The U.S. Financial Industry Regulatory Authority announced that it has expelled Franklin Ross, Inc. for repeatedly violating anti-money laundering rules.

FINRA also imposed fines and suspensions against two of the firm’s principals – its former president, Mark Ross, Jr., and its current president, Kevin Herridge. By federal statute, a firm must be a FINRA member in order to conduct a public securities business.

The regulator found that FRI repeatedly violated anti-money laundering rules by, among other things, failing to investigate and report numerous suspicious transactions; failing to obtain adequate background information on new customer accounts; failing to conduct an independent test of its AML program; and failing to provide AML training. FRI and Ross also violated supervisory, recordkeeping and registration provisions.

“Suspicious Activity Reports provide law enforcement with information that is critical for investigating and prosecuting money laundering, terrorist financing and other financial crimes,” said Susan Merrill, FINRA executive vice president and chief of enforcement. “FRI’s failures to investigate red flags allowed it to serve as a ’safe haven’ for individuals seeking to capitalize on highly suspicious or illegal stock transactions without detection.”

In addition to expelling the firm, FINRA suspended Ross for two years in a principal capacity and 90 days in all capacities and fined him USUS$35,000. FINRA suspended Herridge for six months in a principal capacity and 30 days in all capacities and fined him USUS$25,000. FINRA also ordered both individuals to obtain substantial additional AML training over the next two years.

In concluding this settlement, FRI, Ross and Herridge neither admitted nor denied the charges, but consented to the entry of FINRA’s findings.