Settlement of $2.76 Million in Supervisory Dispute with Corey White

Corey White (CRD #: 4537015), a broker registered with Western International Securities, was involved in a recent dispute, according to his BrokerCheck record, accessed on May 29, 2022. If you want to know more about Corey White’s conduct as a broker, keep reading.

Alleged Failure to Supervise

On February 16, 2022, Corey White was named in an investor dispute alleging he failed to supervise. The investor sought $16,440,221 in damages, and the dispute was settled for $2,760,000.

Bar by FINRA

On March 19, 2021, Corey White was banned from FINRA following allegations he failed to supervise while employed as Chief Compliance Officer and Registered Options Principal at Financial West Group from January 2013 to July 2017.

An Acceptance, Waiver, and Consent (AWC) agreement alleges that Corey White failed to fulfill the following supervisory responsibilities:

• Establishing, maintaining, and enforcing Written Supervisory Procedures (WSPs) related to identifying and preventing excessive trading
• Establishing a supervisory system and WSPs to ensure the sale of Non-Traditional Exchange Traded Products (ETPs) to retail clients would meet FINRA suitability standards
• Monitoring broker activities reported in daily trade blotters and exception reports and monitoring the compliance of other supervisors in reviewing these reports
• Reasonably responding to indications of excessive trading and recommendations of qualitatively unsuitable transactions, specifically involving Non-Traditional ETPs, low-priced securities, and options
• Reasonably discharging these responsibilities to other supervisors

In April 2017, Corey White allegedly updated Financial West’s WSPs concerning leveraged and inverse-leveraged Exchange Traded-Funds (ETFs), but not the WSPs for all Non-Traditional ETPs. The updated WSPs allegedly required Corey White to conduct and document an annual review of all recommended ETF transactions, which the AWC alleges he failed to do.

The AWC further alleges that, between January 2013 and December 2016, Corey White failed to act on indications of excessive trading conducted by five brokers in 10 accounts belonging to six clients. The alleged red flags included high commissions, large and sustained losses, and short-term trading activity inconsistent with clients’ investment objectives, and other signs of potential excessive trading.

The allegations continue that, in March 2016, Corey White failed to investigate why a client with conservative investment objectives had been holding a double-leveraged Non-Traditional ETP, recommended by a broker of Financial West, for more than one trading session. The AWC alleges the client held the ETP position for over 570 days, leading to losses of approximately $32,000.

Lastly, the AWC alleges that Corey White was responsible for approving options trades and reviewing the suitability of options trades from starting in January and April 2013, respectively, through January 2015. Corey White allegedly failed to monitor and approve 370 options transactions a broker executed in a single client’s account.

Some of these options transactions allegedly involved short-term purchases in long-term calls through which the broker was speculating on a short-term move in the underlying equity, and many of the long calls expired worthless, resulting in losses. Further, these transactions were allegedly unsuitable for the client’s investment objective and conservative risk tolerance.

The AWC concludes that these alleged actions violate FINRA Rules 3110(a) and (b), as well as 2360(b)(20) and 2010.

FINRA Rule 3110

Allegations that occurred before the adoption of FINRA regulations may be considered violations of the previously-held NASD rules.

FINRA Rule 3110 requires that firms establish and maintain systems of supervision over their employees to ensure they follow FINRA regulations. Sections (a) and (b) of this rule specifically require the designation of registered principals to carry out supervision and the establishment of Written Supervisory Procedures.

FINRA Rules 2360 and 2010

FINRA Rule 2360 defines and regulates options trading. This rule requires that firms regularly review clients’ options accounts, including designating Registered Options Principals to review options trading in discretionary accounts to ensure brokers’ trades are suitable for their clients.

Violations of many FINRA Rules qualify as automatic violations of FINRA Rule 2010, which requires brokers to meet high standards of professional honor.

Sanctions

Corey White consented to the following sanctions:

• $20,000 fine
• Indefinite bar from associating with FINRA members in all principal capacities

You can read the full AWC here.

Background Information

Corey White has passed the following exams:

• Series 66 – Uniform Combined State Law Examination
• SIE – Securities Industry Essentials Examination
• Series 3 – National Commodity Futures Examination
• Series 7 – General Securities Representative Examination
• Series 4 – Registered Options Principal Examination
• Series 24 – General Securities Principal Examination

Corey White is a registered broker in California and Ohio. He is also a registered investment adviser in California.

He previously worked for Financial West Group (CRD#:16668).

Kurta Law Can Help

If you worked with Corey White and you have concerns about your investments, please contact us today at 877-600-0098 or info@kurtalawfirm.com for a free consultation.

For over 20 years, Kurta Law has advocated on behalf of investors who want to recover their investment losses from brokers and brokerage firms. Kurta Law is a nationally recognized law firm and exclusively represents investors against brokers and brokerage firms on a contingency basis. This means that the firm only earns a fee if our securities attorneys recover money on your behalf.