Popular Securities, Llc

Allegations: FINRA'S EXAMINATION FOCUSED ON (1) THE ADEQUACY OF THE FIRM'S SUPERVISORY SYSTEM AND WRITTEN SUPERVISORY PROCEDURES RELATING TO CONCENTRATION OF PUERTO RICO SECURITIES IN CUSTOMER ACCOUNTS, AND (2) THE SUITABILITY OF RECOMMENDATIONS THE FIRM MADE TO ITS CUSTOMERS RELATING TO PUERTO RICO SECURITIES. Status: Final Sanction Detail: A FINE OF $125,000.00 WAS PAID ON DECEMBER 17, 2014. Summary: ON DECEMBER 11, 2014, THE FIRM EXECUTED A LETTER OF ACCEPTANCE, WAIVER AND CONSENT ("AWC") PURSUANT TO WHICH FINRA AGREED TO ACCEPT A SETTLEMENT TO CONCLUDE ITS EXAMINATION OF THE FIRM. UNDER THE TERMS OF THE AWC, THE FIRM (1) ACCEPTED THAT THE FIRM'S WRITTEN SUPERVISORY PROCEDURES ("WSPS") FOR THE PERIOD BEGINNING ON JULY 1, 2011 AND ENDING ON JUNE 30, 2013 DID NOT OUTLINE THE STEPS THAT THE FIRM SHOULD HAVE TAKEN TO REVIEW ITS CUSTOMERS' SECURITIES PURCHASES IN PUERTO RICO SECURITIES FOR CONCENTRATION, AND THAT, APART FROM A PROCEDURE THAT REQUIRED QUARTERLY REVIEWS OF "ELDERLY" CUSTOMER ACCOUNTS FOR CONCENTRATION OF ONE PRODUCT IN CLIENT'S ACCOUNT, THE FIRM DID NOT ESTABLISH, MAINTAIN, OR ENFORCE ANY SYSTEMS OR PROCEDURES THAT REQUIRED SUPERVISORS TO REVIEW FOR CONCENTRATED PURCHASES IN PUERTO RICO SECURITIES OR DOCUMENT SUCH REVIEWS; AND (2) AGREED TO A CENSURE AND A FINE OF $125,000. THE FIRM HAS ACCEPTED THE ABOVE REFERENCED FINDING WITHOUT ADMITTING OR DENYING THE SAME.

Allegations: MSRB RULES G-14 AND G-27: THE FIRM FAILED TO TIMELY REPORT ITS MUNICIPAL SECURITIES CUSTOMER TRANSACTIONS TO THE MSRB. THE FIRM ALSO FAILED TO TIMELY REPORT ITS MUNICIPAL SECURITIES INTER-DEALER TRANSACTIONS TO THE MSRB. THE FIRM FAILED TO MONITOR ITS TRADE REPORTING TO ENSURE COMPLIANCE WITH MSRB RULE G-14. Status: Final Sanction Detail: ON MAY 31, 2005, POPULAR SECURITIES, INC. ("POPULAR SECURITIES") SUBMITTED A LETTER OF ACCEPTANCE, WAIVER AND CONSENT ("AWC") TO THE NASD WITH THE TERMS UNDER WHICH IT HAS AGREED TO ACCEPT A CENSURE AND PAY A FINE IN CONNECTION WITH THE RESOLUTION OF CERTAIN NASD ALLEGATIONS OR FINDINGS. IN THE AWC, POPULAR SECURITIES CONSENTED, WITHOUT ADMITTING OR DENYING THE NASD'S ALLEGATIONS, TO THE ENTRY OF FINDINGS RELATED TO MSRB RULES G-14 AND G-27. IT IS IMPORTANT TO NOTE THAT THE ALLEGATIONS PRESENTED WERE OPERATIONAL IN NATURE AND THAT NO CLIENTS WERE AFFECTED BY THESE REPORTING ISSUE. Summary: RULE G-14 WAS SIGNIFICANTLY AMENDED IN JANUARY 2005 TO REQUIRE A FASTER REPORTING OF MUNICIPAL SECURITIES TRANSACTIONS TO THE MSRB. CORRECTIVE STEPS AND CONTROLS HAVE BEEN ESTABLISHED IN ORDER TO ENSURE COMPLIANCE WITH THESE RULES.

Allegations: MSRB RULE A-13(D)- RESPONDENT FIRM FAILED TO TIMELY PAY MUNICIPAL SECURITIES TRANSACTION FEES AND MUNICIPAL SECURITIES UNDERWRITING FEES TO THE MSRB. Status: Final Sanction Detail: ON AUGUST 30, 2007, POPULAR SECURITIES, INC. SUBMITTED A LETTER OF ACCEPTANCE, WAIVER AND CONSENT TO THE FINANCIAL INDUSTRY REGULATORY AUTHORITY UNDER THE TERMS OF WHICH IT HAS AGREED TO ACCEPT A CENSURE AND PAY A FINE OF $5,000. Summary: ON AUGUST 30, 2007, POPULAR SECURITIES, INC. SUBMITTED A LETTER OF ACCEPTANCE, WAIVER AND CONSENT TO THE FINANCIAL INDUSTRY REGULATORY AUTHORITY UNDER THE TERMS OF WHICH IT HAS AGREED TO ACCEPT A CENSURE AND PAY A FINE IN CONNECTION WITH THE RESOLUTION OF CERTAIN FINRA ALLEGATION OR FINDINGS. IN THE AWC, POPULAR SECURITIES CONSENTED, WITHOUT ADMITTING OR DENYING FINRA'S ALLEGATIONS, TO THE ENTRY OF FINDINGS RELATED TO MUNICIPAL SECURITIES RULEMAKING BOARD RULE A-13(D)AND THE LATE PAYMENT OF CERTAIN TRANSACTION AND UNDERWRITING FEES TO THE MSRB. IT IS IMPORTANT TO NOTE THAT CLIENTS WERE NOT IMPACTED BY THESE REPORTING ISSUES.

Allegations: POPULAR ADVISED CLIENTS TO PURCHASE OR HOLD MUTUAL FUND SHARE CLASSES THAT CHARGED 12B-1 FEES WHEN LOWER-COST SHARE CLASSES OF THOSE SAME FUNDS WERE AVAILABLE. AS A RESULT, POPULAR SECURITIES RECEIVED 12B-1 FEES THAT IT WOULD NOT HAVE COLLECTED HAD THOSE CLIENTS BEEN INVESTED IN THE AVAILABLE LOWER-COST SHARE CLASSES. POPULAR FAILED TO DISCLOSE IN ITS FORM ADV OR OTHERWISE THE CONFLICTS OF INTEREST RELATED TO (A) ITS RECEIPT OF 12B-1 FEES, AND/OR (B) ITS SELECTION OF MUTUAL FUND SHARE CLASSES THAT PAY SUCH FEES. Status: Final Sanction Detail: DISGORGEMENT: POPULAR SECURITIES SHALL PAY A TOTAL OF $544,577 TO FORMER AND CURRENT CLIENTS WHO, DURING THE RELEVANT PERIOD OF INADEQUATE DISCLOSURE, PURCHASED OR HELD 12B-1 FEE PAYING SHARE CLASS MUTUAL FUNDS WHEN A LOWER-COST SHARE CLASS OF THE SAME FUND WAS AVAILABLE TO THE CLIENT. THE TOTAL IS COMPRISED OF DISGORGEMENT OF $490,020 AND PREJUDGMENT INTEREST OF $54,557. Summary: POPULAR SECURITIES PARTICIPATED IN THE SEC'S SHARE CLASS SELECTION DISCLOSURE INITIATIVE, PURSUANT TO WHICH IT VOLUNTARILY SELF-REPORTED A FAILURE DURING THE PERIOD OF JANUARY 1, 2014 TO FEBRUARY 28, 2017 TO DISCLOSE A CONFLICT OF INTEREST RELATED TO THE SALE OF HIGHER-COST MUTUAL FUND SHARE CLASSES WHEN A LOWER-COST SHARE CLASS WAS AVAILABLE. POPULAR PURCHASED, RECOMMENDED, OR HELD FOR ADVISORY CLIENTS MUTUAL FUND SHARE CLASSES THAT CHARGED HIGHER 12B-1 FEES INSTEAD OF LOWER-COST SHARE CLASSES OF THE SAME FUNDS FOR WHICH THE CLIENTS WERE ELIGIBLE. POPULAR RECEIVED 12B-1 FEES IN CONNECTION WITH THESE INVESTMENTS. WITHOUT ADMITTING OR DENYING THE FINDINGS, POPULAR AGREED TO A SETTLEMENT THAT FOUND THIS CONDUCT TO HAVE BEEN IN VIOLATION OF SECTION 206(2) OF THE ADVISERS ACT. THE SETTLEMENT ALSO INCLUDES THE SANCTIONS AND UNDERTAKINGS DETAILED ABOVE. THE SEC AGREED NOT TO IMPOSE PENALTIES AGAINST POPULAR."