Lek Securities Corporation – Investor Alert – UPDATED

UPDATE 4/11/2020: According to FINRA’s March 2020 Disciplinary Actions: “Lek Securities Corporation (CRD® #33135, New York, New York) and Samuel Frederik Lek (CRD #1642936, New York, New York) December 20, 2019 – An Offer of Settlement was issued in which the firm was suspended from selling or accepting for deposit any low-priced security until it certifies to FINRA® that it has implemented the recommendations of an independent consultant, fined $200,000 and required to retain one or more qualified independent consultants to conduct a comprehensive review of its supervisory system and its compliance with anti-money laundering (AML) and Section 5 of the Securities Act of 1933 obligations in connection with stock trading in low-priced securities. Samuel Lek was not separately sanctioned herein because he was barred in FINRA Case #2011029713004. Without admitting or denying the allegations, the firm and Samuel Lek consented to the sanctions and to the entry of findings that they failed to implement AML policies, procedures and internal controls reasonably expected to detect and cause the reporting of suspicious transactions and reasonably designed to achieve compliance with the Bank Secrecy Act, and the implementing regulations promulgated thereunder, by the Department of the Treasury. The findings stated that the activity resulted in microcap trades being conducted without reasonable detection, investigation and determination as to whether such transactions should be reported on a suspicious activity report (SAR). The findings also stated that as the firm’s AML compliance officer, chief executive officer (CEO) and chief compliance officer (CCO), Samuel Lek was responsible for its supervisory system, including its certificate review process. The firm and Samuel Lek failed to supervise for compliance with Section 5 of the Securities Act by failing to establish reasonable written supervisory procedures (WSPs) to fulfill its obligations to conduct a searching inquiry, prior to liquidating microcap securities, to determine whether the customer’s resale of those shares was registered or subject to an exemption from registration. The firm, acting under Samuel Lek’s direction, also failed to conduct reasonable due diligence on the deposits, customers and issuers despite red flags that existed at the time of deposit or trading of microcap securities. The findings also included that the firm acted in contravention of Section 5 of the Securities Act by engaging in the sales of unregistered securities in transactions not subject to an exemption from registration requirements. In total, firm accounts liquidated microcap stocks and generated approximately $100 million of proceeds, for which the firm received approximately $1.6 million in commissions. FINRA found that the firm failed to conduct timely reviews of Financial Crimes Enforcement Network (FinCen) 314(a) information requests. The firm failed to access the FinCen online portal to conduct mandated searches. FINRA also found that the firm failed to conduct reasonable testing of its AML program. The firm engaged various third parties to conduct its annual independent test. However, the firm failed to conduct any substantive assessment of its microcap business because each of the tests were substantively inadequate, narrow in scope and evidenced a very limited review of the firm’s AML process and procedures. In addition, FINRA determined that the firm failed to provide reasonable AML training to employees that were primarily responsible for compliance functions, including the review of customer accounts, microcap deposits, trading surveillance and investigations. (FINRA Case #2015045312501)“

Galvin Legal, PLLC is launching an investigation on behalf of investors who may have suffered losses investing with Lek Securities Corporation. If you suffered losses investing with Lek Securities Corporation, then Galvin Legal, PLLC may be able to help you recover your losses in a Financial Industry Regulatory Authority (“FINRA“) arbitration claim.

FINRA requires brokerage firms to conduct due diligence on investments and to conduct a suitability analysis when recommending securities to a customer that takes into account the customer’s knowledge and experience. Brokerage firms that fail to conduct adequate due diligence or that make unsuitable recommendations can be held responsible for the customer’s losses in a FINRA arbitration claim.

If you suffered losses investing with Lek Securities Corporation and would like a free consultation with a securities attorney, then please call Galvin Legal, PLLC at 1-800-405-5117.

This information is all publicly available and is being provided to you by Galvin Legal, PLLC.

Galvin Legal, PLLC is a national securities arbitration, securities mediation, securities litigation, securities fraud, securities regulation and compliance, and investor protection law practice. For more information on Galvin Legal, PLLC and its representation of investors, please visit www.galvinlegal.com or call 1-800-405-5117.