, the date the license became effective, and certain information about the firm's SEC registration.

This firm is currently registered with the SEC, 1 SRO and 53 U.S. states and territories.

SEC Registration Questions

This firm is registered with the SEC as:

A broker-dealer:

A broker-dealer and government securities broker or dealer:

A government securities broker or dealer only:

This firm has ceased activity as a government securities broker or dealer:

Yes

Yes

No

No

Federal Regulator Status Date Effective

SEC Approved 12/03/1996

Self-Regulatory Organization Status Date Effective

FINRA Approved 12/03/1996






Firm Operations

Registrations (continued)

U.S. States &Territories

Status Date Effective

Alabama Approved 06/05/2013

Alaska Approved 08/02/2012

Arizona Approved 02/17/2000

Arkansas Approved 02/14/2000

California Approved 04/22/1997

Colorado Approved 02/21/2002

Connecticut Approved 02/22/2000

Delaware Approved 02/16/2000

District of Columbia Approved 02/23/2000

Florida Approved 06/06/1997

Georgia Approved 02/17/2000

Hawaii Approved 05/31/2006

Idaho Approved 02/02/2010

Illinois Approved 06/11/1997

Indiana Approved 01/07/2000

Iowa Approved 07/28/2010

Kansas Approved 02/25/2000

Kentucky Approved 02/17/2000

Louisiana Approved 03/13/2000

Maine Approved 03/03/2000

Maryland Approved 02/25/2000

Massachusetts Approved 03/13/1998

Michigan Approved 08/17/2012

Minnesota Approved 08/06/2012

Mississippi Approved 02/17/2000

Missouri Approved 03/19/2013

Montana Approved 08/16/2012

Nebraska Approved 07/09/2001

Nevada Approved 02/11/2000

New Hampshire Approved 07/19/2006

New Jersey Approved 06/12/1997

New Mexico Approved 11/07/2012

New York Approved 05/15/1997

U.S. States &Territories

Status Date Effective

North Carolina Approved 02/22/2000

North Dakota Approved 03/06/2013

Ohio Approved 03/16/2001

Oklahoma Approved 08/01/2012

Oregon Approved 07/31/2002

Pennsylvania Approved 02/24/2000

Puerto Rico Approved 12/03/1996

Rhode Island Approved 01/24/2012

South Carolina Approved 02/15/2000

South Dakota Approved 08/28/2012

Tennessee Approved 03/01/2000

Texas Approved 08/16/2012

Utah Approved 05/30/2003

Vermont Approved 08/14/2012

Virgin Islands Approved 09/25/2012

Virginia Approved 02/24/2000

Washington Approved 02/23/2000

West Virginia Approved 02/25/2013

Wisconsin Approved 02/17/2000

Wyoming Approved 07/26/2004






Firm Operations

Types of BusinessThis section provides the types of business, including non-securities business, the brokerage firm is engaged in orexpects to be engaged in.

Other Types of Business

This firm does not effect transactions in commodities, commodity futures, or commodity options.This firm does engage in other non-securities business.

Non-Securities Business Description: FIXED ANNUITIESLIFEDISABILITY INSURANCE

This firm currently conducts 21 types of businesses.

Types of Business

Broker or dealer making inter-dealer markets in corporation securities over-the-counter

Broker or dealer retailing corporate equity securities over-the-counter

Broker or dealer selling corporate debt securities

Underwriter or selling group participant (corporate securities other than mutual funds)

Mutual fund underwriter or sponsor

Mutual fund retailer

U S. government securities dealer

U S. government securities broker

Municipal securities dealer

Municipal securities broker

Broker or dealer selling variable life insurance or annuities

Solicitor of time deposits in a financial institution

Real estate syndicator

Put and call broker or dealer or option writer

Broker or dealer selling securities of non-profit organizations (e.g., churches, hospitals)

Investment advisory services

Broker or dealer selling tax shelters or limited partnerships in primary distributions

Non-exchange member arranging for transactions in listed securities by exchange member

Trading securities for own account

Private placements of securities

Broker or dealer involved in a networking, kiosk or similar arrangment with a: bank, savings bank or association, orcredit union





www.finra.org/brokercheck User GuidanceNon-Securities Business Description: FIXED ANNUITIESLIFEDISABILITY INSURANCE





Firm Operations

Clearing Arrangements

This firm does not hold or maintain funds or securities or provide clearing services for other broker-dealer(s).

Introducing Arrangements

This firm does refer or introduce customers to other brokers and dealers.

Name: PERSHING LLC

Business Address: ONE PERSHING PLAZAJERSEY CITY, NJ 07399

CRD #: 7560

Effective Date: 09/26/1996

Description: PERSHING PROVIDES SANTANDER SECURITIES CLEARING SERVICESTHRU A "FULLY DISCLOSED CLEARING AGREEMENT". SANTANDERSECURITIES'PROPIETARY FUNDS AND SECURITIES AS WELL AS THECUSTOMERS ARE MAINTAINED AT PERSHING.






Firm Operations

Industry Arrangements

This firm does have books or records maintained by a third party.

This firm does have accounts, funds, or securities maintained by a third party.

This firm does have customer accounts, funds, or securities maintained by a third party.

This firm does not have individuals who control its management or policies through agreement.

Control Persons/Financing

Name: PERSHING LLC


CRD #: 7560


Description: PERSHING PROVIDES SANTANDER SECURITIES CLEARING SERVICESTHRU A "FULLY DISCLOSED CLEARING AGREEMENT". SANTANDERSECURITIES'PROPIETARY FUNDS AND SECURITIES AS WELL AS THECUSTOMERS ARE MAINTAINED AT PERSHING.

Name: PERSHING LLC


CRD #: 7560


Description: PERSHING PROVIDES SANTANDER SECURITES CLEARING SERVICESTHRU A "FULLY DISCLOSED CLEARING AGREEMENT". SANTANDERSECURITIES'PROPIETARY FUNDS AND SECURITIES AS WELL AS THECUSTOMERS ARE MAINTAINED AT PERSHING.

Name: PERSHING LLC


CRD #: 7560


Description: PERSHING PROVISES SANTANDER SECURITIES CLEARING SERVICESTHRY A "FULLY DISCLOSED CLEARING AGREEMENT." SANTANDERSECURITIES'PROPIETARY FUNDS AND SECURITIES AS WELL AS THECUSTOMERS ARE MAINTAINED AT PERSHING.






Firm Operations

Industry Arrangements (continued)

This firm does not have individuals who wholly or partly finance the firm's business.






Firm Operations

Organization AffiliatesThis section provides information on control relationships the firm has with other firms in the securities, investmentadvisory, or banking business.

This firm is, directly or indirectly:

· in control of· controlled by· or under common control withthe following partnerships, corporations, or other organizations engaged in the securities or investmentadvisory business.

Yes

Yes

No

10/17/2013

75 STATE STREETBOSTON, MA 02109

SANTANDER BANK, N.A. is under common control with the firm.

UNDER COMMON CONTROL UNDER SANTANDER HOLDINGS USA INC.Description:

Investment AdvisoryActivities:

Securities Activities:

Country:

Foreign Entity:

Effective Date:

Business Address:

Yes

Yes

No

12/26/2003

214 PONCE DE LEON AVENUESUITE 600SAN JUAN, PR 00917

SANTANDER BANCORP is under common control with the firm.




Country:

Foreign Entity:

Effective Date:

Business Address:

195 MONTAGUE STREETBROOKLYN, NY 11201

INDEPENDENCE COMMUNITY BANCORP is under common control with the firm.

Business Address:






Firm Operations

Organization Affiliates (continued)

Yes

Yes

No

01/29/2009

195 MONTAGUE STREETBROOKLYN, NY 11201

UNDER COMMON CONTROL UNDER BANCO SANTANDER, S.A.Description:



Country:

Foreign Entity:

Effective Date:

Yes

Yes

No

12/30/2003

207 PONCE DE LEON AVENUSUITE 600HATO REY, PR 00918

BANCO SANTANDER PUERTO RICO is under common control with the firm.




Country:

Foreign Entity:

Effective Date:

Business Address:

Yes

Yes

SPAIN

Yes

10/23/2003

MESENA 80MADRID, SPAIN

BANCO ESPANOL DE CREDITO, S.A. is under common control with the firm.




Country:

Foreign Entity:

Effective Date:

Business Address:

POLG RAOS 7SANTANDER (CANTABRIA), SPAIN 39011

BANCO SANTANDER, S.A. controls the firm.

Business Address:18©2020 FINRA. All rights reserved. Report about SANTANDER SECURITIES LLC





Firm Operations


Yes

Yes

SPAIN

Yes

07/01/2016

POLG RAOS 7SANTANDER (CANTABRIA), SPAIN 39011

THE ULTIMATE PARENT OF SANTANDER SECURITIES, LLC, WHOLLY OWNSSANTANDER HOLDINGS, USA.

Description:



Country:

Foreign Entity:

Effective Date:

Business Address:

Yes

Yes

No

07/01/2016

1401 BRICKELL AVEMIAMI, FL 33131

BANCO SANTANDER INTERNATIONAL is under common control with the firm.




Country:

Foreign Entity:

Effective Date:

Business Address:

No

Yes

VENEZUELA

Yes

10/23/2003

AV. FRANCISCO DE MIRANDA CRUCE CON 2DA AV DE LOS PCARACAS DISTRITO CAPITAL, VENEZUELA 1060

VALORES SANTANDER CASA DE BOLSA, C.A. is under common control with the firm.




Country:

Foreign Entity:

Effective Date:

Business Address:






Firm Operations


No

Yes

CHILE

Yes

10/23/2003

AHUMADA 179 PISO 12SANTIAGO, CHILE

SOCIEDAD INTERBANCARIA DE DEPÓSITOS DE VALORES S.A. is under common control with the firm.




Country:

Foreign Entity:

Effective Date:

Business Address:

No

Yes

CHILE

Yes

10/23/2003

BANDERA 140, PISO 12SANTIAGO, CHILE

SANTANDER S.A. CORREDORES DE BOLSA is under common control with the firm.




Country:

Foreign Entity:

Effective Date:

Business Address:

No

Yes

ARGENTINA

Yes

10/23/2003

BARTOLOME MITRE 480 5TO. PISO CAPITAL FEDERALBUENOS AIRES, ARGENTINA 1036

SANTANDER RÍO SOCIEDAD DE BOLSA S.A. is under common control with the firm.




Country:

Foreign Entity:

Effective Date:

Business Address:






Firm Operations

Organization Affiliates (continued)UNDER COMMON CONTROL UNDER BANCO SANTANDER, S.A.Description:

No

Yes

COLOMBIA

Yes

10/23/2003

CARRERA 7 NO. 99-53BOGOTÁ, COLOMBIA

SANTANDER INVESTMENT VALORES COLOMBIA S.A., COMISIONISTA DE BOLSA COMERCIAL is undercommon control with the firm.




Country:

Foreign Entity:

Effective Date:

Business Address:

No

Yes

BAHAMAS

Yes

10/23/2003

GOODMAN'S BAY CORPORATE CENTRE 3RD FLOOR, WEST BAYNEW PROVIDENCE, BAHAMAS N-1682

SANTANDER INVESTMENT LIMITED is under common control with the firm.




Country:

Foreign Entity:

Effective Date:

Business Address:

Yes

Yes

PORTUGAL

Yes

10/23/2003

RUA DA MESQUITA, 6LISBOA, PORTUGAL 1099-024

SANTANDER ASSET MANAGEMENT - SOCIEDADE GESTORA DE FUNDOS DE INVESTIMENTO MOBILIÁRIO,S.A. is under common control with the firm.



Country:

Foreign Entity:

Effective Date:

Business Address:






Firm Operations


Yes



No

Yes

CHILE

Yes

10/23/2003

BANDERA 140 PISO 6SANTIAGO, CHILE

SANTANDER AGENTE DE VALORES LIMITADA is under common control with the firm.




Country:

Foreign Entity:

Effective Date:

Business Address:

No

Yes

BRAZIL

Yes

10/23/2003

AV. BRIGADEIRO FARIA LIMA3729-14º ANDAR (PARTE) - ITAIMSAO PAULO, BRAZIL 04538-905

NORCHEM PARTICIPAÇÕES E CONSULTORIA S.A. is under common control with the firm.




Country:

Foreign Entity:

Effective Date:

Business Address:

MEXICO

Yes

10/23/2009

PROLONGACIÓN PASEO DE LA REFORMA500 MODULO 206 . COL. LOMAS DE SANTA FE. DELEGACIÓMEXICO, MEXICO 1219

GESTION SANTANDER SA DE CV is under common control with the firm.

Country:

Foreign Entity:

Effective Date:

Business Address:






Firm Operations


No

Yes

MEXICO




Country:

No

Yes

MEXICO

Yes

10/23/2003

PROLONGACIÓN PASEO DE LA REFORMA NO 500SEGUNDO PISO MODULO 210, COLONIA LOMAS DE SANTA FCIUDAD DE MEXICO, MEXICO 1213

CASA DE BOLSA SANTANDER, S.A. DE C.V., GRUPO FINANCIERO SANTANDER is under common controlwith the firm.




Country:

Foreign Entity:

Effective Date:

Business Address:

Yes

No

No

10/17/2007

1660 DUKE STREETSUITE 200ALEXANDRIA, VA 22314

FORTRAM LLC is under common control with the firm.




Country:

Foreign Entity:

Effective Date:

Business Address:

MESENA 80MADRID, SPAIN 28033

BANESTO BOLSA S.A. is under common control with the firm.

Business Address:






Firm Operations


Yes

Yes

SPAIN

Yes

10/23/2003




Country:

Foreign Entity:

Effective Date:

No

Yes

No

07/01/1996

45 EAST 53RD STREETNEW YORK, NY 10022

37216

SANTANDER INVESTMENT SECURITIES INC. is under common control with the firm.




Country:

Foreign Entity:

Effective Date:

Business Address:

CRD #:

Yes

No

No

12/11/2013

B-7 CALLE TABONUCO SUITE 1800GUAYNABO, PR 00968

109399

SANTANDER ASSET MANAGEMENT is under common control with the firm.




Country:

Foreign Entity:

Effective Date:

Business Address:

CRD #:






Firm Operations


This firm is directly or indirectly, controlled by the following:

· bank holding company· national bank· state member bank of the Federal Reserve System· state non-member bank· savings bank or association· credit union· or foreign bank

Effective Date:

Business Address:

Description: WHOLLY OWNS SANTANDER SECURITIES, LLC

SANTANDER HOLDINGS, USA is a Bank Holding Company and controls the firm.

07/01/2016

75 STATE STREETBOSTON, MA 02109






Disclosure Events

All firms registered to sell securities or provide investment advice are required to disclose regulatory actions, criminal orcivil judicial proceedings, and certain financial matters in which the firm or one of its control affiliates has been involved.For your convenience, below is a matrix of the number and status of disclosure events involving this brokerage firm orone of its control affiliates. Further information regarding these events can be found in the subsequent pages of thisreport.

Final On AppealPending

Regulatory Event 0 12 0

Civil Event 1 0 0

Arbitration N/A 7 N/A






Disclosure Event Details

What you should know about reported disclosure events:

1. BrokerCheck provides details for any disclosure event that was reported in CRD. It also includessummary information regarding FINRA arbitration awards in cases where the brokerage firm wasnamed as a respondent.

2. Certain thresholds must be met before an event is reported to CRD, for example: o A law enforcement agency must file formal charges before a brokerage firm is required to disclose a

particular criminal event.3. Disclosure events in BrokerCheck reports come from different sources:

o Disclosure events for this brokerage firm were reported by the firm and/or regulators. When the firmand a regulator report information for the same event, both versions of the event will appear in theBrokerCheck report. The different versions will be separated by a solid line with the reporting sourcelabeled.

4. There are different statuses and dispositions for disclosure events: o A disclosure event may have a status of pending, on appeal, or final.

§ A "pending" event involves allegations that have not been proven or formally adjudicated.§ An event that is "on appeal" involves allegations that have been adjudicated but are currently

being appealed.§ A "final" event has been concluded and its resolution is not subject to change.

o A final event generally has a disposition of adjudicated, settled or otherwise resolved.§ An "adjudicated" matter includes a disposition by (1) a court of law in a criminal or civil matter,

or (2) an administrative panel in an action brought by a regulator that is contested by the partycharged with some alleged wrongdoing.

§ A "settled" matter generally involves an agreement by the parties to resolve the matter.Please note that firms may choose to settle customer disputes or regulatory matters forbusiness or other reasons.

§ A "resolved" matter usually involves no payment to the customer and no finding ofwrongdoing on the part of the individual broker. Such matters generally involve customerdisputes.

5. You may wish to contact the brokerage firm to obtain further information regarding any of thedisclosure events contained in this BrokerCheck report.

Regulatory - Final

This type of disclosure event involves (1) a final, formal proceeding initiated by a regulatory authority (e.g., a statesecurities agency, self-regulatory organization, federal regulator such as the U.S. Securities and Exchange Commission,foreign financial regulatory body) for a violation of investment-related rules or regulations; or (2) a revocation orsuspension of the authority of a brokerage firm or its control affiliate to act as an attorney, accountant or federalcontractor.

Disclosure 1 of 12

Reporting Source: Firm

Allegations: THE STATE OF NEW HAMPSHIRE ALLEGED THAT, ALTHOUGH AN AGENT OFTHE FIRM WAS REGISTERED AS A BROKER-DEALER AGENT WITHIN NEWHAMPSHIRE, THE AGENT WAS NOT REGISTERED AS AN INVESTMENTADVISOR REPRESENTATIVE IN NEW HAMPSHIRE.

Current Status: Final






Initiated By: STATE OF NEW HAMPSHIRE DEPARTMENT OF STATE BUREAU OFSECURITIES REGULATION

Principal Sanction(s)/ReliefSought:

Cease and Desist

Other Sanction(s)/ReliefSought:

Date Initiated: 05/25/2018

Docket/Case Number: INV2019-00026

Principal Product Type: No Product

Other Product Type(s):

Allegations: THE STATE OF NEW HAMPSHIRE ALLEGED THAT, ALTHOUGH AN AGENT OFTHE FIRM WAS REGISTERED AS A BROKER-DEALER AGENT WITHIN NEWHAMPSHIRE, THE AGENT WAS NOT REGISTERED AS AN INVESTMENTADVISOR REPRESENTATIVE IN NEW HAMPSHIRE.

Resolution Date: 01/06/2020

Resolution:

Other Sanctions Ordered:

Sanction Details: THE FIRM AGREED TO PAY AN ADMINISTRATIVE FINE OF $35,000,INVESTIGATION COSTS OF $15,000, AND SHALL CEASE AND DESIST FROMEMPLOYING OR ASSOCIATING WITH UNREGISTERED INVESTMENTADVISOR REPRESENTATIVES.

Firm Statement ON MAY 25, 2018, AN AGENT OF THE FIRM RELOCATED TO THE STATE OFNEW HAMPSHIRE. THE AGENT PROVIDED BOTH BROKER-DEALER ANDINVESTMENT ADVISORY SERVICES WHILE IN NEW HAMPSHIRE TO BOTHRESIDENTS OF NEW HAMPSHIRE AND OTHER STATES. THE AGENT WASREGISTERED AS A BROKER-DEALER AGENT WITH NEW HAMPSHIRE BUT,DUE TO AN ADMINISTRATIVE OVERSIGHT, THE AGENT WAS NOTREGISTERED AS AN INVESTMENT ADVISOR REPRESENTATIVE WITHIN NEWHAMPSHIRE. THE AGENT, WHILE UNREGISTERED AS AN INVESTMENTADVISOR REPRESENTATIVE, PROVIDED INVESTMENT ADVISORYSERVICES. ON JULY 16, 2019 THE FIRM DETERMINED THE AGENT WASUNREGISTERED AS AN INVESTMENT ADVISOR REPRESENTATIVE IN NEWHAMPSHIRE, AND SELF-REPORTED THE LACK OF PROPER REGISTRATION.THE AGENT IS NOW PROPERLY REGISTERED AS AN INVESTMENT ADVISORREPRESENTATIVE IN NEW HAMPSHIRE.

Sanctions Ordered: Monetary/Fine $50,000.00

Consent

Disclosure 2 of 12

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Disclosure 2 of 12


Initiated By: COMMONWEALTH OF MASSACHUSETTS ATTORNEY GENERAL'S OFFICE


Other


ASSURANCE OF DISCONTINUANCE


Docket/Case Number: 1984CV01754 E

Principal Product Type: Annuity(ies) - Variable


Allegations: WITHOUT ADMITTING OR DENYING ANY ALLEGATIONS OR CONCLUSIONSOF LAW, SSLLC ENTERED INTO AN ASSURANCE OF DISCONTINUANCE("AOD") WITH THE COMMONWEALTH OF MASSACHUSETTS. AFTER ANINVESTIGATION CONDUCTED BY THE ATTORNEY GENERAL'S OFFICE("AGO"), THE AGO ALLEGED THAT A MASSACHUSETTS BASED SSLLCREGISTERED REPRESENTATIVE ("RR") ENGAGED IN THE SALE OFUNSUITABLE VARIABLE ANNUITY PRODUCTS TO MASSACHUSETTSCUSTOMERS, INCLUDING SENIORS. THE AGO FURTHER ALLEGED THATFROM 2012 TO 2014, SSLLC FAILED TO ADEQUATELY SUPERVISE THE RR'SSALE ACTIVITIES, ENABLING HIM TO COMMIT UNFAIR AND DECEPTIVESALES PRACTICES. IN ADDITION, THE AGO ALLEGED THAT SSLLC FAILEDTO TAKE ADEQUATE STEPS TO REDUCE CUSTOMER CONFUSIONBETWEEN THE BROKER-DEALER AND THE BANK.



Resolution:

Other Sanctions Ordered: SSLLC WILL OFFER TO REIMBURSE CERTAIN OF THE MASSACHUSETTSRR'S CUSTOMERS' SURRENDER CHARGES AND/OR CERTAINMASSACHUSETTS CLIENTS OF THE FIRM, WHO INDICATED THEY WERECONFUSED. PROVIDE CERTAIN MASSACHUSETTS CLIENTS WITH AREMINDER THAT VARIABLE ANNUITIES ARE NOT FDIC INSURED, MAY LOSEVALUE, ARE NOT BANK GUARANTEED AND WERE SOLD BY THE BROKER-DEALER, NOT THE BANK. IN ADDITION, THE FIRM WILL REMIND THE FIRM'SRRS OF THE DEFINITION OF INVESTMENT EXPERIENCE AND GENERALINVESTMENT KNOWLEDGE AS DEFINED AND USED IN THE FIRM'S NEWACCOUNT FORM AND PROVIDE A NOTICE TO RR'S CONCERNINGAPPROPRIATE METHODS FOR DESCRIBING THE DIFFERENCES BETWEENTHE BROKER-DEALER AND THE BANK DURING CERTAIN CONTACTS WITHMASSACHUSETTS CUSTOMERS.

Sanctions Ordered: Monetary/Fine $100,000.00Disgorgement/Restitution

Other






SSLLC WILL OFFER TO REIMBURSE CERTAIN OF THE MASSACHUSETTSRR'S CUSTOMERS' SURRENDER CHARGES AND/OR CERTAINMASSACHUSETTS CLIENTS OF THE FIRM, WHO INDICATED THEY WERECONFUSED. PROVIDE CERTAIN MASSACHUSETTS CLIENTS WITH AREMINDER THAT VARIABLE ANNUITIES ARE NOT FDIC INSURED, MAY LOSEVALUE, ARE NOT BANK GUARANTEED AND WERE SOLD BY THE BROKER-DEALER, NOT THE BANK. IN ADDITION, THE FIRM WILL REMIND THE FIRM'SRRS OF THE DEFINITION OF INVESTMENT EXPERIENCE AND GENERALINVESTMENT KNOWLEDGE AS DEFINED AND USED IN THE FIRM'S NEWACCOUNT FORM AND PROVIDE A NOTICE TO RR'S CONCERNINGAPPROPRIATE METHODS FOR DESCRIBING THE DIFFERENCES BETWEENTHE BROKER-DEALER AND THE BANK DURING CERTAIN CONTACTS WITHMASSACHUSETTS CUSTOMERS.

Sanction Details: PAY A PENALTY OF $100,000, AND OFFER THE REIMBURSEMENT OFSURRENDER CHARGES, TOTALING APPROXIMATELY $140,000 TO CERTAINMASSACHUSETTS CLIENTS, IF THEY CHOOSE TO SURRENDER THEIRANNUITY.

Firm Statement THE AGO AND SSLLC FURTHER AGREED THAT NOTHING IN THE AOD ISINTENDED TO FORM THE BASIS FOR DISQUALIFICATION UNDER THE LAWSOF THE UNITED STATES, ANY STATE OR THE UNITED STATES TERRITORIESAND INCLUDING, WITHOUT LIMITATION, ANY DISQUALIFICATION FROMRELYING UPON ANY STATE OR FEDERAL REGISTRATION EXEMPTIONS ORSAFE HARBOR PROVISIONS, OR ANY STATUTE, RULE OR REGULATIONINCLUDING FINRA AND OTHER SRO RULES OR MEMBERSHIP PROVISIONSAND IS NOT INTENDED TO BE A FINAL ORDER BASED UPON VIOLATIONSOF ANY MASSACHUSETTS STATUTE, RULE OR REGULATION THATPROHIBITS FRAUDULENT, MANIPULATIVE OR DECEPTIVE CONDUCT.

Disclosure 3 of 12

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Reporting Source: Regulator

Allegations: IA RELEASE 40-5140, MARCH 11, 2019: THE SECURITIES AND EXCHANGECOMMISSION DEEMS IT APPROPRIATE AND IN THE PUBLIC INTEREST THATPUBLIC ADMINISTRATIVE AND CEASE-AND-DESIST PROCEEDINGS BEINSTITUTED AGAINST SANTANDER SECURITIES LLC ("RESPONDENT"). ONTHE BASIS OF THIS ORDER AND RESPONDENT'S OFFER, THECOMMISSION FINDS THAT THESE PROCEEDINGS ARISE OUT OFBREACHES OF FIDUCIARY DUTY AND INADEQUATE DISCLOSURES BY THERESPONDENT IN CONNECTION WITH ITS MUTUAL FUND SHARE CLASSSELECTION PRACTICES AND THE FEES IT RECEIVED. AT TIMES DURINGTHE RELEVANT PERIOD, RESPONDENT PURCHASED, RECOMMENDED, ORHELD FOR ADVISORY CLIENTS MUTUAL FUND SHARE CLASSES THATCHARGED 12B-1 FEES INSTEAD OF LOWER-COST SHARE CLASSES OF THESAME FUNDS FOR WHICH THE CLIENTS WERE ELIGIBLE. RESPONDENTRECEIVED 12B-1 FEES IN CONNECTION WITH THESE INVESTMENTS.RESPONDENT FAILED TO DISCLOSE IN ITS FORM ADV OR OTHERWISE THECONFLICTS OF INTEREST RELATED TO (A) ITS RECEIPT OF 12B-1 FEES,AND/OR (B) ITS SELECTION OF MUTUAL FUND SHARE CLASSES THAT PAYSUCH FEES. DURING THE RELEVANT PERIOD, RESPONDENT RECEIVED12B-1 FEES FOR ADVISING CLIENTS TO INVEST IN OR HOLD SUCH MUTUALFUND SHARE CLASSES. AS A RESULT OF THE CONDUCT, RESPONDENTWILLFULLY VIOLATED SECTIONS 206(2) AND 207 OF THE ADVISERS ACT.







Initiated By: UNITED STATES SECURITIES AND EXCHANGE COMMISSION


Other


N/A


Docket/Case Number: 3-19043

Principal Product Type: Mutual Fund(s)


IA RELEASE 40-5140, MARCH 11, 2019: THE SECURITIES AND EXCHANGECOMMISSION DEEMS IT APPROPRIATE AND IN THE PUBLIC INTEREST THATPUBLIC ADMINISTRATIVE AND CEASE-AND-DESIST PROCEEDINGS BEINSTITUTED AGAINST SANTANDER SECURITIES LLC ("RESPONDENT"). ONTHE BASIS OF THIS ORDER AND RESPONDENT'S OFFER, THECOMMISSION FINDS THAT THESE PROCEEDINGS ARISE OUT OFBREACHES OF FIDUCIARY DUTY AND INADEQUATE DISCLOSURES BY THERESPONDENT IN CONNECTION WITH ITS MUTUAL FUND SHARE CLASSSELECTION PRACTICES AND THE FEES IT RECEIVED. AT TIMES DURINGTHE RELEVANT PERIOD, RESPONDENT PURCHASED, RECOMMENDED, ORHELD FOR ADVISORY CLIENTS MUTUAL FUND SHARE CLASSES THATCHARGED 12B-1 FEES INSTEAD OF LOWER-COST SHARE CLASSES OF THESAME FUNDS FOR WHICH THE CLIENTS WERE ELIGIBLE. RESPONDENTRECEIVED 12B-1 FEES IN CONNECTION WITH THESE INVESTMENTS.RESPONDENT FAILED TO DISCLOSE IN ITS FORM ADV OR OTHERWISE THECONFLICTS OF INTEREST RELATED TO (A) ITS RECEIPT OF 12B-1 FEES,AND/OR (B) ITS SELECTION OF MUTUAL FUND SHARE CLASSES THAT PAYSUCH FEES. DURING THE RELEVANT PERIOD, RESPONDENT RECEIVED12B-1 FEES FOR ADVISING CLIENTS TO INVEST IN OR HOLD SUCH MUTUALFUND SHARE CLASSES. AS A RESULT OF THE CONDUCT, RESPONDENTWILLFULLY VIOLATED SECTIONS 206(2) AND 207 OF THE ADVISERS ACT.


Resolution:

Other Sanctions Ordered: UNDERTAKINGS AND PREJUDGMENT INTEREST

Sanction Details: THE RESPONDENT SHALL CEASE AND DESIST FROM COMMITTING ORCAUSING ANY VIOLATIONS AND ANY FUTURE VIOLATIONS OF SECTIONS206(2) AND 207 OF THE ADVISERS ACT. RESPONDENT IS CENSURED,SHALL PAY DISGORGEMENT OF $245,826.43 AND PREJUDGMENT INTERESTOF $24,713.46, AND SHALL COMPLY WITH THE UNDERTAKINGSENUMERATED IN THE OFFER OF SETTLEMENT.

Regulator Statement RESPONDENT HAS SUBMITTED AN OFFER OF SETTLEMENT WHICH THECOMMISSION HAS DETERMINED TO ACCEPT. IN VIEW OF THE FOREGOING,THE COMMISSION DEEMS IT APPROPRIATE IN THE PUBLIC INTEREST TOIMPOSE THE SANCTIONS AGREED TO IN THE RESPONDENT'S OFFER.

RESPONDENT SELF-REPORTED TO THE COMMISSION THE VIOLATIONSDISCUSSED IN THIS ORDER PURSUANT TO THE DIVISION OFENFORCEMENT'S SHARE CLASS SELECTION DISCLOSURE INITIATIVE("SCSD INITIATIVE"). ACCORDINGLY, THIS ORDER AND RESPONDENT'SOFFER ARE BASED ON THE INFORMATION SELF-REPORTED BYRESPONDENT.

Does the order constitute afinal order based onviolations of any laws orregulations that prohibitfraudulent, manipulative, ordeceptive conduct?

Yes

Sanctions Ordered: CensureDisgorgement/RestitutionCease and Desist/Injunction

Order






RESPONDENT HAS SUBMITTED AN OFFER OF SETTLEMENT WHICH THECOMMISSION HAS DETERMINED TO ACCEPT. IN VIEW OF THE FOREGOING,THE COMMISSION DEEMS IT APPROPRIATE IN THE PUBLIC INTEREST TOIMPOSE THE SANCTIONS AGREED TO IN THE RESPONDENT'S OFFER.

RESPONDENT SELF-REPORTED TO THE COMMISSION THE VIOLATIONSDISCUSSED IN THIS ORDER PURSUANT TO THE DIVISION OFENFORCEMENT'S SHARE CLASS SELECTION DISCLOSURE INITIATIVE("SCSD INITIATIVE"). ACCORDINGLY, THIS ORDER AND RESPONDENT'SOFFER ARE BASED ON THE INFORMATION SELF-REPORTED BYRESPONDENT.

iReporting Source: Firm

Initiated By: UNITED STATES SECURITIES AND EXCHANGE COMMISSION


Cease and Desist



Docket/Case Number: FILE NO. 3-19043



Allegations: THE ALLEGATIONS RELATED TO THIS REGULATORY ACTION ARE THATFROM JANUARY 1, 2014 TO SEPTEMBER 30, 2016, THE FIRM PURCHASED,RECOMMENDED, OR HELD FOR ADVISORY CLIENTS MUTUAL FUND SHARECLASSES THAT CHARGED 12B-1 FEES INSTEAD OF LOWER-COST SHARECLASSES OF THE SAME FUNDS FOR WHICH CLIENTS WERE ELIGIBLE,THAT THE FIRM AND ITS ASSOCIATED PERSONS RECEIVED 12B-1 FEES INCONNECTION WITH THESE INVESTMENTS, AND THAT THE FIRM FAILED TOADEQUATELY DISCLOSE ON ITS FORM ADV THE CONFLICTS OF INTERESTRELATED TO ITS RECEIPT OF 12B-1 FEES AND ITS SELECTION OF MUTUALFUND SHARE CLASSES THAT PAY SUCH FEES.



Resolution:


Sanction Details: ON MARCH 11, 2019, SANTANDER SECURITIES LLC (THE "FIRM"), WITHOUTADMITTING OR DENYING THE FINDINGS, CONSENTED TO THE ENTRY OFAN ORDER (FILE NO. 3-19043) BY THE UNITED STATES SECURITIES ANDEXCHANGE COMMISSION (THE "SEC") INSTITUTING ADMINISTRATIVE ANDCEASE-AND-DESIST PROCEEDINGS, MAKING FINDINGS, IMPOSINGREMEDIAL SANCTIONS AND IMPOSING A CEASE-AND-DESIST ORDER (THE "ORDER"). THE ORDER REQUIRES THE FIRM TO CEASE AND DESIST FROMCOMMITTING OR CAUSING ANY VIOLATIONS AND ANY FUTURE VIOLATIONSOF SECTIONS 206(2) AND 207 OF THE ADVISERS ACT AND TO PAYDISGORGEMENT AND PREJUDGMENT INTEREST TO AFFECTEDINVESTORS TOTALING $270,539.89.

Sanctions Ordered: CensureDisgorgement/RestitutionCease and Desist/Injunction

Order






ON MARCH 11, 2019, SANTANDER SECURITIES LLC (THE "FIRM"), WITHOUTADMITTING OR DENYING THE FINDINGS, CONSENTED TO THE ENTRY OFAN ORDER (FILE NO. 3-19043) BY THE UNITED STATES SECURITIES ANDEXCHANGE COMMISSION (THE "SEC") INSTITUTING ADMINISTRATIVE ANDCEASE-AND-DESIST PROCEEDINGS, MAKING FINDINGS, IMPOSINGREMEDIAL SANCTIONS AND IMPOSING A CEASE-AND-DESIST ORDER (THE "ORDER"). THE ORDER REQUIRES THE FIRM TO CEASE AND DESIST FROMCOMMITTING OR CAUSING ANY VIOLATIONS AND ANY FUTURE VIOLATIONSOF SECTIONS 206(2) AND 207 OF THE ADVISERS ACT AND TO PAYDISGORGEMENT AND PREJUDGMENT INTEREST TO AFFECTEDINVESTORS TOTALING $270,539.89.

Firm Statement ON MARCH 11, 2019, SANTANDER SECURITIES LLC (THE "FIRM"), WITHOUTADMITTING OR DENYING THE FINDINGS, CONSENTED TO THE ENTRY OFAN ORDER (FILE NO. 3-19043) BY THE UNITED STATES SECURITIES ANDEXCHANGE COMMISSION (THE "SEC") INSTITUTING ADMINISTRATIVE ANDCEASE-AND-DESIST PROCEEDINGS, MAKING FINDINGS, IMPOSINGREMEDIAL SANCTIONS AND IMPOSING A CEASE-AND-DESIST ORDER (THE "ORDER"). THE ORDER STATES THAT FROM JANUARY 1, 2014 TOSEPTEMBER 30, 2016, THE FIRM PURCHASED, RECOMMENDED, OR HELDFOR ADVISORY CLIENTS MUTUAL FUND SHARE CLASSES THAT CHARGED12B-1 FEES INSTEAD OF LOWER-COST SHARE CLASSES OF THE SAMEFUNDS FOR WHICH CLIENTS WERE ELIGIBLE, THAT THE FIRM AND ITSASSOCIATED PERSONS RECEIVED 12B-1 FEES IN CONNECTION WITHTHESE INVESTMENTS, AND THAT THE FIRM FAILED TO ADEQUATELYDISCLOSE ON ITS FORM ADV THE CONFLICTS OF INTEREST RELATED TOITS RECEIPT OF 12B-1 FEES AND ITS SELECTION OF MUTUAL FUND SHARECLASSES THAT PAY SUCH FEES. THE ORDER REQUIRES THE FIRM TOCEASE AND DESIST FROM COMMITTING OR CAUSING ANY VIOLATIONSAND ANY FUTURE VIOLATIONS OF SECTIONS 206(2) AND 207 OF THEADVISERS ACT AND TO PAY DISGORGEMENT AND PREJUDGMENTINTEREST TO AFFECTED INVESTORS TOTALING $270,539.89.

Disclosure 4 of 12

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Initiated By: NEW HAMPSHIREBUREAU OF SECURITIES REGULATION


Cease and Desist



URL for Regulatory Action:

Principal Product Type: Debt - Government

Other Product Type(s): NA

Allegations: FINRA FOUND THAT SANTANDER VIOLATED MSRB RULE G-27 IN AN AWCDATED 10/13/2015. THE BUREAU TOOK ACTION FOR VIOLATION OF THISRULE.








Cease and Desist


FINE PLUS COSTS AND RESTITUTION.


Resolution:

Other Sanctions Ordered: COSTS $7500 RESTITUTION TOTALING $31,154.33.

Sanction Details: SAME AS ABOVE.

Regulator Statement SAME AS ABOVE.


No

Sanctions Ordered: Monetary/Fine $2,500.00Disgorgement/RestitutionCease and Desist/Injunction

Consent


Initiated By: STATE OF NEW HAMPSHIRE DEPARTMENT OF STATE BUREAU OFSECURITIES REGULATION


Cease and Desist




Principal Product Type: Debt - Municipal


Allegations: IT WAS ALLEGED THAT TWO MUNICIPAL SECURITIES TRANSACTIONSEXECUTED BY THE FIRM MAY HAVE VIOLATED MSRB RULE G-27.


Resolution: Settled








Sanction Details: THE FIRM AGREED TO PAY A $2500 FINE, $7500 INVESTIGATION COSTS,AND A TOTAL OF $31,154.33 IN RESTITUTION TO THE 2 AFFECTED NEWHAMPSHIRE CLIENTS.

Firm Statement THE FIRM CONSENTED TO THE SANCTIONS AND TO THE ENTRY OFFINDINGS THAT IN TWO TRANSACTIONS, THE FIRM SOLD MUNICIPALSECURITIES THAT MAY HAVE VIOLATED MSRB RULE G-27. THE FIRMAGREED TO PAY A $2500 FINE, $7500 INVESTIGATION COSTS, AND A TOTALOF $31,154.33 IN RESTITUTION TO THE 2 AFFECTED NEW HAMPSHIRECLIENTS.

Sanctions Ordered: Monetary/Fine $2,500.00Disgorgement/RestitutionCease and Desist/Injunction

Disclosure 5 of 12

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Initiated By: OFFICE OF THE COMMISSIONER OF FINANCIAL INSTITUTIONS OF THECOMMONWEALTH OF PUERTO RICO (OCFI)


Other


SETTLEMENT


Docket/Case Number:

Principal Product Type: Other

Other Product Type(s): PUERTO RICO CLOSED END FUNDS AND PUERTO RICO BONDS.

Allegations: UNSUITABILITY IN CONNECTION WITH TRANSACTIONS INVOLVINGPURCHASES AND MARGIN LOANS BY SENIOR LOW NET WORTHINVESTORS IN PUERTO RICO CLOSED END FUNDS AND PUERTO RICOBONDS.



Resolution:

Sanctions Ordered: Monetary/Fine $1,000,000.00Disgorgement/Restitution

Settled







Sanction Details: THE FINE (CONTRIBUTION TO THEIR EDUCATION FUND) WAS $1,000,000.RESTITUTION WAS 532,000. PAYMENT IS ON GOING.

Firm Statement WITHOUT ADMITTING OR DENYING RESPONSIBILITY, NOR THAT THEREWAS ANY WRONGDOING, NEGLIGENCE, MISMANAGEMENT, LACK OFPROPER SUPERVISION, NOR LOSSES IN THE ACCOUNTS OFMANAGEMENT, ACTIONS OR OMISSIONS OF SS, ITS OFFICERS ORDIRECTORS AND/OR THE SS SUPERVISORY STAFF AND/OR SS BROKERS,SS WILL OFFER SETTLEMENT PAYMENTS TO 16 CUSTOMERS.

Sanctions Ordered: Monetary/Fine $1,000,000.00Disgorgement/Restitution

Disclosure 6 of 12

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Initiated By: FINRA




Docket/Case Number: 2013038868601



Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IN 12TRANSACTIONS, THE FIRM SOLD MUNICIPAL SECURITIES FOR ITS OWNACCOUNT TO A CUSTOMER AT AN AGGREGATE PRICE (INCLUDING ANYMARK-UP) THAT WAS NOT FAIR AND REASONABLE, TAKING INTOCONSIDERATION ALL RELEVANT FACTORS, INCLUDING THE BESTJUDGMENT OF THE BROKER, DEALER OR MUNICIPAL SECURITIES DEALERAS TO THE FAIR MARKET VALUE OF THE SECURITIES AT THE TIME OF THETRANSACTION AND OF ANY SECURITIES EXCHANGED OR TRADED INCONNECTION WITH THE TRANSACTION, THE EXPENSE INVOLVED INEFFECTING THE TRANSACTION, THE FACT THAT THE BROKER, DEALER,OR MUNICIPAL SECURITIES DEALER IS ENTITLED TO A PROFIT, AND THETOTAL DOLLAR AMOUNT OF THE TRANSACTION.


Resolution: Acceptance, Waiver & Consent(AWC)





https://www.finra.org/rules-guidance/oversight-enforcement/finra-disciplinary-actions?search=2013038868601



Other Sanctions Ordered: INTEREST

Sanction Details: THE FIRM WAS CENSURED, FINED $175,000 AND ORDERED TO PAY$62,807.48, PLUS INTEREST, IN RESTITUTION TO CUSTOMERS. FINE PAIDIN FULL ON 3/17/17.


No

Sanctions Ordered: CensureMonetary/Fine $175,000.00Disgorgement/Restitution


Initiated By: FINRA


Other


CIVIL AND ADMINISTRATIVE PENALTY / FINERESTITUTIONCENSURE





Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IN TWELVETRANSACTIONS, THE FIRM SOLD MUNICIPAL SECURITIES FOR ITS OWNACCOUNT TO A CUSTOMER AT AN AGGREGATE PRICE (INCLUDING ANYMARK-UP) THAT WAS NOT FAIR AND REASONABLE, TAKING INTOCONSIDERATION ALL RELEVANT FACTORS, INCLUDING THE BESTJUDGMENT OF THE BROKER, DEALER OR MUNICIPAL SECURITIES DEALERAS TO THE FAIR MARKET VALUE OF THE SECURITIES AT THE TIME OF THETRANSACTION AND OF ANY SECURITIES EXCHANGED OR TRADED INCONNECTION WITH THE TRANSACTION, THE EXPENSE INVOLVED INEFFECTING THE TRANSACTION, THE FACT THAT THE BROKER, DEALER,OR MUNICIPAL SECURITIES DEALER IS ENTITLED TO A PROFIT, AND THETOTAL DOLLAR AMOUNT OF THE TRANSACTION








CIVIL AND ADMINISTRATIVE PENALTY / FINERESTITUTIONCENSURE


Resolution:


Sanction Details: FINE-$175,000.00, RESTITUTION-$62,807.48 PLUS INTEREST

Firm Statement THE FIRM WAS CENSURED, FINED $175,000.00, AND AGREED TORESTITUTION OF APPROXIMATELY $62,807.48 PLUS INTEREST FORTWELVE TRANSACTIONS.

Sanctions Ordered: CensureMonetary/Fine $175,000.00Disgorgement/Restitution

Acceptance, Waiver & Consent(AWC)

Disclosure 7 of 12

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Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT FAILED TOHAVE A REASONABLY DESIGNED SUPERVISORY SYSTEM ANDPROCEDURES RELATING TO SALES OF PUERTO RICO MUNICIPAL BONDS(PRMBS) TO PUERTO RICO CUSTOMERS. THE FINDINGS STATED THAT THEFIRM'S SYSTEMS AND PROCEDURES WERE INADEQUATE BECAUSE THEYDID NOT REQUIRE THE FIRM TO REVIEW OR ASSESS THAT ITSPROPRIETARY PRODUCT RISK-CLASSIFICATION TOOL TOOK INTOACCOUNT THE UNIQUE AND CHANGED RISKS OF INVESTING IN PRMBS.THE FINDINGS ALSO STATED THAT ALTHOUGH THE FIRM HAD CERTAINREPORTS TO IDENTIFY CONCENTRATION LEVELS AND MARGIN ACTIVITYIN CUSTOMER ACCOUNTS, IT DID NOT HAVE ADEQUATE SYSTEMS ANDPROCEDURES IN PLACE TO MONITOR FOR THE APPROPRIATE USE OFMARGIN IN CONNECTION WITH THE PURCHASE OF PRMBS OR TOMONITOR FOR POTENTIALLY OVER-CONCENTRATED POSITIONS IN PRMBSAND PUERTO RICO CLOSED-END FUNDS (PRCEFS). THE FINDINGS ALSOINCLUDED THAT THE FIRM FAILED TO HAVE ADEQUATE SYSTEMS ANDPROCEDURES GOVERNING TRANSACTIONS IN PUERTO RICO EMPLOYEEBROKERAGE ACCOUNTS. WHILE THE FIRM HAD A POLICY REQUIRING THEPRE-APPROVAL OF EMPLOYEE TRADES, ITS SYSTEMS WERE NOTDESIGNED TO DETECT TRANSACTIONS EFFECTED BETWEEN EMPLOYEEBROKERAGE ACCOUNTS AND THE ACCOUNTS OF THE FIRM'SCUSTOMERS. AS A RESULT, THE FIRM WAS UNABLE TO ADEQUATELYMONITOR FOR POTENTIAL CONFLICTS OF INTEREST WHERE CUSTOMERORDERS WERE FILLED THROUGH POSITIONS IN PUERTO RICO EMPLOYEEBROKERAGE ACCOUNTS. IN RESOLVING THIS MATTER, THE FIRM WILL PAYRESTITUTION OF APPROXIMATELY $4.3 MILLION.







Initiated By: FINRA


Other


N/A




Other Product Type(s): PUERTO RICO CLOSED-END FUNDS; PUERTO RICO MUNICIPAL BONDS

WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT FAILED TOHAVE A REASONABLY DESIGNED SUPERVISORY SYSTEM ANDPROCEDURES RELATING TO SALES OF PUERTO RICO MUNICIPAL BONDS(PRMBS) TO PUERTO RICO CUSTOMERS. THE FINDINGS STATED THAT THEFIRM'S SYSTEMS AND PROCEDURES WERE INADEQUATE BECAUSE THEYDID NOT REQUIRE THE FIRM TO REVIEW OR ASSESS THAT ITSPROPRIETARY PRODUCT RISK-CLASSIFICATION TOOL TOOK INTOACCOUNT THE UNIQUE AND CHANGED RISKS OF INVESTING IN PRMBS.THE FINDINGS ALSO STATED THAT ALTHOUGH THE FIRM HAD CERTAINREPORTS TO IDENTIFY CONCENTRATION LEVELS AND MARGIN ACTIVITYIN CUSTOMER ACCOUNTS, IT DID NOT HAVE ADEQUATE SYSTEMS ANDPROCEDURES IN PLACE TO MONITOR FOR THE APPROPRIATE USE OFMARGIN IN CONNECTION WITH THE PURCHASE OF PRMBS OR TOMONITOR FOR POTENTIALLY OVER-CONCENTRATED POSITIONS IN PRMBSAND PUERTO RICO CLOSED-END FUNDS (PRCEFS). THE FINDINGS ALSOINCLUDED THAT THE FIRM FAILED TO HAVE ADEQUATE SYSTEMS ANDPROCEDURES GOVERNING TRANSACTIONS IN PUERTO RICO EMPLOYEEBROKERAGE ACCOUNTS. WHILE THE FIRM HAD A POLICY REQUIRING THEPRE-APPROVAL OF EMPLOYEE TRADES, ITS SYSTEMS WERE NOTDESIGNED TO DETECT TRANSACTIONS EFFECTED BETWEEN EMPLOYEEBROKERAGE ACCOUNTS AND THE ACCOUNTS OF THE FIRM'SCUSTOMERS. AS A RESULT, THE FIRM WAS UNABLE TO ADEQUATELYMONITOR FOR POTENTIAL CONFLICTS OF INTEREST WHERE CUSTOMERORDERS WERE FILLED THROUGH POSITIONS IN PUERTO RICO EMPLOYEEBROKERAGE ACCOUNTS. IN RESOLVING THIS MATTER, THE FIRM WILL PAYRESTITUTION OF APPROXIMATELY $4.3 MILLION.


Resolution:

Other Sanctions Ordered: UNDERTAKING

Sanction Details: THE FIRM IS CENSURED, FINED $2,000,000, CONSENTED TO RESTITUTIONOF APPROXIMATELY $4,300,000, CONSENTED TO RESTITUTION ANDRESCISSION OFFERS IN THE AMOUNT OF APPROXIMATELY $121,000, PLUSRESTITUTION INTEREST, AND CONSENTED TO THE UNDERTAKING TOREVIEW ALL OF ITS CURRENT WRITTEN POLICIES AND PROCEDURES.FINE PAID IN FULL OCTOBER 28, 2015.


No

Sanctions Ordered: CensureMonetary/Fine $2,000,000.00Disgorgement/Restitution



Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE ENTRY OF FINDINGS THAT THE FIRM'S PROCEDURES ANDSUPERVISORY SYSTEMS WERE DEFICIENT BECAUSE THEY DID NOT: 1.REQUIRE IT TO ASSESS WHETHER TO MODIFY ITS PRODUCT RISKCLASSIFICATION TOOL FOR PUERTO RICO MUNCIPAL BONDS IN LIGHT OFRELATIVELY HIGH CUSTOMER CONCENTRATION IN THOSE SECURITIES,THE FIRM'S DECISION TO STOP PURCHASING SUCH SECURITIES FOR ITSOWN ACCOUNT, AND A DOWNGRADE OF THOSE SECURITIES BY A RATINGSAGENCY; 2. ADEQUATELY ENSURE REVIEW OF ACCOUNTS WITHSIGNIFICANT CONCENTRATION IN PUERTO RICO SECURITIES ORMONITOR THE USE OF MARGIN FOR PURCHASES OF SUCH SECURITIES;AND 3. FAILED TO IDENTIFY AND REVIEW CERTAIN TRANSACTIONS INEMPLOYEE AND EMPLOYEE-RELATED ACCOUNTS WITH A VIEW TOWARDSMONITORING FOR POTENTIAL CONFLICTS OF INTEREST.








Initiated By: FINRA


Other


CIVIL AND ADMINISTRATIVE PENALITY/ FINERESTITUTIONCENSUREAND UNDERTAKING




Other Product Type(s): PUERTO RICO MUNICIPAL BONDS AND PUERTO RICO CLOSED END FUNDS

Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE ENTRY OF FINDINGS THAT THE FIRM'S PROCEDURES ANDSUPERVISORY SYSTEMS WERE DEFICIENT BECAUSE THEY DID NOT: 1.REQUIRE IT TO ASSESS WHETHER TO MODIFY ITS PRODUCT RISKCLASSIFICATION TOOL FOR PUERTO RICO MUNCIPAL BONDS IN LIGHT OFRELATIVELY HIGH CUSTOMER CONCENTRATION IN THOSE SECURITIES,THE FIRM'S DECISION TO STOP PURCHASING SUCH SECURITIES FOR ITSOWN ACCOUNT, AND A DOWNGRADE OF THOSE SECURITIES BY A RATINGSAGENCY; 2. ADEQUATELY ENSURE REVIEW OF ACCOUNTS WITHSIGNIFICANT CONCENTRATION IN PUERTO RICO SECURITIES ORMONITOR THE USE OF MARGIN FOR PURCHASES OF SUCH SECURITIES;AND 3. FAILED TO IDENTIFY AND REVIEW CERTAIN TRANSACTIONS INEMPLOYEE AND EMPLOYEE-RELATED ACCOUNTS WITH A VIEW TOWARDSMONITORING FOR POTENTIAL CONFLICTS OF INTEREST.


Resolution:


Sanction Details: FINE-$2 MILLION DOLLARS,RESTITUTION -APPROXIMATELY $4.3 MILLION IN CONNECTION WITHPUERTO RICO MUNICIPAL BONDSRESTITUTION/RESCISSION - APPROXIMATELY $121,000 IN CONNECTIONWITH EMPLOYEE TRADING

Firm Statement THE FIRM WAS CENSURED, FINED $2 MILLION, AGREED TO RESTITUTIONOF APPROXIMATELY $4.3 MILLION IN CONNECTION WITH CERTAINSOLICITED PURCHASES OF PUERTO RICO MUNICIPAL BONDS ANDRESTITUTION AND RESCISSION OFFERS OF APPROXIMATELY $121,000 INCONNECTION WITH CERTAIN EMPLOYEE TRANSACTIONS. THE FIRM ALSOCONSENTED TO REVISE CERTAIN SUPERVISORY SYSTEMS ANDPROCEDURES RELATING TO CONCENTRATION, MARGIN, SUPERVISION OFCUSTOMER TRANSACTIONS AND THE USE OF CERTAIN TOOLS BYREGISTERED REPRESENTATIVES.

Sanctions Ordered: CensureMonetary/Fine $2,000,000.00Disgorgement/Restitution








THE FIRM WAS CENSURED, FINED $2 MILLION, AGREED TO RESTITUTIONOF APPROXIMATELY $4.3 MILLION IN CONNECTION WITH CERTAINSOLICITED PURCHASES OF PUERTO RICO MUNICIPAL BONDS ANDRESTITUTION AND RESCISSION OFFERS OF APPROXIMATELY $121,000 INCONNECTION WITH CERTAIN EMPLOYEE TRANSACTIONS. THE FIRM ALSOCONSENTED TO REVISE CERTAIN SUPERVISORY SYSTEMS ANDPROCEDURES RELATING TO CONCENTRATION, MARGIN, SUPERVISION OFCUSTOMER TRANSACTIONS AND THE USE OF CERTAIN TOOLS BYREGISTERED REPRESENTATIVES.

Disclosure 8 of 12

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Initiated By: THE OFFICE OF THE COMMISSIONER OF FINANCIAL INSTITUTIONS OF THECOMMONWEALTH OF PUERTO RICO (OCFI)


Other


VOLUNTARY CONTRIBUTION TO THE SECURITIES TRADING, INVESTOREDUCATION AND INVESTIGATION FUND OF THE OCFI


Docket/Case Number:



Allegations: AS PART OF A ROUTINE EXAMINATION OF THE FIRM'S OPERATIONS FORTHE PERIOD FROM AUGUST 1, 2007 TO SEPTEMBER 30, 2011, THE OCFINOTED CERTAIN POTENTIAL DEFICIENCIES WITH A BANK REFERRALPROGRAM WHICH WAS DISCONTINUED IN 2009.



Resolution:

Firm Statement VOLUNTARY CONTRIBUTION OF $15,000.00 WAS PAID TO THE OFFICE OFTHE COMMISSIONER OF FINANCIAL INSTITUTIONS OF THECOMMONWEALTH OF PUERTO RICO (OCFI)

Settled

Disclosure 9 of 12

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Allegations: ON MARCH 15, 2013, AS AN OUTGROWTH OF AN AUDIT CONDUCTED BYTHE INSURANCE COMMISSIONER OF PUERTO RICO, SANTANDERSECURITIES, LLC AGREED TO AN ADMINISTRATIVE PENALTY OF $3,500RELATED TO THE PAYMENT OF COMMISSIONS TO AN UNAUTHORIZEDINDIVIDUAL, LATE FILING OF ANNUAL REPORTS, AND THEMISCOMMUNICATION OF A CONTRACTUAL CHANGE WITH A CONTRACTEDINSURER.








Initiated By: INSURANCE COMMISSIONER OF PUERTO RICO


Civil and Administrative Penalt(ies) /Fine(s)



Docket/Case Number:



ON MARCH 15, 2013, AS AN OUTGROWTH OF AN AUDIT CONDUCTED BYTHE INSURANCE COMMISSIONER OF PUERTO RICO, SANTANDERSECURITIES, LLC AGREED TO AN ADMINISTRATIVE PENALTY OF $3,500RELATED TO THE PAYMENT OF COMMISSIONS TO AN UNAUTHORIZEDINDIVIDUAL, LATE FILING OF ANNUAL REPORTS, AND THEMISCOMMUNICATION OF A CONTRACTUAL CHANGE WITH A CONTRACTEDINSURER.


Resolution:


Sanction Details: ON MARCH 15, 2013, AS AN OUTGROWTH OF AN AUDIT CONDUCTED BYTHE INSURANCE COMMISSIONER OF PUERTO RICO, SANTANDERSECURITIES, LLC AGREED TO AN ADMINISTRATIVE PENALTY OF $3,500RELATED TO THE PAYMENT OF COMMISSIONS TO AN UNAUTHORIZEDINDIVIDUAL, LATE FILING OF ANNUAL REPORTS, AND THEMISCOMMUNICATION OF A CONTRACTUAL CHANGE WITH A CONTRACTEDINSURER.

Firm Statement ON MARCH 15, 2013, AS AN OUTGROWTH OF AN AUDIT CONDUCTED BYTHE INSURANCE COMMISSIONER OF PUERTO RICO, SANTANDERSECURITIES, LLC AGREED TO AN ADMINISTRATIVE PENALTY OF $3,500RELATED TO THE PAYMENT OF COMMISSIONS TO AN UNAUTHORIZEDINDIVIDUAL, LATE FILING OF ANNUAL REPORTS, AND THEMISCOMMUNICATION OF A CONTRACTUAL CHANGE WITH A CONTRACTEDINSURER.


Settled

Disclosure 10 of 12

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Allegations: SECTION 5 OF THE SECURITIES ACT OF 1933, ARTICLE V, SECTIONS 2 & 3OF NASD BY-LAWS, NASD RULES 2110, 2310, 2710, 2720, 3010: THE FIRMHAD A DEFICIENT SUPERVISORY SYSTEM AND INADEQUATE WRITTENSUPERVISORY PROCEDURES FOR SUPERVISING THE SALE OFSTRUCTURED PRODUCTS, INCLUDING REVERSE CONVERTIBLESECURITIES TO RETAIL CUSTOMERS. THE FIRM PROVIDED MINIMALSUITABILITY GUIDANCE REGARDING STRUCTURED PRODUCTS TO ITSSALES FORCE AND SUPERVISORS. THE FIRM DID NOT HAVE EFFECTIVEPROCEDURES IN PLACE TO MONITOR CUSTOMER ACCOUNTS FORPOTENTIALLY UNSUITABLE PURCHASES OF STRUCTURED PRODUCTSAND HAD NO SUITABILITY POLICIES GOVERNING PRODUCTCONCENTRATION. AS A RESULT, THE FIRM FAILED TO DETECT CERTAINACCOUNTS WITH CONCENTRATED POSITIONS IN RISKY PRODUCTS. THEFIRM PLACED RESPONSIBILITY WITH THE SALES MANAGER TO ENSURE,AMONG OTHER THINGS, THAT ALL SECURITIES TRANSACTIONSRECOMMENDED BY BROKERS WERE SUITABLE. HOWEVER, THE FIRM DIDNOT PROVIDE ANY GUIDANCE OR TOOLS FOR MANAGERS TO USE TODETERMINE WHETHER A PARTICULAR STRUCTURED PRODUCTTRANSACTION WAS SUITABLE. THE FIRM ALSO LACKED TOOLS TO ASSISTA MANAGER IN DETERMINING WHETHER THE REVERSE CONVERTIBLETRANSACTION CREATED A CONCENTRATED POSITION IN A CUSTOMER'SACCOUNT. THE FIRM'S PROCEDURES REQUIRED THE SALES MANAGER TOSUPERVISE FOR SUITABILITY BY REVIEWING A DAILY TRANSACTIONSREPORT, WHICH CONTAINED ALL TRADES EXECUTED ON THE PREVIOUSBUSINESS DAY. THIS REPORT DID NOT INCLUDE ANY CUSTOMER-SPECIFICSUITABILITY INFORMATION, WHICH COULD ONLY BE ACCESSED THROUGHOTHER SYSTEMS, AND LITTLE INFORMATION ABOUT THE PRODUCT BEINGBOUGHT OR SOLD. ACCESSING BASIC INFORMATION NEEDED FORSUITABILITY REVIEW WAS A SLOW AND INEFFICIENT PROCESS, NOTFEASIBLE FOR THE NUMBER OF TRANSACTIONS THAT APPEARED ON THEUNWIELDY REPORT. AT DIFFERENT TIMES, THE COMPLIANCEDEPARTMENT HIGHLIGHTED CERTAIN ACCOUNTS WITH CONCENTRATEDREVERSE CONVERTIBLE POSITIONS DURING THE SUPERVISIONMEETINGS ATTENDED BY SENIOR MANAGEMENT. HOWEVER, THE FIRMDID NOT ADEQUATELY FOLLOW-UP ON THESE REPORTS OFOVERCONCENTRATION IN THESE ACCOUNTS. IN ADDITION, THECOMPLIANCE DEPARTMENT IDENTIFIED 108 ACCOUNTS THAT HELD MORETHAN 20% OF THE ACCOUNT'S VALUE IN A SINGLE REVERSECONVERTIBLE. THESE ACCOUNTS HAD INVESTED A TOTAL OFAPPROXIMATELY $17.8 MILLION IN REVERSE CONVERTIBLES. AGAIN, THEFIRM FAILED TO ADEQUATELY ADDRESS THE CONCENTRATED ACCOUNTSAND DID NOT FOLLOW-UP WITH ANY TIMELY ACTION. THIS LACK OFADEQUATE SYSTEMS AND PROCEDURES LED TO UNSUITABLERECOMMENDATIONS IN STRUCTURED PRODUCTS AND RESULTED INSIGNIFICANT LOSSES BY CLIENTS. CUSTOMERS OF THE FIRM INVESTEDMORE THAN $130 MILLION IN REVERSE CONVERTIBLES AND THE FIRMEARNED MORE THAN $1.7 MILLION IN COMMISSIONS FROM THE SALE OFTHESE SECURITIES. A REVIEW OF A SUBSET OF THOSE TRADESIDENTIFIED 16 RECOMMENDED PURCHASES OF REVERSE CONVERTIBLESIN NINE ACCOUNTS THAT WERE UNSUITABLE. THESE TRANSACTIONSEXPOSED THOSE CUSTOMERS TO A RISK OF LOSS THAT WASINCONSISTENT WITH THEIR RISK TOLERANCE AND INVESTMENTOBJECTIVES AND RESULTED IN CONCENTRATED POSITIONS. WHILE SOMEOF THE UNSUITABLE RECOMMENDATIONS WERE PROFITABLE, 11 OF THERECOMMENDATIONS RESULTED IN CUSTOMER LOSSES OF $376,172. THEFIRM HAS REMEDIATED, WITH INTEREST, THE CUSTOMERS IDENTIFIED. INADDITION TO THE UNSUITABLE INVESTMENTS IN REVERSECONVERTIBLES, THE FIRM ENTERED INTO SETTLEMENTS WITHCUSTOMERS BASED ON THE PURCHASE OF REVERSE CONVERTIBLES.THE SETTLEMENTS WERE REACHED AS A RESULT OF THE FIRM'S REVIEWOF CERTAIN ACCOUNTS HOLDING CONCENTRATED REVERSECONVERTIBLE POSITIONS IN PLEDGE COLLATERAL LOAN ACCOUNTS, ASWELL AS SOME CUSTOMER COMPLAINTS. THE FIRM SETTLED WITH 17CLIENTS AND HAS PAID OUT MORE THAN $6.9 MILLION TO THOSE CLIENTS.THE FIRM ALSO FAILED TO HAVE ADEQUATE SUPERVISORY POLICIES ANDPROCEDURES IN PLACE TO MONITOR ITS BROKERS' SECURITIESRECOMMENDATIONS IN CUSTOMERS' PLEDGE COLLATERAL ACCOUNTS,USING FUNDS BORROWED THROUGH THE LOAN PROGRAM OFFERED BYITS AFFILIATE BANK. [CONTINUED IN COMMENT]








Allegations: SECTION 5 OF THE SECURITIES ACT OF 1933, ARTICLE V, SECTIONS 2 & 3OF NASD BY-LAWS, NASD RULES 2110, 2310, 2710, 2720, 3010: THE FIRMHAD A DEFICIENT SUPERVISORY SYSTEM AND INADEQUATE WRITTENSUPERVISORY PROCEDURES FOR SUPERVISING THE SALE OFSTRUCTURED PRODUCTS, INCLUDING REVERSE CONVERTIBLESECURITIES TO RETAIL CUSTOMERS. THE FIRM PROVIDED MINIMALSUITABILITY GUIDANCE REGARDING STRUCTURED PRODUCTS TO ITSSALES FORCE AND SUPERVISORS. THE FIRM DID NOT HAVE EFFECTIVEPROCEDURES IN PLACE TO MONITOR CUSTOMER ACCOUNTS FORPOTENTIALLY UNSUITABLE PURCHASES OF STRUCTURED PRODUCTSAND HAD NO SUITABILITY POLICIES GOVERNING PRODUCTCONCENTRATION. AS A RESULT, THE FIRM FAILED TO DETECT CERTAINACCOUNTS WITH CONCENTRATED POSITIONS IN RISKY PRODUCTS. THEFIRM PLACED RESPONSIBILITY WITH THE SALES MANAGER TO ENSURE,AMONG OTHER THINGS, THAT ALL SECURITIES TRANSACTIONSRECOMMENDED BY BROKERS WERE SUITABLE. HOWEVER, THE FIRM DIDNOT PROVIDE ANY GUIDANCE OR TOOLS FOR MANAGERS TO USE TODETERMINE WHETHER A PARTICULAR STRUCTURED PRODUCTTRANSACTION WAS SUITABLE. THE FIRM ALSO LACKED TOOLS TO ASSISTA MANAGER IN DETERMINING WHETHER THE REVERSE CONVERTIBLETRANSACTION CREATED A CONCENTRATED POSITION IN A CUSTOMER'SACCOUNT. THE FIRM'S PROCEDURES REQUIRED THE SALES MANAGER TOSUPERVISE FOR SUITABILITY BY REVIEWING A DAILY TRANSACTIONSREPORT, WHICH CONTAINED ALL TRADES EXECUTED ON THE PREVIOUSBUSINESS DAY. THIS REPORT DID NOT INCLUDE ANY CUSTOMER-SPECIFICSUITABILITY INFORMATION, WHICH COULD ONLY BE ACCESSED THROUGHOTHER SYSTEMS, AND LITTLE INFORMATION ABOUT THE PRODUCT BEINGBOUGHT OR SOLD. ACCESSING BASIC INFORMATION NEEDED FORSUITABILITY REVIEW WAS A SLOW AND INEFFICIENT PROCESS, NOTFEASIBLE FOR THE NUMBER OF TRANSACTIONS THAT APPEARED ON THEUNWIELDY REPORT. AT DIFFERENT TIMES, THE COMPLIANCEDEPARTMENT HIGHLIGHTED CERTAIN ACCOUNTS WITH CONCENTRATEDREVERSE CONVERTIBLE POSITIONS DURING THE SUPERVISIONMEETINGS ATTENDED BY SENIOR MANAGEMENT. HOWEVER, THE FIRMDID NOT ADEQUATELY FOLLOW-UP ON THESE REPORTS OFOVERCONCENTRATION IN THESE ACCOUNTS. IN ADDITION, THECOMPLIANCE DEPARTMENT IDENTIFIED 108 ACCOUNTS THAT HELD MORETHAN 20% OF THE ACCOUNT'S VALUE IN A SINGLE REVERSECONVERTIBLE. THESE ACCOUNTS HAD INVESTED A TOTAL OFAPPROXIMATELY $17.8 MILLION IN REVERSE CONVERTIBLES. AGAIN, THEFIRM FAILED TO ADEQUATELY ADDRESS THE CONCENTRATED ACCOUNTSAND DID NOT FOLLOW-UP WITH ANY TIMELY ACTION. THIS LACK OFADEQUATE SYSTEMS AND PROCEDURES LED TO UNSUITABLERECOMMENDATIONS IN STRUCTURED PRODUCTS AND RESULTED INSIGNIFICANT LOSSES BY CLIENTS. CUSTOMERS OF THE FIRM INVESTEDMORE THAN $130 MILLION IN REVERSE CONVERTIBLES AND THE FIRMEARNED MORE THAN $1.7 MILLION IN COMMISSIONS FROM THE SALE OFTHESE SECURITIES. A REVIEW OF A SUBSET OF THOSE TRADESIDENTIFIED 16 RECOMMENDED PURCHASES OF REVERSE CONVERTIBLESIN NINE ACCOUNTS THAT WERE UNSUITABLE. THESE TRANSACTIONSEXPOSED THOSE CUSTOMERS TO A RISK OF LOSS THAT WASINCONSISTENT WITH THEIR RISK TOLERANCE AND INVESTMENTOBJECTIVES AND RESULTED IN CONCENTRATED POSITIONS. WHILE SOMEOF THE UNSUITABLE RECOMMENDATIONS WERE PROFITABLE, 11 OF THERECOMMENDATIONS RESULTED IN CUSTOMER LOSSES OF $376,172. THEFIRM HAS REMEDIATED, WITH INTEREST, THE CUSTOMERS IDENTIFIED. INADDITION TO THE UNSUITABLE INVESTMENTS IN REVERSECONVERTIBLES, THE FIRM ENTERED INTO SETTLEMENTS WITHCUSTOMERS BASED ON THE PURCHASE OF REVERSE CONVERTIBLES.THE SETTLEMENTS WERE REACHED AS A RESULT OF THE FIRM'S REVIEWOF CERTAIN ACCOUNTS HOLDING CONCENTRATED REVERSECONVERTIBLE POSITIONS IN PLEDGE COLLATERAL LOAN ACCOUNTS, ASWELL AS SOME CUSTOMER COMPLAINTS. THE FIRM SETTLED WITH 17CLIENTS AND HAS PAID OUT MORE THAN $6.9 MILLION TO THOSE CLIENTS.THE FIRM ALSO FAILED TO HAVE ADEQUATE SUPERVISORY POLICIES ANDPROCEDURES IN PLACE TO MONITOR ITS BROKERS' SECURITIESRECOMMENDATIONS IN CUSTOMERS' PLEDGE COLLATERAL ACCOUNTS,USING FUNDS BORROWED THROUGH THE LOAN PROGRAM OFFERED BYITS AFFILIATE BANK. [CONTINUED IN COMMENT]






Initiated By: FINRA


Other


N/A




Other Product Type(s): REVERSE CONVERTIBLES, STRUCTURED PRODUCTS

SECTION 5 OF THE SECURITIES ACT OF 1933, ARTICLE V, SECTIONS 2 & 3OF NASD BY-LAWS, NASD RULES 2110, 2310, 2710, 2720, 3010: THE FIRMHAD A DEFICIENT SUPERVISORY SYSTEM AND INADEQUATE WRITTENSUPERVISORY PROCEDURES FOR SUPERVISING THE SALE OFSTRUCTURED PRODUCTS, INCLUDING REVERSE CONVERTIBLESECURITIES TO RETAIL CUSTOMERS. THE FIRM PROVIDED MINIMALSUITABILITY GUIDANCE REGARDING STRUCTURED PRODUCTS TO ITSSALES FORCE AND SUPERVISORS. THE FIRM DID NOT HAVE EFFECTIVEPROCEDURES IN PLACE TO MONITOR CUSTOMER ACCOUNTS FORPOTENTIALLY UNSUITABLE PURCHASES OF STRUCTURED PRODUCTSAND HAD NO SUITABILITY POLICIES GOVERNING PRODUCTCONCENTRATION. AS A RESULT, THE FIRM FAILED TO DETECT CERTAINACCOUNTS WITH CONCENTRATED POSITIONS IN RISKY PRODUCTS. THEFIRM PLACED RESPONSIBILITY WITH THE SALES MANAGER TO ENSURE,AMONG OTHER THINGS, THAT ALL SECURITIES TRANSACTIONSRECOMMENDED BY BROKERS WERE SUITABLE. HOWEVER, THE FIRM DIDNOT PROVIDE ANY GUIDANCE OR TOOLS FOR MANAGERS TO USE TODETERMINE WHETHER A PARTICULAR STRUCTURED PRODUCTTRANSACTION WAS SUITABLE. THE FIRM ALSO LACKED TOOLS TO ASSISTA MANAGER IN DETERMINING WHETHER THE REVERSE CONVERTIBLETRANSACTION CREATED A CONCENTRATED POSITION IN A CUSTOMER'SACCOUNT. THE FIRM'S PROCEDURES REQUIRED THE SALES MANAGER TOSUPERVISE FOR SUITABILITY BY REVIEWING A DAILY TRANSACTIONSREPORT, WHICH CONTAINED ALL TRADES EXECUTED ON THE PREVIOUSBUSINESS DAY. THIS REPORT DID NOT INCLUDE ANY CUSTOMER-SPECIFICSUITABILITY INFORMATION, WHICH COULD ONLY BE ACCESSED THROUGHOTHER SYSTEMS, AND LITTLE INFORMATION ABOUT THE PRODUCT BEINGBOUGHT OR SOLD. ACCESSING BASIC INFORMATION NEEDED FORSUITABILITY REVIEW WAS A SLOW AND INEFFICIENT PROCESS, NOTFEASIBLE FOR THE NUMBER OF TRANSACTIONS THAT APPEARED ON THEUNWIELDY REPORT. AT DIFFERENT TIMES, THE COMPLIANCEDEPARTMENT HIGHLIGHTED CERTAIN ACCOUNTS WITH CONCENTRATEDREVERSE CONVERTIBLE POSITIONS DURING THE SUPERVISIONMEETINGS ATTENDED BY SENIOR MANAGEMENT. HOWEVER, THE FIRMDID NOT ADEQUATELY FOLLOW-UP ON THESE REPORTS OFOVERCONCENTRATION IN THESE ACCOUNTS. IN ADDITION, THECOMPLIANCE DEPARTMENT IDENTIFIED 108 ACCOUNTS THAT HELD MORETHAN 20% OF THE ACCOUNT'S VALUE IN A SINGLE REVERSECONVERTIBLE. THESE ACCOUNTS HAD INVESTED A TOTAL OFAPPROXIMATELY $17.8 MILLION IN REVERSE CONVERTIBLES. AGAIN, THEFIRM FAILED TO ADEQUATELY ADDRESS THE CONCENTRATED ACCOUNTSAND DID NOT FOLLOW-UP WITH ANY TIMELY ACTION. THIS LACK OFADEQUATE SYSTEMS AND PROCEDURES LED TO UNSUITABLERECOMMENDATIONS IN STRUCTURED PRODUCTS AND RESULTED INSIGNIFICANT LOSSES BY CLIENTS. CUSTOMERS OF THE FIRM INVESTEDMORE THAN $130 MILLION IN REVERSE CONVERTIBLES AND THE FIRMEARNED MORE THAN $1.7 MILLION IN COMMISSIONS FROM THE SALE OFTHESE SECURITIES. A REVIEW OF A SUBSET OF THOSE TRADESIDENTIFIED 16 RECOMMENDED PURCHASES OF REVERSE CONVERTIBLESIN NINE ACCOUNTS THAT WERE UNSUITABLE. THESE TRANSACTIONSEXPOSED THOSE CUSTOMERS TO A RISK OF LOSS THAT WASINCONSISTENT WITH THEIR RISK TOLERANCE AND INVESTMENTOBJECTIVES AND RESULTED IN CONCENTRATED POSITIONS. WHILE SOMEOF THE UNSUITABLE RECOMMENDATIONS WERE PROFITABLE, 11 OF THERECOMMENDATIONS RESULTED IN CUSTOMER LOSSES OF $376,172. THEFIRM HAS REMEDIATED, WITH INTEREST, THE CUSTOMERS IDENTIFIED. INADDITION TO THE UNSUITABLE INVESTMENTS IN REVERSECONVERTIBLES, THE FIRM ENTERED INTO SETTLEMENTS WITHCUSTOMERS BASED ON THE PURCHASE OF REVERSE CONVERTIBLES.THE SETTLEMENTS WERE REACHED AS A RESULT OF THE FIRM'S REVIEWOF CERTAIN ACCOUNTS HOLDING CONCENTRATED REVERSECONVERTIBLE POSITIONS IN PLEDGE COLLATERAL LOAN ACCOUNTS, ASWELL AS SOME CUSTOMER COMPLAINTS. THE FIRM SETTLED WITH 17CLIENTS AND HAS PAID OUT MORE THAN $6.9 MILLION TO THOSE CLIENTS.THE FIRM ALSO FAILED TO HAVE ADEQUATE SUPERVISORY POLICIES ANDPROCEDURES IN PLACE TO MONITOR ITS BROKERS' SECURITIESRECOMMENDATIONS IN CUSTOMERS' PLEDGE COLLATERAL ACCOUNTS,USING FUNDS BORROWED THROUGH THE LOAN PROGRAM OFFERED BYITS AFFILIATE BANK. [CONTINUED IN COMMENT]


Resolution:


No








Other Sanctions Ordered: UNDERTAKINGS

Sanction Details: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS;THEREFORE IT IS CENSURED, FINED $2 MILLION, AND UNDERTAKES TOREVIEW ITS CURRENT WRITTEN POLICIES AND PROCEDURES, TRAININGAND AVAILABLE TOOLS, IN THE FOLLOWING AREAS: A) PRODUCTSUITABILITY, INCLUDING BOTH REASONABLE BASIS AND CUSTOMER-SPECIFIC SUITABILITY; B) SALES SUPERVISION, INCLUDING REVIEW OFCUSTOMER TRANSACTIONS AND ACCOUNT ALLOCATION; AND C)INTRASTATE OFFERINGS. THE FIRM WILL IMPLEMENT STRENGTHENEDSYSTEMS AND PROCEDURES WHERE APPROPRIATE. IN ADDITION, THEFIRM WILL ESTABLISH WRITTEN POLICIES AND PROCEDURES FOR THEDEVELOPMENT AND VETTING OF NEW PRODUCTS FOR REVIEW BY THEFIRM. THE FIRM WILL OBTAIN TRAINING FOR FIRM PERSONNEL WITHRESPONSIBILITY FOR REGULATORY DISCLOSURES WITH RESPECT TOREPORTING REQUIREMENTS UNDER FINRA AND CENTRAL REGISTRATIONDEPOSITORY (CRD) RULES. WITHIN 210 DAYS FROM THE DATE OF THISAWC, THE FIRM WILL SUBMIT TO FINRA A REPORT THAT: A. DESCRIBESTHE SYSTEMS AND PROCEDURES THAT ARE IN EFFECT AT THE FIRM ATTHAT TIME WITH RESPECT TO EACH AREA ADDRESSED ABOVE; B.DESCRIBES THE COMMITTEE ESTABLISHED; AND C. CERTIFIES THAT THEREQUIRED TRAINING HAS BEEN COMPLETED. FOR GOOD CAUSE SHOWN,AND UPON RECEIPT OF A TIMELY REQUEST FROM THE FIRM, FINRA MAYEXTEND ANY OF THE PROCEDURAL DATES SET FORTH ABOVE.

Regulator Statement [CONTINUED FROM ALLEGATIONS]: SOME BROKERS RECOMMENDED THATCUSTOMERS USE FUNDS BORROWED THROUGH THIS PROGRAM TOPURCHASE REVERSE CONVERTIBLES, SUBSTANTIALLY INCREASING THECLIENTS' EXPOSURES TO RISK AND, IN MANY INSTANCES, INCREASINGLOSSES. THE SUPERVISORY FAILURES CONCERNING STRUCTUREDPRODUCTS GENERALLY WERE COMPOUNDED IN MANY PLEDGECOLLATERAL ACCOUNTS. THE FIRM HAD NO POLICIES AND PROCEDURES,WRITTEN OR UNWRITTEN, THAT GOVERNED HOW SUPERVISORS WERETO MONITOR AND REVIEW BROKERS' RECOMMENDATIONS TO PURCHASESECURITIES USING PLEDGE COLLATERAL ACCOUNTS. IN ADDITION, THELACK OF SUPERVISION OF THE HOLDINGS IN THESE ACCOUNTS, THEFIRM HAD NO MEANS TO MONITOR THE LOAN-TO-VALUE ASSIGNED TOTHE SECURITIES IN THESE ACCOUNTS. IN CONNECTION WITHSTRUCTURED PRODUCTS ISSUED BY MUTUAL FUNDS MANAGED BY THEFIRM'S INVESTMENT ADVISER-SUBSIDIARY, THE FIRM FAILED TO PROVIDECUSTOMERS WITH OFFERING DOCUMENTS PRIOR TO THE CUSTOMERS'INVESTMENTS. THE FIRM WAS REQUIRED TO SEND OFFERING ANDDISCLOSURE DOCUMENTS TO CUSTOMERS PRIOR TO A CUSTOMER'SINVESTMENT DECISION. THE FIRM ALSO FREQUENTLY FAILED TO OBTAINREPRESENTATION LETTERS FROM CUSTOMERS CONCERNINGRESIDENCY OR ASSETS. IN THREE INSTANCES, THE FIRM CREATED ANDDISTRIBUTED OFFERING DOCUMENTS THAT HAD MATERIALINACCURACIES CONCERNING THE ISSUER. THE FIRM HAD NO WRITTENPROCEDURES AND ITS SUPERVISORY SYSTEM WAS NOT ADEQUATE TOENSURE CUSTOMERS THAT WERE SENT OFFERING AND DISCLOSUREDOCUMENTS, OR THAT THE REPRESENTATION LETTERS WERECOMPLETED BY CUSTOMERS, RETURNED TO THE FIRM, AND REVIEWEDTO DETERMINE THAT THE PURCHASING INVESTORS MET THE REQUIREDCONDITIONS SET BY THE ISSUERS. THE FIRM PARTICIPATED IN VARIOUSPUBLIC OFFERINGS OF STRUCTURED PRODUCTS IN WHICH NO FILINGSHAD BEEN MADE WITH FINRA, IN VIOLATION OF FINRA'S CORPORATEFINANCING RULES. STEPS WERE NOT TAKEN PRIOR TO THE FIRM'SPARTICIPATION IN CERTAIN OFFERINGS THAT WERE NOT EXEMPT FROMTHE FILING REQUIREMENTS. BECAUSE THE FIRM ENGAGED IN THEOFFERING OF SECURITIES ISSUED BY AFFILIATES, IT WAS ALSO SUBJECTTO THE CONFLICT OF INTEREST PROVISIONS OF NASD RULE 2720. THEFIRM DID NOT COMPLY WITH SEVERAL APPLICABLE PROVISIONS OF THATRULE FOR THOSE OFFERINGS THAT WERE NOT EXEMPT FROM RULE 2720.THE FIRM ENTERED INTO SETTLEMENT AGREEMENTS INVOLVING THEPURCHASE OF REVERSE CONVERTIBLE SECURITIES THAT CONTAINEDCONFIDENTIALITY PROVISIONS THAT WERE INCONSISTENT WITHREGULATORY GUIDANCE, ALTHOUGH IT LATER SENT CLARIFYING NOTICETO THOSE PARTIES. THE FIRM FILED FORM U4 AND FORM U5AMENDMENTS WHICH CONTAINED INACCURACIES FORREPRESENTATIVES WITH RESPECT TO CUSTOMER SETTLEMENTS.SPECIFICALLY, IN A TOTAL OF SIX INSTANCES, THE FIRM INCORRECTLYREPORTED THAT A BROKER CONTRIBUTED TO A SETTLEMENT INVOLVINGREVERSE CONVERTIBLES. ALTHOUGH THE FIRM HOPED TO OBTAIN ACONTRIBUTION FROM THE BROKERS, IN EACH INSTANCE, THERE WAS NOINDIVIDUAL CONTRIBUTION TO THE SETTLEMENT.


No

Sanctions Ordered: CensureMonetary/Fine $2,000,000.00






[CONTINUED FROM ALLEGATIONS]: SOME BROKERS RECOMMENDED THATCUSTOMERS USE FUNDS BORROWED THROUGH THIS PROGRAM TOPURCHASE REVERSE CONVERTIBLES, SUBSTANTIALLY INCREASING THECLIENTS' EXPOSURES TO RISK AND, IN MANY INSTANCES, INCREASINGLOSSES. THE SUPERVISORY FAILURES CONCERNING STRUCTUREDPRODUCTS GENERALLY WERE COMPOUNDED IN MANY PLEDGECOLLATERAL ACCOUNTS. THE FIRM HAD NO POLICIES AND PROCEDURES,WRITTEN OR UNWRITTEN, THAT GOVERNED HOW SUPERVISORS WERETO MONITOR AND REVIEW BROKERS' RECOMMENDATIONS TO PURCHASESECURITIES USING PLEDGE COLLATERAL ACCOUNTS. IN ADDITION, THELACK OF SUPERVISION OF THE HOLDINGS IN THESE ACCOUNTS, THEFIRM HAD NO MEANS TO MONITOR THE LOAN-TO-VALUE ASSIGNED TOTHE SECURITIES IN THESE ACCOUNTS. IN CONNECTION WITHSTRUCTURED PRODUCTS ISSUED BY MUTUAL FUNDS MANAGED BY THEFIRM'S INVESTMENT ADVISER-SUBSIDIARY, THE FIRM FAILED TO PROVIDECUSTOMERS WITH OFFERING DOCUMENTS PRIOR TO THE CUSTOMERS'INVESTMENTS. THE FIRM WAS REQUIRED TO SEND OFFERING ANDDISCLOSURE DOCUMENTS TO CUSTOMERS PRIOR TO A CUSTOMER'SINVESTMENT DECISION. THE FIRM ALSO FREQUENTLY FAILED TO OBTAINREPRESENTATION LETTERS FROM CUSTOMERS CONCERNINGRESIDENCY OR ASSETS. IN THREE INSTANCES, THE FIRM CREATED ANDDISTRIBUTED OFFERING DOCUMENTS THAT HAD MATERIALINACCURACIES CONCERNING THE ISSUER. THE FIRM HAD NO WRITTENPROCEDURES AND ITS SUPERVISORY SYSTEM WAS NOT ADEQUATE TOENSURE CUSTOMERS THAT WERE SENT OFFERING AND DISCLOSUREDOCUMENTS, OR THAT THE REPRESENTATION LETTERS WERECOMPLETED BY CUSTOMERS, RETURNED TO THE FIRM, AND REVIEWEDTO DETERMINE THAT THE PURCHASING INVESTORS MET THE REQUIREDCONDITIONS SET BY THE ISSUERS. THE FIRM PARTICIPATED IN VARIOUSPUBLIC OFFERINGS OF STRUCTURED PRODUCTS IN WHICH NO FILINGSHAD BEEN MADE WITH FINRA, IN VIOLATION OF FINRA'S CORPORATEFINANCING RULES. STEPS WERE NOT TAKEN PRIOR TO THE FIRM'SPARTICIPATION IN CERTAIN OFFERINGS THAT WERE NOT EXEMPT FROMTHE FILING REQUIREMENTS. BECAUSE THE FIRM ENGAGED IN THEOFFERING OF SECURITIES ISSUED BY AFFILIATES, IT WAS ALSO SUBJECTTO THE CONFLICT OF INTEREST PROVISIONS OF NASD RULE 2720. THEFIRM DID NOT COMPLY WITH SEVERAL APPLICABLE PROVISIONS OF THATRULE FOR THOSE OFFERINGS THAT WERE NOT EXEMPT FROM RULE 2720.THE FIRM ENTERED INTO SETTLEMENT AGREEMENTS INVOLVING THEPURCHASE OF REVERSE CONVERTIBLE SECURITIES THAT CONTAINEDCONFIDENTIALITY PROVISIONS THAT WERE INCONSISTENT WITHREGULATORY GUIDANCE, ALTHOUGH IT LATER SENT CLARIFYING NOTICETO THOSE PARTIES. THE FIRM FILED FORM U4 AND FORM U5AMENDMENTS WHICH CONTAINED INACCURACIES FORREPRESENTATIVES WITH RESPECT TO CUSTOMER SETTLEMENTS.SPECIFICALLY, IN A TOTAL OF SIX INSTANCES, THE FIRM INCORRECTLYREPORTED THAT A BROKER CONTRIBUTED TO A SETTLEMENT INVOLVINGREVERSE CONVERTIBLES. ALTHOUGH THE FIRM HOPED TO OBTAIN ACONTRIBUTION FROM THE BROKERS, IN EACH INSTANCE, THERE WAS NOINDIVIDUAL CONTRIBUTION TO THE SETTLEMENT.


Allegations: ON APRIL 12, 2011, FINRA ACCEPTED THE LETTER OF ACCEPTANCE,WAIVER AND CONSENT (AWC) THAT SANTANDER SECURITIESCORPORATION HAD SUBMITTED TO FINRA. THE AWC ALLEGES THAT,AMONG OTHER THINGS, IN THE PERIOD FROM SEPTEMBER 2007THROUGH SEPTEMBER 2008, SSC FAILED TO ESTABLISH A SUPERVISORYSYSTEM OR WRITTEN SUPERVISORY PROCEDURES REASONABLYDESIGNED TO SUPERVISE THE SALE OF CERTAIN STRUCTUREDPRODUCTS TO RETAIL CUSTOMERS AND THAT SUCH FAILURES LED TOUNSUITABLE RECOMMENDATIONS AND RESULTED IN CUSTOMER LOSSES.WITHOUT ADMITTING OR DENYING ANY ALLEGATIONS OR FINDINGS INTHE AWC, THE FIRM WAS CENSURED BY FINRA, FINED $2 MILLION ANDAGREED TO CERTAIN UNDERTAKINGS INCLUDING BUT NOT LIMITED TOREVISING CERTAIN OF ITS WRITTEN POLICIES AND PROCEDURES.







Initiated By: FINANCIAL INDUSTRY REGULATORY AUTHORITY


Censure


FINE; UNDERTAKINGS.



Principal Product Type: Debt - Corporate


Allegations: ON APRIL 12, 2011, FINRA ACCEPTED THE LETTER OF ACCEPTANCE,WAIVER AND CONSENT (AWC) THAT SANTANDER SECURITIESCORPORATION HAD SUBMITTED TO FINRA. THE AWC ALLEGES THAT,AMONG OTHER THINGS, IN THE PERIOD FROM SEPTEMBER 2007THROUGH SEPTEMBER 2008, SSC FAILED TO ESTABLISH A SUPERVISORYSYSTEM OR WRITTEN SUPERVISORY PROCEDURES REASONABLYDESIGNED TO SUPERVISE THE SALE OF CERTAIN STRUCTUREDPRODUCTS TO RETAIL CUSTOMERS AND THAT SUCH FAILURES LED TOUNSUITABLE RECOMMENDATIONS AND RESULTED IN CUSTOMER LOSSES.WITHOUT ADMITTING OR DENYING ANY ALLEGATIONS OR FINDINGS INTHE AWC, THE FIRM WAS CENSURED BY FINRA, FINED $2 MILLION ANDAGREED TO CERTAIN UNDERTAKINGS INCLUDING BUT NOT LIMITED TOREVISING CERTAIN OF ITS WRITTEN POLICIES AND PROCEDURES.


Resolution:


Sanction Details: TOTAL AMOUNT OF FINE TO APPLICANT $2,000,000.

Firm Statement ON FEBRUARY 28, 2011, SSC SUBMITED THE SIGNED AWC TO FINRA.FINRA ACCEPTED THE AWC ON APRIL 12, 2011. WITHOUT ADMITTING ORDENYING ANY ALLEGATIONS OR FINDINGS IN THE AWC, THE FIRM WASCENSURED BY FINRA, FINED $2 MILLION AND AGREED TO CERTAINUNDERTAKINGS INCLUDING BUT NOT LIMITED TO REVISING CERTAIN OFITS WRITTEN POLICIES AND PROCEDURES.

Sanctions Ordered: CensureMonetary/Fine $2,000,000.00


Disclosure 11 of 12

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Initiated By: FINRA






Other Product Type(s): TRACE-ELIGIBLE SECURITIES

Allegations: NASD RULES 2110, 6230(A), 6230(E) - SANTANDER SECURITIES FAILED TOREPORT TO THE TRADE REPORTING AND COMPLIANCE ENGINE (TRACE)TRANSACTIONS IN TRACE-ELIGIBLE SECURITIES WITHIN 15 MINUTES OFTHE TIME OF EXECUTION. THIS CONDUCT CONSTITUTES SEPARATE ANDDISTINCT VIOLATIONS OF NASD RULE 6230(A) AND A PATTERN ORPRACTICE OF LATE REPORTING WITHOUT EXCEPTIONALCIRCUMSTANCES IN VIOLATION OF NASD RULE 2110. THE FIRM REPORTEDTRANSACTIONS IN TRACE-ELIGIBLE SECURITIES TO TRACE THAT IT WASNOT REQUIRED TO REPORT.



Resolution:


Sanction Details: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS;THEREFORE, THE FIRM IS CENSURED AND FINED $10,000.


No

Sanctions Ordered: CensureMonetary/Fine $10,000.00









Initiated By: FINANCIAL INDUSTRY REGULATORY AUTHORITY


Civil and Administrative Penalt(ies) /Fine(s)




Principal Product Type: Debt - Corporate


Allegations: DURING THE REVIEW PERIOD OF JANUARY 1, 2008 THROUGH MARCH 31,2008, SSC FAILED TO REPORT TO TRACE 20 TRANSACTIONS IN TRACE-ELEGIBLE SECURITIES WITHIN 15 MINUTES OF THE TIME OF EXECUTION.IN ADDITION, SSC REPORTED TO TRACE 94 TRANSACTIONS IN TRACE-ELEGIBLE SECURITIES THAT IT WAS NOT REQUIRED TO REPORT.



Resolution:

Other Sanctions Ordered: NONE

Sanction Details: NONE



Disclosure 12 of 12

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Initiated By: NASD




Allegations: MSRB RULE G-14 - THE FIRM FAILED TO REPORT INFORMATION ABOUTPURCHASE AND SALE TRANSACTIONS EFFECTED IN MUNICIPALSECURITIES TO THE REAL-TIME TRANSACTION REPORTING SYSTEM("RTRS") IN THE MANNER PRESCRIBED BY RULE G-14 RTRS PROCEDURESAND THE RTRS USERS MANUAL.










Other Product Type(s): MUNICIPAL SECURITIES


Resolution:


Sanction Details: WITHOUT ADMITTING OR DENYING THE FINDINGS, SANTANDERSECURITIES CONSENTED TO THE DESCRIBED SANCTIONS AND TO THEENTRY OF FINDINGS, THEREFORE, THE FIRM IS CENSURED AND FINED$6,000.


No




Initiated By: NASD


Other




Other Product Type(s): MUNICIPAL SECURITIES

Allegations: MSRB RULE G-14 THE FIRM FAILED TO REPORT INFORMATION ABOUTPURCHASE AND SALE TRANSACTIONS EFFECTED IN MUNICIPALSECURITIES TO THE REAL-TIME TRANSACTION REPORTING SYSTEM("RTRS") IN THE MANNER PRESCRIBED BY RULE G-14 RTRS PROCEDURESAND THE RTRS USERS MANUAL.








Other



Resolution:


Sanction Details: WITHOUT ADMITTING OR DENYING THE FINDINGS, SANTANDERSECURITIES CONSENTED TO THE DESCRIBED SACTIONS AND TO THEENTRY OF FINDINGS, THEREFORE, THE FIRM WAS CENSURED AND FINED$6,000.








Civil - Pending

This type of disclosure event involves a pending civil court action that with seek an injunction to cease certain investment-related activity or alleges a violation of any investment-related statute or regulation.

Disclosure 1 of 1


Initiated By: DIONISIO TRIGO GONZÁLEZ AND ANA RITA SUAREZ SEÍN

Relief Sought: Other

Other Relief Sought: UNSPECIFIED DAMAGES TO BE DETERMINED AT TRIAL

Date Court Action Filed: 09/12/2016


Other Product Types:

Court Details: COURT OF FIRST INSTANCE OF THE COMMONWEALTH OF PUERTO RICO,SUPERIOR COURT OF SAN JUAN. CAPTIONED DIONISIO TRIGO GONZÁLEZET AL. V. BANCO SANTANDER, S.A. ET AL., CIVIL NO. 2016-0857

PLAINTIFFS ALLEGE THE FOLLOWING AGAINST THE APPLICANT, ITSCONTROL AFFILIATE AND OTHER DEFENDANTS:1. A DERIVATIVE CLAIM FOR AIDING AND ABETTING BREACH OF FIDUCIARYDUTY AGAINST ALL DEFENDANTS.2.A DERIVATIVE CLAIM FOR UNJUST ENRICHMENT/CONSTRUCTIVE TRUSTAGAINST ALL DEFENDANTS.3.A CLASS ACTION CLAIM FOR BREACH OF CONTRACT AGAINST THESANTANDER ENTITY DEFENDANTS4.A CLASS ACTION CLAIM FOR BREACH OF THE COVENANT OF GOODFAITH AND FAIR DEALING AGAINST THE SANTANDER ENTITYDEFENDANTS.PLAINTIFFS ALLEGE THE FOLLOWING ONLY AGAINST OTHERDEFENDANTS:1.A DERIVATIVE CLAIM FOR VIOLATION OF FIDUCIARY DUTIES OWED TOTHE FUNDS AND THEIR SHAREHOLDERS PURSUANT TO THE GENERALCORPORATIONS ACT OF THE COMMONWEALTH OF PUERTO RICO AGAINSTTHE DIRECTOR DEFENDANTS.2.A DERIVATIVE CLAIM FOR VIOLATION OF DUTIES AS AGENT OF THEFUNDS PURSUANT TO THE CIVIL CODE OF THE COMMONWEALTH OFPUERTO RICO AGAINST SANTANDER ASSET MANAGEMENT.

Allegations:

Current Status: Pending

Date Notice/Process Served: 09/26/2016

Firm Statement THIS PURPORTED SHAREHOLDER DERIVATIVE AND CLASS ACTION WASBROUGHT BY CUSTOMERS OF CERTAIN PUERTO RICO CLOSED-ENDFUNDS ("CEFS") IN PUERTO RICO STATE COURT AGAINST BANCOSANTANDER, S.A., SANTANDER BANCORP, BANCO SANTANDER PUERTORICO, SANTANDER SECURITIES LLC, SANTANDER ASSET MANAGEMENTLLC, AND SEVERAL DIRECTORS AND SENIOR MANAGEMENT OF THOSEENTITIES IN SEPTEMBER 2016. BROUGHT ON BEHALF OF THE FUNDS ANDOF PUERTO RICO BASED INVESTORS, THE COMPLAINT ALLEGES THATTHE ENTITIES AND INDIVIDUALS CREATED, CONTROLLED, MANAGED, ANDADVISED CERTAIN CEFS TO THE DETRIMENT OF THE FUNDS AND THEIRSHAREHOLDERS FROM MARCH 1, 2012 THROUGH THE PRESENT. ANOTICE OF REMOVAL TO FEDERAL COURT HAS BEEN FILED.






THIS PURPORTED SHAREHOLDER DERIVATIVE AND CLASS ACTION WASBROUGHT BY CUSTOMERS OF CERTAIN PUERTO RICO CLOSED-ENDFUNDS ("CEFS") IN PUERTO RICO STATE COURT AGAINST BANCOSANTANDER, S.A., SANTANDER BANCORP, BANCO SANTANDER PUERTORICO, SANTANDER SECURITIES LLC, SANTANDER ASSET MANAGEMENTLLC, AND SEVERAL DIRECTORS AND SENIOR MANAGEMENT OF THOSEENTITIES IN SEPTEMBER 2016. BROUGHT ON BEHALF OF THE FUNDS ANDOF PUERTO RICO BASED INVESTORS, THE COMPLAINT ALLEGES THATTHE ENTITIES AND INDIVIDUALS CREATED, CONTROLLED, MANAGED, ANDADVISED CERTAIN CEFS TO THE DETRIMENT OF THE FUNDS AND THEIRSHAREHOLDERS FROM MARCH 1, 2012 THROUGH THE PRESENT. ANOTICE OF REMOVAL TO FEDERAL COURT HAS BEEN FILED.






Arbitration Award - Award / Judgment

Brokerage firms are not required to report arbitration claims filed against them by customers; however, BrokerCheckprovides summary information regarding FINRA arbitration awards involving securities and commodities disputesbetween public customers and registered securities firms in this section of the report. The full text of arbitration awards issued by FINRA is available at www.finra.org/awardsonline.

Disclosure 1 of 7


Type of Event: ARBITRATION

Arbitration Forum:

Case Initiated:

Case Number:

Allegations:

Disputed Product Type:

Sum of All Relief Requested:

Disposition:

Disposition Date:

Sum of All Relief Awarded:

FINRA

10/03/2010

10-04204

ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-SUITABILITY; ACCOUNTRELATED-BREACH OF CONTRACT; ACCOUNT RELATED-FAILURE TOSUPERVISE; ACCOUNT RELATED-NEGLIGENCE

COMMON STOCK; OPTIONS; OTHER TYPES OF SECURITIES; PREFERREDSTOCK

$3,456,718.00

AWARD AGAINST PARTY

06/20/2012

$70,000.00

There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.

Disclosure 2 of 7

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Arbitration Forum:

Case Initiated:

Allegations:

FINRA

04/05/2012

ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-OTHER;ACCOUNT ACTIVITY-SUITABILITY; ACCOUNT RELATED-BREACH OFCONTRACT; ACCOUNT RELATED-FAILURE TO SUPERVISE; ACCOUNTRELATED-NEGLIGENCE





www.finra.org/awardsonline

https://www.finra.org/arbitration-mediation/arbitration-awards-online?search=10-04204


Case Initiated:

Case Number:



Disposition:

Disposition Date:


04/05/2012

12-01192

REVERSE REPURCHASE AGREEMENTS; STRUCTURED PRODUCTS

$5,000,000.00

AWARD AGAINST PARTY

08/06/2013

$1,921,000.00


Disclosure 3 of 7

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Arbitration Forum:

Case Initiated:

Case Number:

Allegations:



Disposition:

Disposition Date:


FINRA

09/12/2014

14-02167

ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-OMISSION OF FACTS; ACCOUNT ACTIVITY-SUITABILITY; ACCOUNTRELATED-FAILURE TO SUPERVISE; ACCOUNT RELATED-NEGLIGENCE;ACCOUNT RELATED-OTHER

MUTUAL FUNDS

$50,000.00

AWARD AGAINST PARTY

03/18/2015

$15,300.00


Disclosure 4 of 7

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Allegations: ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-FRAUD;ACCOUNT ACTIVITY-SUITABILITY; ACCOUNT RELATED-BREACH OFCONTRACT; ACCOUNT RELATED-FAILURE TO SUPERVISE; ACCOUNTRELATED-NEGLIGENCE; ACCOUNT RELATED-OTHER








Arbitration Forum:

Case Initiated:

Case Number:

Allegations:



Disposition:

Disposition Date:


FINRA

03/17/2016

16-00737

ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-FRAUD;ACCOUNT ACTIVITY-SUITABILITY; ACCOUNT RELATED-BREACH OFCONTRACT; ACCOUNT RELATED-FAILURE TO SUPERVISE; ACCOUNTRELATED-NEGLIGENCE; ACCOUNT RELATED-OTHER

MUNICIPAL BOND FUNDS; MUNICIPAL BONDS; OTHER TYPES OFSECURITIES

$400,000.00

AWARD AGAINST PARTY

02/12/2019

$135,629.62


Disclosure 5 of 7

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Arbitration Forum:

Case Initiated:

Case Number:

Allegations:



Disposition:

Disposition Date:


FINRA

09/06/2018

18-03108

ACCOUNT ACTIVITY - ELDER ABUSE; ACCOUNT ACTIVITY-BRCH OFFIDUCIARY DT; ACCOUNT ACTIVITY-MANIPULATION; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-OMISSION OF FACTS;ACCOUNT ACTIVITY-OTHER; ACCOUNT ACTIVITY-SUITABILITY; ACCOUNTRELATED-BREACH OF CONTRACT; ACCOUNT RELATED-FAILURE TOSUPERVISE; ACCOUNT RELATED-NEGLIGENCE; ACCOUNT RELATED-OTHER

GOVERNMENT SECURITIES; MUNICIPAL BOND FUNDS; MUNICIPAL BONDS;MUTUAL FUNDS

$50,000.00

AWARD AGAINST PARTY

08/15/2019

$40,817.01








Sum of All Relief Awarded: $40,817.01


Disclosure 6 of 7

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Arbitration Forum:

Case Initiated:

Case Number:

Allegations:



Disposition:

Disposition Date:


FINRA

04/23/2019

19-01099

ACCOUNT ACTIVITY - ELDER ABUSE; ACCOUNT ACTIVITY-BRCH OFFIDUCIARY DT; ACCOUNT ACTIVITY-MANIPULATION; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-OMISSION OF FACTS;ACCOUNT ACTIVITY-OTHER; ACCOUNT ACTIVITY-SUITABILITY; ACCOUNTRELATED-BREACH OF CONTRACT; ACCOUNT RELATED-FAILURE TOSUPERVISE; ACCOUNT RELATED-NEGLIGENCE; ACCOUNT RELATED-OTHER


$50,000.00

AWARD AGAINST PARTY

09/13/2019

$3,300.00


Disclosure 7 of 7

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Arbitration Forum:

Allegations:

FINRA

ACCOUNT ACTIVITY - ELDER ABUSE; ACCOUNT ACTIVITY-BRCH OFFIDUCIARY DT; ACCOUNT ACTIVITY-MANIPULATION; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-OMISSION OF FACTS;ACCOUNT ACTIVITY-OTHER; ACCOUNT ACTIVITY-SUITABILITY; ACCOUNTRELATED-FAILURE TO SUPERVISE; ACCOUNT RELATED-NEGLIGENCE;ACCOUNT RELATED-OTHER







Case Initiated:

Case Number:



Disposition:

Disposition Date:


10/03/2019

19-02980


$50,000.00

AWARD AGAINST PARTY

02/24/2020

$50,600.00








End of Report

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