The Financial Industry Regulatory Authority today expelled Melville, N.Y.-based EKN Financial Services, Inc. for several compliance violations, and for allowing CEO Anthony Ottimo to serve as supervisor after he had been barred by the Securities & Exchange Commission since June 2008, Finra officials said.
Finra barred Ottimo from the securities industry, and it also barred the firm's former president, Thomas Giugliano, from acting in a principal capacity and suspended him from the securities industry for a year and fined him $150,000.
In settling this matter, EKN, Ottimo and Giugliano neither admitted nor denied the charges, but consented to the entry of Finra's findings.
Finra also claims that EKN, through Ottimo and Giugliano, also violated numerous National Association of Securities Dealers, Finra and SEC rules, as well as federal securities laws relating to anti-money laundering violations, net capital deficiencies and widespread reporting failures.
Finra claims that between 2008 and 2011, Ottimo acted as a supervisor despite an SEC order and acted as CEO despite not being registered as a principal. During the period Finra officials claim that EKN and Giugliano repeatedly misrepresented to Finra that Ottimo was no longer acting as EKN's CEO, as a principal or as a supervisor. In 2011, EKN lied to Finra examiners, reporting that since 2008, it had not filled its CEO position while Finra determined that EKN's documents indicated that Ottimo was listed as EKN's CEO and served in that position from 2008 to 2011.
As CEO, Ottimo supervised other EKN personnel, negotiated and executed agreements, controlled its finances, retained signatory authority over its bank accounts, and represented himself as EKN's CEO to its clearing firm and other third parties.
In addition Finra claims that EKN failed to meet minimum net capital requirements during certain periods from September 2008 to November 2010, and also prepared inaccurate net capital computations, failed to accurately report its net capital deficiencies to the SEC and Finra, and failed to accurately record expenses and liabilities in its books and records. EKN also failed to report to Finra--which would have made this information publicly available through Finra BrokerCheck--that Ottimo and Giugliano each had hundreds of thousands of dollars in unsatisfied judgments and liens.
Finra vice president and chief of enforcement Brad Bennett described EKN's actions, Ottimo and Giugliano's defiance of an SEC order, and their lies to regulators as brazen behavior that "completely ignored any sense of responsibility to follow securities rules and laws."
Finra is the independent regulator for all securities firms doing business in the U.S.