Jason Adams Suspended by FINRA for Alleged Failure to Supervise
Jason Adams (CRD #: 2690575), a broker registered with NatAlliance Securities, has been suspended by FINRA, according to his BrokerCheck record, accessed on April 18, 2023. Keep reading if you have questions about his alleged conduct as a broker.
FINRA Suspension
On March 27, 2023, Jason Adams consented to the entry of findings that he allegedly failed to reasonably supervise a proprietary corporate bond trader at NatAlliance Securities and that the trades mismarked by this trader caused the firm to fail to keep accurate books and records.
In order for firms to calculate their net capital, they require bond traders to estimate the fair value of firm-owned bonds, known as their “mark to market.” These records reflect the firm’s unrealized gains or losses on these bonds’ value on a daily basis.
A Letter of Acceptance, Waiver & Consent (AWC) alleges that, during the relevant period of April through September 2020, Jason Adams was Trader A’s direct supervisor and was responsible for reviewing this trader’s profit and loss.
During this time, Jason Adams allegedly failed to reasonably respond to signs that Trader A was not appropriately updating his marks. For example, Jason Adams allegedly identified several discrepancies between Trader A’s marks and the market prices for the bonds but failed to escalate his concerns.
The AWC concludes that this alleged misconduct constitutes violations of FINRA Rules 3110 and 2010.
NatAlliance Securities’ Alleged Failure to Supervise
Additionally, the AWC alleges that NatAlliance Securities failed to implement a reasonable system of supervision to monitor traders’ end-of-day bond valuations. The firm allegedly relied on traders to determine the fair market value of their bonds and failed to institute a systematic review of these valuations.
The AWC alleges that Trader A made 8,847 inaccurate marks on 220 corporate bonds, causing NatAlliance Securities to keep inaccurate books and records that overstated the value of Trader A’s portfolio by more than $2.6 million. This allegedly also caused the firm to file inaccurate FOCUS reports with the SEC which overstated the firm’s net capital.
The AWC concludes that these allegations constitute violations of Section 17(a) of the Securities Exchange Act of 1934 and Rules 17a-3 and 17a-5 thereunder, as well as FINRA Rules 2010, 3110, and 4511 on the part of NatAlliance Securities.
FINRA Rule 3110
FINRA Rule 3110 requires that firms establish systems of supervision to identify and avoid violations of securities regulations. Firms must appoint supervisors and provide them with Written Supervisory Procedures (WSPs) to follow.
FINRA Rule 2010
FINRA Rule 2010 holds brokers to high standards of commercial honor and just and equitable principles of trade.
FINRA Rule 4511
FINRA Rule 4511 requires that firms maintain accurate books and records.
Securities Exchange Act of 1934
Section 17(a) of the Securities Exchange Act of 1934 defines the recordkeeping requirements for brokerage firms and other organizations.
Rule 17a-3 requires firms to maintain properly itemized ledger accounts of all purchases, sales, receipts, and deliveries of securities, as well as other information concerning transactions.
Rule 17a-5 describes the kinds of financial reports brokers and dealers must make to the SEC, including audited statements.
Sanctions
Jason Adams consented to the following sanctions:
- $5,000 fine
- 2-month suspension from associating with FINRA members in all principal capacities
- 20 hours of continuing education concerning supervisory responsibilities within 90 days of acceptance of the AWC
His suspension began on April 17, 2023, and will end on June 16, 2023.
NatAlliance Securities consented to the following sanctions:
- Censure
- $40,000 fine
- Undertaking to establish a supervisory system to remediate the issues alleged by the AWC
You can read the AWC here.
Background Information
Jason Adams has passed the following exams:
- Series 63 – Uniform Securities Agent State Law Examination
- SIE – Securities Industry Essentials Examination
- Series 7 – General Securities Representative Examination
- Series 24 – General Securities Principal Examination
Jason Adams is a registered broker in 30 states and the District of Columbia.
He has also worked for the following firms:
- Auriga USA (CRD#:121731)
- KeyBanc Capital Markets (CRD#:566)
- Cantor Fitzgerald & Company (CRD#:134)
- CIBC World Markets (CRD#:630)
Kurta Law Can Help
If you worked with Jason Adams 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.
Loading...
Reload document 
Open in new tab