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The Financial Industry Regulatory Authority (FINRA) announced today that it has filed for a Temporary Cease-and-Desist Order (TCDO) against Herkimer, NY-based Westor Capital Group, Inc. and its President, Chief Compliance Officer and Financial and Operations Principal, Richard Hans Bach, to immediately stop the further misappropriation and misuse of customer funds and securities. FINRA is seeking the TCDO to prevent further customer harm that would likely continue before a formal disciplinary proceeding against Westor and Bach could be completed.
In addition, FINRA issued a complaint against Westor and Bach, charging them with failing to allow customers to withdraw account balances and deliver securities, misusing customer securities, failing to maintain physical possession or control of securities, and for operating an unapproved self-clearing business.
In one instance, when a customer sought to withdraw $97,000 from his account, Westor refused. FINRA further charges that Westor, acting through Bach, misused 65,000 shares of customers' fully paid common stock to effect and cover short sales by another customer, without the authority to do so. As a result, Westor and Bach failed to maintain physical possession or control of securities as required by the federal securities laws and rules.
Westor's primary business is trading in microcap securities through its own accounts held at several different brokerage firms and has ineffective measures to track and reconcile its customers' stock positions. This makes it possible for Westor and Bach to conceal the improper use of securities, the complaint alleges.
Under FINRA rules, the individuals and firms named in a complaint can file a response and request a hearing before a FINRA disciplinary panel. Possible sanctions include a fine, an order to pay restitution, censure, suspension or bar from the securities industry. The issuance of a disciplinary complaint represents the initiation of a formal proceeding by FINRA, in which findings as to the allegations in the complaint have not been made, and does not represent a decision as to any of the allegations contained in the complaint.
Investors can obtain more information about, and the disciplinary record of, any FINRA-registered broker or brokerage firm by using FINRA's BrokerCheck. FINRA makes BrokerCheck available at no charge. In 2012, members of the public used this service to conduct 14.6 million reviews of broker or firm records. Investors can access BrokerCheck at www.finra.org/brokercheck or by calling (800) 289-9999. Investors may find copies of this disciplinary action as well as other disciplinary documents in FINRA's Disciplinary Actions Online database
