U.S. securities regulators have expelled a firm, and banned two of its executives, amid allegations that they hid the firm’s condition when it fell into financial trouble.
The Financial Industry Regulatory Authority (FINRA) announced Wednesday that it has expelled WJB Capital Group, Inc. for misstating its financial records and for engaging in securities transactions while it was capital deficient. FINRA also barred the firm’s chief executive officer, Craig Rothfeld, from the securities industry, and its chief financial officer, Gregory Maleski, is barred from acting in a principal capacity.
FINRA said it found that from 2009, when WJB Capital began to experience financial difficulties, through 2011, Rothfeld and Maleski misstated the firm’s financial position and misclassified certain items for net capital purposes. As a result, at various times in 2011, the firm engaged in securities transactions when it was below its minimum required net capital, it noted.
The firm, and the two executives, consented to FINRA’s findings, without admitting nor denying the charges.
“Both WJB’s CEO and CFO hid the precarious financial condition of the firm,” noted Brad Bennett, FINRA executive vice president and chief of enforcement, adding that it misstated its net capital calculations by as much as $4.4 million per month over a two-year period. “The firm’s supervision and accounting were seriously flawed,” he added.