FINRA Expels Alpine Securities from Its Membership

FINRA announced that a FINRA extended hearing panel has expelled Salt Lake City-based broker-dealer Alpine Securities Corp. from FINRA membership, and ordered the firm to pay more than $2.3 million in restitution to customers for converting and misusing customer funds and securities, engaging in unauthorized trading, charging customers unfair prices in securities transactions and unreasonable fees, and making an unauthorized capital withdrawal.

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The hearing panel also issued a permanent cease and desist order; specifically, Alpine Securities was ordered to cease and desist from converting or misusing customer funds or securities. The decision resolves charges brought by FINRA's Department of Enforcement in August 2019.

As noted in the decision, at issue in this case was whether Alpine Securities acted properly in response to the firm's mounting financial challenges. Alpine Securities was one of the largest clearing firms in the United States until 2018. Because of an increase in clearing-related, compliance and legal expenses, its profits declined precipitously in 2018, making it difficult to continue its retail securities business. As a result, Alpine Securities contended, in August 2018, it advised customers that it would stop carrying retail accounts and impose additional fees, including a $5,000 monthly account fee, on retail customers who did not close their accounts.

The decision notes that Alpine Securities provided minimal notice to its customers of its change in business plan and additional fees. Furthermore, because of a change in the firm's back-office system, reduced staffing, and an inadequate telephone system, customers encountered difficulties reaching the firm to ask questions. Many customers encountered difficulties logging into their accounts online and were unable to reach Alpine Securities staff to resolve issues.