Summit Financial, Llc

Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTED TO SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT FAILED TO REASONABLY SUPERVISE ITS REGISTERED REPRESENTATIVES' RECOMMENDATIONS OF MULTI-SHARE CLASS VARIABLE ANNUITIES (VAS) TO CUSTOMERS AND FAILED TO ESTABLISH, MAINTAIN, AND ENFORCE A REASONABLE SUPERVISORY SYSTEM AND PROCEDURES RELATED TO THE SALE AND SUITABILITY OF SUCH SECURITIES, INCLUDING SALES OF L-SHARE CONTRACTS. THE FINDINGS ALSO STATE THAT THE FIRM FAILED TO PROVIDE TRAINING TO ITS REGISTERED REPRESENTATIVES AND PRINCIPALS ON THE SALE AND SUPERVISION OF MULTI-SHARE CLASS VAS AND THE SALE OF LONG-TERM INCOME RIDERS WITH MULTI-SHARE CLASS VAS. THE FIRM DID NOT PROVIDE TRAINING OR GUIDANCE TO REGISTERED REPRESENTATIVES ON THE FEATURES OF VARIOUS SHARE CLASSES AND THE ASSOCIATED FEES AND SURRENDER CHARGES, AND DID NOT PROVIDE THEM WITH ADEQUATE INFORMATION TO COMPARE SHARE CLASSES TO MAKE SUITABILITY DETERMINATIONS. THE FINDINGS ALSO STATED THAT THE FIRM FAILED TO REASONABLY SUPERVISE THE PRIVATE SECURITIES TRANSACTIONS OF A REGISTERED REPRESENTATIVE. THE FIRM ALLOWED THE REGISTERED REPRESENTATIVE TO FORM A SEPARATE BROKER-DEALER. THE FIRM FAILED TO ADEQUATELY SUPERVISE THE REGISTERED REPRESENTATIVE'S ACTIVITIES THROUGH THE SEPARATE BROKER-DEALER AND FAILED TO ENSURE THAT HE COMPLIED WITH RESTRICTIONS IMPOSED BY THE FIRM. IN ADDITION, THE FIRM FAILED TO DETECT SEVERAL RED FLAGS THAT SHOULD HAVE ALERTED IT TO THE REGISTERED REPRESENTATIVE'S ACTIVITY. Status: Final Sanction Detail: THE FIRM WAS CENSURED AND FINED $325,000. Summary: SUMMIT HAS SIGNIFICANTLY EXPANDED AND ENHANCED ITS MANAGEMENT, COMPLIANCE, SUPERVISORY AND LEGAL PERSONNEL AS WELL AS ITS OVERALL COMPLIANCE AND SUPERVISORY STRUCTURES AND TRAINING PROGRAMS. NOTWITHSTANDING THIS AWC'S FINDINGS THAT THE FIRM'S SUPERVISION AND TRAINING REGARDING VA SHARE CLASSES WAS INADEQUATE, WHICH SUMMIT DOES NOT DISPUTE, SUMMIT BELIEVES THAT THE RRS DID MAKE APPROPRIATE SUITABILITY DETERMINATIONS REGARDING THE SHARE CLASSES THEY RECOMMENDED TO THEIR VA CLIENTS. FURTHER, SUMMIT EQUITIES NO LONGER PERMITS RRS TO ASSOCIATE WITH ANY BROKERAGE FIRM OTHER THAN SUMMIT.

Allegations: ALLEGED FAILURE TO REASONABLY SUPERVISE REGISTERED REPRESENTATIVES(AS DEFINED BY MA LAWS) TO ASSURE COMPLIANCE WITH MA PRIVACY LAWS, RESULTING IN VIOLATION OF MASS.GEN.LAWS. CH110A, SECTION 204(A)(2)(J) Status: Final Sanction Detail: A FINE OF $100,00 WAS IMPOSED ON SUMMIT EQUITIES AND PAID IN FULL IN DECEMBER 2018 Summary: THE FIRM CONSENTED TO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT FAILED TO REASONABLY SUPERVISE ITS DEPARTING REGISTERED REPRESENTATIVES TO ASSURE COMPLIANCE WITH MA PRIVACY LAWS. EVEN THOUGH THE FIRM HAD ADOPTED A POLICY REQUIRING ALL REGISTERED REPRESENTATIVES DEPARTING THE FIRM FOR ANY REASON TO RETURN AND NOT RETAIN COPIES OF ANY RECORDS AND FILES CONTAINING FIRM CUSTOMERS' PERSONALLY IDENTIFIABLE INFORMATION, AND REQUIRED REGISTERED REPRESENTATIVES TO COMPLETE VARIOUS FORMS OF TRAINING IN THIS REGARD, IT PERMITTED ITS REGISTERED REPRESENTATIVES TO USE THIRD-PARTY CONTACT OR CUSTOMER RELATIONSHIP MANAGEMENT SYSTEMS OVER WHICH THE FIRM DID NOT HAVE ACCESS OR CONTROL. REGISTERED REPRESNTATIVES USING THESE SYSTEMS INPUT FIRM CUSTOMERS' INFORMATION IN SUCH SYSTEM, AND AS A RESULT OF THE FIRM NOT HAVING ACCESS TO THESE SYSTEMS, THE FIRM WAS NOT ABLE TO (I) MONITOR OR CONTROL THE USERS OF EACH SYSTEM IN ORDER TO PREVENT ACCESS BY OR SHARING WITH UNAUTHORIZED PERSONS, (II) MONITOR OR CONTROL THE INFORMATION THAT REGISTERED REPRESENTATIVES INPUT INTO THE SYSTEMS TO PREVENT UNAUTHORIZED SHARING OF FIRM CUSTOMERS' PERSONALLY IDENTIFIABLE INFORMATION, OR (III) REMOTELY WIPE OR OTHERWISE REMOVE ITS CUSTOMERS' PERSONALLY IDENTIFIABLE INFORMATION WITHIN THOSE SYSTEMS AS NEEDED, SUCH AS WHEN REGISTERED REPRESENTATIVES DEPARTED THE FIRM. AS OF DECEMBER 26, 2018, THE FIRM HAS FINALIZED ITS SETTLEMENT WITH MA.