Hornor, Townsend & Kent, Llc

Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTED TO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT FAILED TO REASONABLY SUPERVISE A REGISTERED REPRESENTATIVE'S DISCLOSED, BUT UNAPPROVED, OUTSIDE BUSINESS ACTIVITY (OBA) INVOLVING THE SALE OF A SECURITY DESCRIBED AS A STRUCTURED CASH FLOW INVESTMENT. THE FINDINGS STATED THAT THE REGISTERED REPRESENTATIVE SUBMITTED AN OBA REQUEST FOR APPROVAL TO SELL INTERESTS IN THE SECURITY. UNDER THE FIRM'S WRITTEN SUPERVISORY PROCEDURES (WSPS), THE FIRM'S HOME OFFICE SUPERVISION WAS RESPONSIBLE FOR FINAL APPROVAL OR DISAPPROVAL OF OBA REQUESTS AND FOR NOTIFYING THE REPRESENTATIVE AND THE REPRESENTATIVE'S SUPERVISOR OF ITS DECISION. THE REGISTERED REPRESENTATIVE'S SUPERVISOR REVIEWED HIS OBA REQUEST AND RECOMMENDED THAT HOME OFFICE SUPERVISION APPROVE THE OBA. THE SUPERVISOR RECORDED THIS RECOMMENDATION IN THE FIRM'S SYSTEMS. HOME OFFICE SUPERVISION, HOWEVER, DID NOT REVIEW THE OBA REQUEST UNTIL NEARLY SEVEN MONTHS AFTER THE REGISTERED REPRESENTATIVE SUBMITTED THE REQUEST, AND SUBSEQUENTLY INFORMED THE REGISTERED REPRESENTATIVE'S SUPERVISOR THAT THE OBA REQUEST WOULD NOT BE APPROVED. ALTHOUGH HOME OFFICE SUPERVISION RECORDED THE DISAPPROVAL IN THE FIRM'S SYSTEMS, NO ONE AT THE FIRM EVER COMMUNICATED THIS DECISION TO THE REGISTERED REPRESENTATIVE. THE REGISTERED REPRESENTATIVE'S OBA REQUEST PLACED THE FIRM ON NOTICE THAT HE PLANNED TO COMMENCE SELLING THE SECURITY AT A FIRM BRANCH OFFICE ON A CERTAIN DATE. NONETHELESS, THE FIRM DID NOT REASONABLY SUPERVISE THE REGISTERED REPRESENTATIVE OR HIS FIRM BRANCH OFFICE. HAD THE FIRM CONDUCTED REASONABLE SUPERVISION, IT WOULD HAVE LEARNED THAT THE REGISTERED REPRESENTATIVE WAS USING FIRM RESOURCES TO SELL THE SECURITY TO FIRM CUSTOMERS, INCLUDING HIS FIRM EMAIL ACCOUNT, AND HIS ASSIGNED SALES ASSISTANT. AS A RESULT, THE FIRM FAILED TO DETECT THE REGISTERED REPRESENTATIVE'S SALES OF THE SECURITY. IN TOTAL, THE REGISTERED REPRESENTATIVE SOLD OVER $7 MILLION IN THE SECURITY TO INVESTORS. Status: Final Sanction Detail: THE FIRM WAS CENSURED AND FINED $180,000.

Allegations: THE FIRM FAILED TO REASONABLY SUPERVISE REPRESENTATIVES' SALE OF MULTI-SHARE CLASS VARIABLE ANNUITIES, AND FAILED TO PROVIDE TRAINING TO ITS REPRESENTATIVES AND PRINCIPALS ON THE SALE AND SUPERVISION OF MULTI-SHARE CLASS VARIABLE ANNUITIES. ALSO, THE FIRM FAILED TO ADEQUATELY SUPERVISE THE PRIVATE SECURITIES TRANSACTIONS OF ITS REPRESENTATIVES WHO WERE DUALLY REGISTERED AS INVESTMENT ADVISORS WITH THIRD-PARTY ADVISORY FIRMS. Status: Final Sanction Detail: CENSURE; FINE OF$275,000 - PAID ON 11/21/17 Summary: THE FIRM ENTERED INTO A LETTER OF ACCEPTANCE, WAIVER AND CONSENT (AWC) WITH FINRA BY WHICH IT NEITHER ADMITTED OR DENIED ALLEGATIONS THAT IT FAILED TO REASONABLY SUPERVISE REPRESENTATIVES' SALE OF MULTI-SHARE CLASS VARIABLE ANNUITIES, AND FAILED TO PROVIDE TRAINING TO ITS REPRESENTATIVES AND PRINCIPALS ON THE SALE AND SUPERVISION OF MULTI-SHARE CLASS VARIABLE ANNUITIES. ALSO, THE FIRM FAILED TO ADEQUATELY SUPERVISE THE PRIVATE SECURITIES TRANSACTIONS OF ITS REPRESENTATIVES WHO WERE DUALLY REGISTERED AS INVESTMENT ADVISORS WITH THIRD-PARTY ADVISORY FIRMS. THE FIRM AGREED TO A CENSURE AND A FINE OF $275,000.