The SEC has chastised national brokerage firm 1st Discount and its former compliance supervisor for missing the warning signs of a rogue representative running a Ponzi scheme over most of the last decade.
Michael Park, a Tennessee-based affiliate of 1st Discount, has already pleaded guilty to fraud charges and is now facing an eight-year jail term.
However, the SEC still had questions about how Park managed to hide almost $9 million in illicit deposits coming into what amounted to a Ponzi scheme.
The brokerage firm had some policies in place to monitor reps' business accounts, the SEC determined, but the overall compliance environment was full of holes.
In particular, the regulators blamed Michael Fisher, who was in charge of 1st Discount's "heightened supervision" team at the time, for failing to enforce the rules.
Fisher is no longer with the company, but is looking at a $10,000 fine.
The brokerage firm itself has settled for $40,000.