QUESTAR CAPITAL CORPORATION · · 2018-04-28BrokerCheck Report QUESTAR CAPITAL CORPORATION Section Title Report Summary Firm History CRD# 43100 1 10 Firm Profile 2 - 9 Page(s) Firm

BrokerCheck Report

QUESTAR CAPITAL CORPORATION

Section Title

Report Summary

Firm History

CRD# 43100

1

10

Firm Profile 2 - 9

Page(s)

Firm Operations 11 - 21

Disclosure Events 22

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CRD# 43100

SEC# 8-50174

Main Office Location

5701 GOLDEN HILLS DRIVEMINNEAPOLIS, MN 55416Regulated by FINRA Kansas City Office

Mailing Address

P O BOX 59177MINNEAPOLIS, MN 55459-0177

Business Telephone Number

888-446-5872

Report Summary for this Firm

This report summary provides an overview of the brokerage firm. Additional information for this firm can be foundin the detailed report.

Disclosure Events

Brokerage firms are required to disclose certaincriminal matters, regulatory actions, civil judicialproceedings and financial matters in which the firm orone of its control affiliates has been involved.

Are there events disclosed about this firm? Yes

The following types of disclosures have beenreported:

Type Count

Regulatory Event 8

Arbitration 1

Firm Profile

This firm is classified as a corporation.

This firm was formed in Minnesota on 02/15/2007.

Its fiscal year ends in December.

Firm History

Information relating to the brokerage firm's historysuch as other business names and successions(e.g., mergers, acquisitions) can be found in thedetailed report.

Firm Operations

Is this brokerage firm currently suspended with anyregulator? No

This firm conducts 15 types of businesses.

This firm is affiliated with financial or investmentinstitutions.

This firm has referral or financial arrangements withother brokers or dealers.

This firm is registered with:

• the SEC• 1 Self-Regulatory Organization• 51 U.S. states and territories

www.finra.org/brokercheck User Guidance

1©2018 FINRA. All rights reserved. Report about QUESTAR CAPITAL CORPORATION


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This firm is classified as a corporation.

This firm was formed in Minnesota on 02/15/2007.

CRD#

This section provides the brokerage firm's full legal name, "Doing Business As" name, business and mailingaddresses, telephone number, and any alternate name by which the firm conducts business and where such name isused.

Firm Profile

Firm Names and Locations

Its fiscal year ends in December.


SEC#

43100

8-50174

Main Office Location

Mailing Address

Business Telephone Number

Doing business as QUESTAR CAPITAL CORPORATION

888-446-5872

Regulated by FINRA Kansas City Office

5701 GOLDEN HILLS DRIVEMINNEAPOLIS, MN 55416

P O BOX 59177MINNEAPOLIS, MN 55459-0177






This section provides information relating to all direct owners and executive officers of the brokerage firm.

Direct Owners and Executive Officers

Firm Profile

Position

Percentage of Ownership

Is this a public reportingcompany?

Position Start Date

Does this owner direct themanagement or policies ofthe firm?

YORKTOWN FINANCIAL COMPANIES, INC. - INDIANA

SHAREHOLDER

75% or more

No

Domestic Entity

02/2001

Yes

Is this a domestic or foreignentity or an individual?

Legal Name & CRD# (if any):

Position



Position Start Date


BRAUN, BARBARA J

CHIEF TECHNOLOGY AND EXECUTIVE PROJECTS OFFICER

Less than 5%

No

Individual

09/2017

Yes

6839583



Position


Position Start Date

BURNS, THOMAS PATRICK

CHAIRMAN

Less than 5%

Individual

12/2007

1028109








Direct Owners and Executive Officers (continued)

Firm Profile




Less than 5%

No

Yes

Position



Position Start Date


DIAN, MATTHEW CHRISTOPHER

CHIEF OPERATING AND SUPERVISION OFFICER

Less than 5%

No

Individual

09/2015

Yes

2246088



Position



Position Start Date


DU MOND, SHARON LEA

PRESIDENT, CHIEF EXECUTIVE OFFICER, DIRECTOR

Less than 5%

No

Individual

07/2015

Yes

2134316



GAUMOND, WILLIAM EDWARD

5294073








Firm Profile

Position



Position Start Date


DIRECTOR

Less than 5%

No

Individual

01/2016

Yes

5294073


Position



Position Start Date


HALVERSON, AMY CATHERINE

CHIEF FINANCIAL OFFICER

Less than 5%

No

Individual

04/2016

Yes

3231087



Position


Position Start Date


LORD-KRAHN, KRISTINE MARIE

CHIEF LEGAL OFFICER, SECRETARY

Less than 5%

Individual

10/2005

Yes

4241291









Firm Profile



No

Yes

Position



Position Start Date


MATZ, DARCY LYN

CHIEF FIELD DEVELOPMENT AND MARKETING OFFICER

Less than 5%

No

Individual

11/2015

Yes

4847207



Position



Position Start Date


STARKMAN, KRISTINE ALANE

CHIEF COMPLIANCE OFFICER

Less than 5%

No

Individual

09/2017

Yes

2409241



WHITE, WALTER REX

IndividualIs this a domestic or foreignentity or an individual?








Firm Profile

Position



Position Start Date


DIRECTOR

Less than 5%

No

Individual

02/2009

Yes







This section provides information relating to any indirect owners of the brokerage firm.

Indirect Owners

Firm Profile

ALLIANZ EUROPE B.V.

SHAREHOLDER

ALLIANZ OF AMERICA, INC.

75% or more

No

Foreign Entity

06/2012

Yes



Company through whichindirect ownership isestablished

Relationship to Direct Owner

Relationship Established




ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA

SHAREHOLDER

YORKTOWN FINANCIAL COMPANIES, INC. INDIANA

75% or more

No

Domestic Entity

11/2005

Yes









ALLIANZ OF AMERICA INC


Domestic Entity









Indirect Owners (continued)

Firm Profile

SHAREHOLDER


75% or more

No

04/1996

Yes







ALLIANZ SOCIETAS EUROPAEA

SHAREHOLDER

ALLIANZ EUROPE B.V.

75% or more

No

Foreign Entity

06/2012

Yes














Firm History

This section provides information relating to any successions (e.g., mergers, acquisitions) involving the firm.

No information reported.






Firm Operations

RegistrationsThis section provides information about the regulators (Securities and Exchange Commission (SEC), self-regulatoryorganizations (SROs), and U.S. states and territories) with which the brokerage firm is currently registered andlicensed, the date the license became effective, and certain information about the firm's SEC registration.

This firm is currently registered with the SEC, 1 SRO and 51 U.S. states and territories.

SEC Registration Questions

This firm is registered with the SEC as:

A broker-dealer:

A broker-dealer and government securities broker or dealer:

A government securities broker or dealer only:

This firm has ceased activity as a government securities broker or dealer:

Yes

Yes

No

No

Federal Regulator Status Date Effective

SEC Approved 02/15/2007

Self-Regulatory Organization Status Date Effective

FINRA Approved 07/07/1997






Firm Operations

Registrations (continued)

U.S. States &Territories

Status Date Effective

Alabama Approved 07/02/1998

Alaska Approved 10/01/1997

Arizona Approved 09/03/1997

Arkansas Approved 05/23/2001

California Approved 09/02/1997

Colorado Approved 07/24/1997

Connecticut Approved 02/03/1999

Delaware Approved 05/03/1999

District of Columbia Approved 08/30/1997

Florida Approved 08/07/1997

Georgia Approved 08/18/1997

Hawaii Approved 01/24/2002

Idaho Approved 05/13/1999

Illinois Approved 08/07/1997

Indiana Approved 09/02/1997

Iowa Approved 05/13/1998

Kansas Approved 04/10/1998

Kentucky Approved 02/17/1998

Louisiana Approved 12/07/2000

Maine Approved 07/31/2000

Maryland Approved 09/16/1997

Massachusetts Approved 10/01/1997

Michigan Approved 07/18/1997

Minnesota Approved 03/03/1998

Mississippi Approved 07/13/1999

Missouri Approved 06/24/1998

Montana Approved 04/17/1998

Nebraska Approved 07/02/1999

Nevada Approved 10/20/1998

New Hampshire Approved 10/24/1997

New Jersey Approved 09/03/1997

New Mexico Approved 08/21/1998

New York Approved 09/12/1997

U.S. States &Territories

Status Date Effective

North Carolina Approved 10/30/1997

North Dakota Approved 08/04/2000

Ohio Approved 07/16/1997

Oklahoma Approved 06/04/1998

Oregon Approved 01/11/1999

Pennsylvania Approved 09/16/1997

Rhode Island Approved 03/23/1998

South Carolina Approved 08/19/1997

South Dakota Approved 12/06/1999

Tennessee Approved 08/11/1997

Texas Approved 10/17/1997

Utah Approved 09/18/1997

Vermont Approved 07/16/2001

Virginia Approved 08/27/1997

Washington Approved 01/01/1999

West Virginia Approved 11/10/1997

Wisconsin Approved 09/04/1997

Wyoming Approved 04/07/1998






Firm Operations

Types of BusinessThis section provides the types of business, including non-securities business, the brokerage firm is engaged in orexpects to be engaged in.

Other Types of Business

This firm does not effect transactions in commodities, commodity futures, or commodity options.This firm does engage in other non-securities business.

Non-Securities Business Description: INSURANCE, EQUITY INDEXED ANNUITIES

This firm currently conducts 15 types of businesses.

Types of Business

Broker or dealer retailing corporate equity securities over-the-counter

Broker or dealer selling corporate debt securities

Mutual fund retailer

U S. government securities broker

Municipal securities broker

Broker or dealer selling variable life insurance or annuities

Solicitor of time deposits in a financial institution

Put and call broker or dealer or option writer

Broker or dealer selling tax shelters or limited partnerships in primary distributions

Broker or dealer selling tax shelters or limited partnerships in the secondary market

Non-exchange member arranging for transactions in listed securities by exchange member

Private placements of securities

Broker or dealer involved in a networking, kiosk or similar arrangment with a: bank, savings bank or association, orcredit union

Broker or dealer involved in a networking, kiosk or similar arrangment with a: insurance company or agency

Other - THE FIRM WILL OFFER AND SELL REAL ESTATE INVESTMENT TRUSTS.






Firm Operations

Clearing Arrangements

This firm does not hold or maintain funds or securities or provide clearing services for other broker-dealer(s).

Introducing Arrangements

This firm does refer or introduce customers to other brokers and dealers.

Name: PERSHING LLC

Business Address: 1515 WEST 22ND STREETOAK BROOK, IL 60521

CRD #: 7560

Effective Date: 05/05/1997

Description: APPLICANT IS A FULLY DISCLOSED, INTRODUCING BROKER DEALERWITH AN AGREEMENT WITH PERSHING LLC FOR CLEARINGBROKERAGE TRANSACTIONS






Firm Operations

Industry Arrangements

This firm does have books or records maintained by a third party.

This firm does have accounts, funds, or securities maintained by a third party.

Name: BUSINESS DATA RECORD SERVICES

Business Address: 201 9TH AVENUE SWNEW BRIGHTON, MN 55112


Description: APPLICANT HAS AN AGREEMENT WITH BDRS FOR OFF-SITE RECORDSSTORAGE FOR BOOKS AND RECORDS OF THE FIRM INCLUDINGCUSTOMER FILES AND REGISTERED REPRESENTATIVE FILES.

Name: THE CARLYLE GROUP

Business Address: 1001 PENNSYLVANIA AVENUE NWWASHINGTON, DC 20004


Description: SERVICE PROVIDER CONTRACTED FOR STORAGE OF ELECTRONICCOMMUNICATIONS (EMAIL)

Name: ACCUITY, INC.

Business Address: 10089 WILLOW CREEK ROADSUITE 120SAN DIEGO, CA 92131


Description: SERVICE PROVIDER CONTRACTED FOR RETENTION OF BOOKS ANDRECORDS RELATED TO COMPLIANCE INSPECTIONS AND AUDITS

Name: PERSHING LLC

Business Address: 1515 WEST 22ND STREETSUITE 1000OAK BROOK, IL 60521

CRD #: 7560








Firm Operations

Industry Arrangements (continued)

This firm does have customer accounts, funds, or securities maintained by a third party.

This firm does not have individuals who control its management or policies through agreement.

This firm does not have individuals who wholly or partly finance the firm's business.

Control Persons/Financing

Name: PERSHING LLC


CRD #: 7560



Name: PERSHING LLC


CRD #: 7560








Firm Operations

Organization AffiliatesThis section provides information on control relationships the firm has with other firms in the securities, investmentadvisory, or banking business.

This firm is, directly or indirectly:

· in control of· controlled by· or under common control withthe following partnerships, corporations, or other organizations engaged in the securities or investmentadvisory business.

Yes

No

No

04/01/2018

1633 BROADWAYNEW YORK, NY 10019

161684

ALLIANZ CAPITAL PARTNERS OF AMERICA LLC is under common control with the firm.

FIRM IS UNDER COMMON CONTROL WITH QUESTAR CAPITALCORPORATION

Description:

Investment AdvisoryActivities:

Securities Activities:

Country:

Foreign Entity:

Effective Date:

Business Address:

CRD #:

Yes

No

HONG KONG

Yes

09/15/2017

27TH FL, ICBC TOWER3 GARDEN ROAD, CENTRALHONG KONG, HONG KONG

289358

ALLIANZ GLOBAL INVESTORS ASIA PACIFIC LIMITED is under common control with the firm.

ALLIANZ SE INDIRECTLY OWNS THE APPLICANT AND ALLIANZ GLOBALINVESTORS ASIA PACIFIC LIMITED

Description:



Country:

Foreign Entity:

Effective Date:

Business Address:

CRD #:






Firm Operations

Organization Affiliates (continued)ALLIANZ SE INDIRECTLY OWNS THE APPLICANT AND ALLIANZ GLOBALINVESTORS ASIA PACIFIC LIMITED

Description:

Yes

Yes

PARENT ORGANIZATION: GERMANY AND EUROPEAN UNION

Yes

11/17/2005

GROUP: KOENIGINSTRASSE 28 D-80802MUNICH, GERMANY

ALLIANZ GROUP FOREIGN SECURITIES OR INVESTMENT ADVISER ENTITIES is under common control withthe firm.

APPLICANT IS PART OF A LARGE GROUP OF COMPANIES INCLUDINGFOREIGN BROKER-DEALERS AND ADVISERS NOT INVOLVED INAPPLICANT'S BUSINESS. APPLICANT DOES NOT DO BUSINESS ORCONDUCT JOINT OPERATIONS WITH OR PROVIDE SERVICES TO THESEFOREIGN ENTITIES; THE ENTITIES DO NOT PROVIDE SERVICES TOAPPLICANT; THE ENTITIES DO NOT FORMULATE APPLICANT'SRECOMMENDATIONS; AND THERE IS NO POTENTIAL CONFLICT OFINTEREST BETWEEN THE ENTITIES AND APPLICANT'S CUSTOMERS.

Description:



Country:

Foreign Entity:

Effective Date:

Business Address:

No

Yes

No

06/27/2011


25567

ALLIANZ GLOBAL INVESTORS DISTRIBUTORS LLC is under common control with the firm.


Description:



Country:

Foreign Entity:

Effective Date:

Business Address:

CRD #:

104559

PACIFIC INVESTMENT MANAGEMENT COMPANY LLC is under common control with the firm.

CRD #:18©2018 FINRA. All rights reserved. Report about QUESTAR CAPITAL CORPORATION





Firm Operations

Organization Affiliates (continued)

Yes

No

No

11/17/2005

650 NEWPORT CENTER DRIVENEWPORT BEACH, CA 92660

104559


Description:



Country:

Foreign Entity:

Effective Date:

Business Address:

CRD #:

Yes

No

No

12/31/2012


149003

ALLIANZ GLOBAL INVESTORS U.S. LLC is under common control with the firm.


Description:



Country:

Foreign Entity:

Effective Date:

Business Address:

CRD #:

No

06/27/2011

1633 BROADWAY45TH FLOORNEW YORK, NY 10019

154957

PIMCO INVESTMENTS LLC is under common control with the firm.

Country:

Foreign Entity:

Effective Date:

Business Address:

CRD #:






Firm Operations


No

Yes


Description:



Yes

No

No

05/01/2008


111925

ALLIANZ INVESTMENT MANAGEMENT LLC is under common control with the firm.


Description:



Country:

Foreign Entity:

Effective Date:

Business Address:

CRD #:

No

Yes

No

11/17/2005


612

ALLIANZ LIFE FINANCIAL SERVICES, LLC is under common control with the firm.

FIRM IS UNDER COMMON CONTROL WITH QUESTAR CAPITALCORPORATION.

Description:



Country:

Foreign Entity:

Effective Date:

Business Address:

CRD #:

133358

QUESTAR ASSET MANAGEMENT, INC. is under common control with the firm.

CRD #:20©2018 FINRA. All rights reserved. Report about QUESTAR CAPITAL CORPORATION





Firm Operations


Yes

No

No

04/15/2004


133358


Description:



Country:

Foreign Entity:

Effective Date:

Business Address:

CRD #:

This firm is not directly or indirectly, controlled by the following:

· bank holding company· national bank· state member bank of the Federal Reserve System· state non-member bank· savings bank or association· credit union· or foreign bank






Disclosure Events

All firms registered to sell securities or provide investment advice are required to disclose regulatory actions, criminal orcivil judicial proceedings, and certain financial matters in which the firm or one of its control affiliates has been involved.For your convenience, below is a matrix of the number and status of disclosure events involving this brokerage firm orone of its control affiliates. Further information regarding these events can be found in the subsequent pages of thisreport.

Final On AppealPending

Regulatory Event 0 8 0

Arbitration N/A 1 N/A






Disclosure Event Details

What you should know about reported disclosure events:

1. BrokerCheck provides details for any disclosure event that was reported in CRD. It also includessummary information regarding FINRA arbitration awards in cases where the brokerage firm wasnamed as a respondent.

2. Certain thresholds must be met before an event is reported to CRD, for example: o A law enforcement agency must file formal charges before a brokerage firm is required to disclose a

particular criminal event.3. Disclosure events in BrokerCheck reports come from different sources:

o Disclosure events for this brokerage firm were reported by the firm and/or regulators. When the firmand a regulator report information for the same event, both versions of the event will appear in theBrokerCheck report. The different versions will be separated by a solid line with the reporting sourcelabeled.

4. There are different statuses and dispositions for disclosure events: o A disclosure event may have a status of pending, on appeal, or final.

§ A "pending" event involves allegations that have not been proven or formally adjudicated.§ An event that is "on appeal" involves allegations that have been adjudicated but are currently

being appealed.§ A "final" event has been concluded and its resolution is not subject to change.

o A final event generally has a disposition of adjudicated, settled or otherwise resolved.§ An "adjudicated" matter includes a disposition by (1) a court of law in a criminal or civil matter,

or (2) an administrative panel in an action brought by a regulator that is contested by the partycharged with some alleged wrongdoing.

§ A "settled" matter generally involves an agreement by the parties to resolve the matter.Please note that firms may choose to settle customer disputes or regulatory matters forbusiness or other reasons.

§ A "resolved" matter usually involves no payment to the customer and no finding ofwrongdoing on the part of the individual broker. Such matters generally involve customerdisputes.

5. You may wish to contact the brokerage firm to obtain further information regarding any of thedisclosure events contained in this BrokerCheck report.

Regulatory - Final

This type of disclosure event involves (1) a final, formal proceeding initiated by a regulatory authority (e.g., a statesecurities agency, self-regulatory organization, federal regulator such as the U.S. Securities and Exchange Commission,foreign financial regulatory body) for a violation of investment-related rules or regulations; or (2) a revocation orsuspension of the authority of a brokerage firm or its control affiliate to act as an attorney, accountant or federalcontractor.

Disclosure 1 of 8

Reporting Source: Regulator

Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT ITDISADVANTAGED CERTAIN RETIREMENT PLAN AND CHARITABLEORGANIZATION CUSTOMERS THAT WERE ELIGIBLE TO PURCHASE CLASSA SHARES IN CERTAIN MUTUAL FUNDS WITHOUT A FRONT-END SALESCHARGE. THE FINDINGS STATED THAT THESE ELIGIBLE CUSTOMERSWERE INSTEAD SOLD CLASS A SHARES WITH A FRONT-END SALESCHARGE OR CLASS B OR C SHARES WITH BACK-END SALES CHARGESAND HIGHER ONGOING FEES AND EXPENSES. THESE SALESDISADVANTAGED ELIGIBLE CUSTOMERS BY CAUSING SUCH CUSTOMERSTO PAY HIGHER FEES THAN THEY WERE ACTUALLY REQUIRED TO PAY.THE FINDINGS ALSO STATED THAT THE FIRM FAILED TO REASONABLYSUPERVISE THE APPLICATION OF SALES-CHARGE WAIVERS TO ELIGIBLEMUTUAL FUND SALES. THE FIRM RELIED ON ITS FINANCIAL ADVISORS TODETERMINE THE APPLICABILITY OF SALES-CHARGE WAIVERS, BUT FAILEDTO MAINTAIN ADEQUATE WRITTEN POLICIES OR PROCEDURES TO ASSISTFINANCIAL ADVISORS IN MAKING THIS DETERMINATION. IN ADDITION, THEFIRM FAILED TO ADEQUATELY NOTIFY AND TRAIN ITS FINANCIALADVISORS REGARDING THE AVAILABILITY OF MUTUAL FUND SALES-CHARGE WAIVERS FOR ELIGIBLE CUSTOMERS. THE FIRM ALSO FAILED TOADOPT ADEQUATE CONTROLS TO DETECT INSTANCES IN WHICH THEY DIDNOT PROVIDE SALES-CHARGE WAIVERS TO ELIGIBLE CUSTOMERS INCONNECTION WITH THEIR MUTUAL FUND PURCHASES. AS A RESULT OFTHE FIRM'S FAILURE TO APPLY AVAILABLE SALES-CHARGE WAIVERS, THEFIRM ESTIMATES THAT ELIGIBLE CUSTOMERS WERE OVERCHARGED BYAPPROXIMATELY $686,334 FOR MUTUAL FUND PURCHASES MADE SINCEJULY 1, 2009.

Current Status: Final






Initiated By: FINRA

Principal Sanction(s)/ReliefSought:

Other

Other Sanction(s)/ReliefSought:

N/A

Date Initiated: 11/02/2017

Docket/Case Number: 2016049977801

Principal Product Type: Mutual Fund(s)

Other Product Type(s):

Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT ITDISADVANTAGED CERTAIN RETIREMENT PLAN AND CHARITABLEORGANIZATION CUSTOMERS THAT WERE ELIGIBLE TO PURCHASE CLASSA SHARES IN CERTAIN MUTUAL FUNDS WITHOUT A FRONT-END SALESCHARGE. THE FINDINGS STATED THAT THESE ELIGIBLE CUSTOMERSWERE INSTEAD SOLD CLASS A SHARES WITH A FRONT-END SALESCHARGE OR CLASS B OR C SHARES WITH BACK-END SALES CHARGESAND HIGHER ONGOING FEES AND EXPENSES. THESE SALESDISADVANTAGED ELIGIBLE CUSTOMERS BY CAUSING SUCH CUSTOMERSTO PAY HIGHER FEES THAN THEY WERE ACTUALLY REQUIRED TO PAY.THE FINDINGS ALSO STATED THAT THE FIRM FAILED TO REASONABLYSUPERVISE THE APPLICATION OF SALES-CHARGE WAIVERS TO ELIGIBLEMUTUAL FUND SALES. THE FIRM RELIED ON ITS FINANCIAL ADVISORS TODETERMINE THE APPLICABILITY OF SALES-CHARGE WAIVERS, BUT FAILEDTO MAINTAIN ADEQUATE WRITTEN POLICIES OR PROCEDURES TO ASSISTFINANCIAL ADVISORS IN MAKING THIS DETERMINATION. IN ADDITION, THEFIRM FAILED TO ADEQUATELY NOTIFY AND TRAIN ITS FINANCIALADVISORS REGARDING THE AVAILABILITY OF MUTUAL FUND SALES-CHARGE WAIVERS FOR ELIGIBLE CUSTOMERS. THE FIRM ALSO FAILED TOADOPT ADEQUATE CONTROLS TO DETECT INSTANCES IN WHICH THEY DIDNOT PROVIDE SALES-CHARGE WAIVERS TO ELIGIBLE CUSTOMERS INCONNECTION WITH THEIR MUTUAL FUND PURCHASES. AS A RESULT OFTHE FIRM'S FAILURE TO APPLY AVAILABLE SALES-CHARGE WAIVERS, THEFIRM ESTIMATES THAT ELIGIBLE CUSTOMERS WERE OVERCHARGED BYAPPROXIMATELY $686,334 FOR MUTUAL FUND PURCHASES MADE SINCEJULY 1, 2009.

Resolution Date: 11/02/2017

Resolution:

Does the order constitute afinal order based onviolations of any laws orregulations that prohibitfraudulent, manipulative, ordeceptive conduct?

No

Acceptance, Waiver & Consent(AWC)





https://www.finra.org/industry/disciplinary-actions/finra-disciplinary-actions-online?search=2016049977801


Other Sanctions Ordered: INTEREST

Sanction Details: THE FIRM WAS CENSURED AND REQUIRED TO PROVIDE FINRA WITH AREMEDIATION PLAN TO REMEDIATE ELIGIBLE CUSTOMERS WHOQUALIFIED FOR, BUT DID NOT RECEIVE, THE APPLICABLE MUTUAL FUNDSALES-CHARGE WAIVER. AS PART OF THIS SETTLEMENT, THE FIRMAGREES TO PAY RESTITUTION TO ELIGIBLE CUSTOMERS, WHICH ISESTIMATED TO TOTAL $796,892 (THE AMOUNT ELIGIBLE CUSTOMERSWERE OVERCHARGED, INCLUSIVE OF INTEREST).

Regulator Statement IN RESOLVING THIS MATTER, FINRA HAS RECOGNIZED THEEXTRAORDINARY COOPERATION OF THE FIRM FOR HAVING: (1) INITIATEDAN INVESTIGATION TO IDENTIFY WHETHER ELIGIBLE CUSTOMERSRECEIVED SALES CHARGE WAIVERS DURING THE RELEVANT PERIOD; (2)VOLUNTARILY EXPANDED THE LOOK BACK PERIOD REQUESTED BY F1NRATO JULY 1, 2009, OR AN ADDITIONAL 18 MONTHS, RESULTING INADDITIONAL RESTITUTION TO CUSTOMERS OF APPROXIMATELY $325,000;(3) PROMPTLY ESTABLISHED A PLAN OF REMEDIATION FOR ELIGIBLECUSTOMERS WHO DID NOT RECEIVE APPROPRIATE SALES CHARGEWAIVERS; (4) PROMPTLY TAKEN ACTION AND REMEDIAL STEPS TOCORRECT THE VIOLATIVE CONDUCT; AND (5) EMPLOYED SUBSEQUENTCORRECTIVE MEASURES TO REVISE ITS PROCEDURES TO AVOIDRECURRENCE OF THE MISCONDUCT.


No

Sanctions Ordered: CensureDisgorgement/Restitution

iReporting Source: Firm

Allegations: FINRA ALLEGED THE FIRM VIOLATED NASD CONDUCT RULE 3010, FINRARULE 3110 AND FINRA RULE 2010 BETWEEN JULY 1, 2009 AND NOVEMBER1, 2016. DURING THIS TIME THE FIRM DISADVANTAGED CERTAINRETIREMENT PLAN AND CHARITABLE ORGANIZATION CUSTOMERS THATWERE ELIGIBLE TO PURCHASE CLASS A SHARES IN CERTAIN MUTUALFUNDS WITHOUT A FRONT-END SALES CHARGE. THE FIRM FAILED TOESTABLISH AND MAINTAIN A SUPERVISORY SYSTEM AND PROCEDURESREASONABLY DESIGNED TO ENSURE THAT ELIGIBLE CUSTOMERS WHOPURCHASED MUTUAL FUND SHARES RECEIVED THE BENEFIT OFAPPLICABLE SALES CHARGE WAIVERS.







Initiated By: FINRA





Principal Product Type: Mutual Fund(s)


FINRA ALLEGED THE FIRM VIOLATED NASD CONDUCT RULE 3010, FINRARULE 3110 AND FINRA RULE 2010 BETWEEN JULY 1, 2009 AND NOVEMBER1, 2016. DURING THIS TIME THE FIRM DISADVANTAGED CERTAINRETIREMENT PLAN AND CHARITABLE ORGANIZATION CUSTOMERS THATWERE ELIGIBLE TO PURCHASE CLASS A SHARES IN CERTAIN MUTUALFUNDS WITHOUT A FRONT-END SALES CHARGE. THE FIRM FAILED TOESTABLISH AND MAINTAIN A SUPERVISORY SYSTEM AND PROCEDURESREASONABLY DESIGNED TO ENSURE THAT ELIGIBLE CUSTOMERS WHOPURCHASED MUTUAL FUND SHARES RECEIVED THE BENEFIT OFAPPLICABLE SALES CHARGE WAIVERS.


Resolution:

Other Sanctions Ordered: INTEREST

Sanction Details: WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, THE FIRM WASCENSURED AND REQUIRED TO PROVIDE FINRA WITH A REMEDIATIONPLAN TO REMEDIATE ELIGIBLE CUSTOMERS WHO QUALIFIED FOR, BUTDID NOT RECEIVE, THE APPLICABLE MUTUAL FUND SALES-CHARGEWAIVER. AS PART OF THIS SETTLEMENT, THE FIRM AGREES TO PAYRESTITUTION TO ELIGIBLE CUSTOMERS, WHICH IS ESTIMATED TO TOTAL$796,892 (THE AMOUNT ELIGIBLE CUSTOMERS WERE OVERCHARGED,INCLUSIVE OF INTEREST).

Firm Statement WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, THE FIRM WASCENSURED AND REQUIRED TO PROVIDE FINRA WITH A REMEDIATIONPLAN TO REMEDIATE ELIGIBLE CUSTOMERS WHO QUALIFIED FOR, BUTDID NOT RECEIVE, THE APPLICABLE MUTUAL FUND SALES-CHARGEWAIVER. AS PART OF THIS SETTLEMENT, THE FIRM AGREES TO PAYRESTITUTION TO ELIGIBLE CUSTOMERS, WHICH IS ESTIMATED TO TOTAL$796,892 (THE AMOUNT ELIGIBLE CUSTOMERS WERE OVERCHARGED,INCLUSIVE OF INTEREST). IN RESOLVING THIS MATTER, FINRA HASRECOGNIZED THE EXTRAORDINARY COOPERATION OF THE FIRM FORHAVING: (1) INITIATED AN INVESTIGATION TO IDENTIFY WHETHER ELIGIBLECUSTOMERS RECEIVED SALES CHARGE WAIVERS DURING THE RELEVANTPERIOD; (2) VOLUNTARILY EXPANDED THE LOOK BACK PERIODREQUESTED BY F1NRA TO JULY 1, 2009, OR AN ADDITIONAL 18 MONTHS,RESULTING IN ADDITIONAL RESTITUTION TO CUSTOMERS OFAPPROXIMATELY $325,000; (3) PROMPTLY ESTABLISHED A PLAN OFREMEDIATION FOR ELIGIBLE CUSTOMERS WHO DID NOT RECEIVEAPPROPRIATE SALES CHARGE WAIVERS; (4) PROMPTLY TAKEN ACTIONAND REMEDIAL STEPS TO CORRECT THE VIOLATIVE CONDUCT; AND (5)EMPLOYED SUBSEQUENT CORRECTIVE MEASURES TO REVISE ITSPROCEDURES TO AVOID RECURRENCE OF THE MISCONDUCT.

Sanctions Ordered: CensureDisgorgement/Restitution








WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, THE FIRM WASCENSURED AND REQUIRED TO PROVIDE FINRA WITH A REMEDIATIONPLAN TO REMEDIATE ELIGIBLE CUSTOMERS WHO QUALIFIED FOR, BUTDID NOT RECEIVE, THE APPLICABLE MUTUAL FUND SALES-CHARGEWAIVER. AS PART OF THIS SETTLEMENT, THE FIRM AGREES TO PAYRESTITUTION TO ELIGIBLE CUSTOMERS, WHICH IS ESTIMATED TO TOTAL$796,892 (THE AMOUNT ELIGIBLE CUSTOMERS WERE OVERCHARGED,INCLUSIVE OF INTEREST). IN RESOLVING THIS MATTER, FINRA HASRECOGNIZED THE EXTRAORDINARY COOPERATION OF THE FIRM FORHAVING: (1) INITIATED AN INVESTIGATION TO IDENTIFY WHETHER ELIGIBLECUSTOMERS RECEIVED SALES CHARGE WAIVERS DURING THE RELEVANTPERIOD; (2) VOLUNTARILY EXPANDED THE LOOK BACK PERIODREQUESTED BY F1NRA TO JULY 1, 2009, OR AN ADDITIONAL 18 MONTHS,RESULTING IN ADDITIONAL RESTITUTION TO CUSTOMERS OFAPPROXIMATELY $325,000; (3) PROMPTLY ESTABLISHED A PLAN OFREMEDIATION FOR ELIGIBLE CUSTOMERS WHO DID NOT RECEIVEAPPROPRIATE SALES CHARGE WAIVERS; (4) PROMPTLY TAKEN ACTIONAND REMEDIAL STEPS TO CORRECT THE VIOLATIVE CONDUCT; AND (5)EMPLOYED SUBSEQUENT CORRECTIVE MEASURES TO REVISE ITSPROCEDURES TO AVOID RECURRENCE OF THE MISCONDUCT.

Disclosure 2 of 8

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Initiated By: FINRA



Principal Product Type: No Product

Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT FAILED TOMAINTAIN A SIGNIFICANT NUMBER OF ELECTRONIC BROKERAGERECORDS, ESSENTIAL TO ITS BUSINESS, IN NON-ERASABLE AND NON-REWRITABLE FORMAT KNOWN AS THE "WRITE ONCE, READMANY" (WORM) FORMAT, THAT IS INTENDED TO PREVENT THE ALTERATIONOR DESTRUCTION OF BROKER-DEALER RECORDS STOREDELECTRONICALLY.THE FINDINGS STATED THAT THESE REQUIREMENTS ARE AN ESSENTIALPART OF THE INVESTOR PROTECTION FUNCTION BECAUSEPRESERVATION OF THESE RECORDS IS THE PRIMARY MEANS OFMONITORING COMPLIANCE WITH APPLICABLE SECURITIES LAWS,INCLUDING ANTIFRAUD PROVISIONS AND FINANCIAL RESPONSIBILITYSTANDARDS. THIS DEFICIENCY AFFECTED 18 CATEGORIES OFELECTRONIC RECORDS, INCLUDING RECORDS RELATING TO CUSTOMERACCOUNTS, FINANCIAL RECORDS, AND RECORDS RELATING TODISCIPLINARY ACTIONS AND ANTI-MONEY LAUNDERING COMPLIANCE.THE FINDINGS ALSO STATED THAT THE FIRM EXPERIENCED RELATEDAUDIT DEFICIENCIES THAT AFFECTED ITS ABILITY TO ADEQUATELY RETAINAND PRESERVE ELECTRONIC RECORDS. MAINLY, THE FIRM DID NOT HAVEAN AUDIT SYSTEM AS REQUIRED FOR THOSE RECORDS IT FAILED TOMAINTAIN IN WORM FORMAT.THE FINDINGS ALSO INCLUDED THAT THE FIRM FAILED TO ESTABLISH,MAINTAIN AND ENFORCE WRITTEN SUPERVISORY PROCEDURES (WSPS)REASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITH APPLICABLERECORD RETENTION REQUIREMENTS. THE FIRM' WSPS FAILED TOSPECIFY HOW IT WOULD SUPERVISE ITS COMPLIANCE WITH THE WORM-RELATED REQUIREMENTS.













Resolution:

Other Sanctions Ordered:

Sanction Details: THE FIRM WAS CENSURED AND FINED $150,000, JOINTLY AND SEVERALLY.


No

Sanctions Ordered: CensureMonetary/Fine $150,000.00



Initiated By: FINRA





Allegations: FINRA ALLEGED THAT THE FIRM VIOLATED SECTION 17(A) OF THEEXCHANGE ACT OF 1934, RULE 17A-4(F), NASD RULE 3110 AND FINRA RULE4511, BY FAILING TO MAINTAIN A SIGNIFICANT NUMBER OF ELECTRONICBROKERAGE RECORDS IN NON-ERASABLE AND NON-REWRITABLEFORMAT, KNOWN AS WORM FORMAT. FINRA ALSO ALLEGED THE FIRMEXPERIENCED RELATED AUDIT DEFICIENCIES AFFECTING THE ABILITY TOADEQUATELY RETAIN AND PRESERVE ELECTRONIC RECORDS AND FAILEDTO ENFORCE WRITTEN SUPERVISORY PROCEDURES REASONABLYDESIGNED TO ACHIEVE COMPLIANCE WITH APPLICABLE RECORDRETENTION REQUIREMENTS.









Civil and Administrative Penalt(ies) /Fine(s)




Resolution:


Sanction Details: WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, THROUGH A FINRALETTER OF ACCEPTANCE, WAIVER AND CONSENT ACCEPTED ON JUNE 30,2017, THE FIRM AGREED TO THE IMPOSITION OF A CENSURE AND $150,000FINE, JOINTLY AND SEVERALLY BETWEEN THE FIRM AND OUR AFFILIATEALLIANZ LIFE FINANCIAL SERVICES, LLC.

Firm Statement WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, THROUGH A FINRALETTER OF ACCEPTANCE, WAIVER AND CONSENT ACCEPTED ON JUNE 30,2017, THE FIRM AGREED TO THE IMPOSITION OF A CENSURE AND $150,000FINE, JOINTLY AND SEVERALLY BETWEEN THE FIRM AND OUR AFFILIATEALLIANZ LIFE FINANCIAL SERVICES, LLC.



Disclosure 3 of 8

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Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT FAILED TOESTABLISH AND MAINTAIN ADEQUATE SUPERVISORY SYSTEMSREGARDING ITS USE OF CONSOLIDATED REPORTS AND REGARDING ITSREVIEW OF CERTAIN HOME OFFICE EMAIL CORRESPONDENCE. THEFINDINGS STATED THAT THE FIRM PERMITTED ITS REGISTEREDREPRESENTATIVES TO CREATE CONSOLIDATED REPORTS USING AVENDOR-PROVIDED SYSTEM THAT ALLOWED FOR MANUAL ENTRIES OFVARIOUS ASSETS HELD AWAY FROM THE FIRM. DURING THAT TIME, THEFIRM GENERATED 559,518 CONSOLIDATED REPORTS, OF WHICH NEARLY60,000 CONTAINED MANUAL ENTRIES. THE FIRM FAILED TO ENFORCE ITSWRITTEN SUPERVISORY PROCEDURE REQUIREMENT THAT BEFORE AREGISTERED REPRESENTATIVE COULD USE THE MANUAL-ENTRYFUNCTION, THE REPRESENTATIVE FIRST HAD TO COMPLETE TRAINING.MORE THAN HALF OF THE FIRM REGISTERED REPRESENTATIVES WHOGENERATED CONSOLIDATED REPORTS WITH MANUAL ENTRIES DID SOWITHOUT FIRST COMPLETING THE REQUIRED TRAINING. THE FIRM ALSOFELL SHORT OF ITS REQUIREMENT TO PERFORM A MANUAL ENTRY SPOTCHECK WHICH REQUIRED AUDITING 50 PERCENT OF THE REGISTEREDREPRESENTATIVES WHO CREATED CONSOLIDATED REPORTS WITHMANUAL ENTRIES EACH MONTH. THE MANUAL ENTRY SPOT CHECK,MOREOVER, WAS INADEQUATE. ALTHOUGH 50 PERCENT OF THEREGISTERED REPRESENTATIVES WHO CREATED MANUAL ENTRIES WERETO BE AUDITED EACH MONTH, THE FIRM'S WRITTEN PROCEDURES DIDNOT SPECIFY WHAT PORTION OF THOSE REPRESENTATIVES' ENTRIESWOULD BE REVIEWED AND DID NOT IDENTIFY ANY RISK-BASED CRITERIAFOR SELECTING WHICH REPRESENTATIVES' ENTRIES TO REVIEW. AS ARESULT, THE FIRM'S SUPERVISORY PROCEDURES WERE NOTREASONABLY DESIGNED TO ENSURE THAT CONSOLIDATED REPORTSWERE ACCURATE AND NOT MISLEADING. THE FINDINGS ALSO STATEDTHAT SOME EMAIL CORRESPONDENCE OF CERTAIN FIRM HOME OFFICEEMPLOYEES WAS NOT COPIED OR JOURNALED TO THE APPROPRIATESERVER FOR REVIEW OF EMAIL COMMUNICATIONS AT THE FIRM,RESULTING IN THOSE EMAILS NOT BEING SUBJECT TO SUPERVISORYREVIEW. THE FIRM WAS UNABLE TO DETERMINE EXACTLY HOW MANYEMAILS WERE NOT SUBJECTED TO SUPERVISORY REVIEW DURING APERIOD OF TIME.







Initiated By: FINRA







WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT FAILED TOESTABLISH AND MAINTAIN ADEQUATE SUPERVISORY SYSTEMSREGARDING ITS USE OF CONSOLIDATED REPORTS AND REGARDING ITSREVIEW OF CERTAIN HOME OFFICE EMAIL CORRESPONDENCE. THEFINDINGS STATED THAT THE FIRM PERMITTED ITS REGISTEREDREPRESENTATIVES TO CREATE CONSOLIDATED REPORTS USING AVENDOR-PROVIDED SYSTEM THAT ALLOWED FOR MANUAL ENTRIES OFVARIOUS ASSETS HELD AWAY FROM THE FIRM. DURING THAT TIME, THEFIRM GENERATED 559,518 CONSOLIDATED REPORTS, OF WHICH NEARLY60,000 CONTAINED MANUAL ENTRIES. THE FIRM FAILED TO ENFORCE ITSWRITTEN SUPERVISORY PROCEDURE REQUIREMENT THAT BEFORE AREGISTERED REPRESENTATIVE COULD USE THE MANUAL-ENTRYFUNCTION, THE REPRESENTATIVE FIRST HAD TO COMPLETE TRAINING.MORE THAN HALF OF THE FIRM REGISTERED REPRESENTATIVES WHOGENERATED CONSOLIDATED REPORTS WITH MANUAL ENTRIES DID SOWITHOUT FIRST COMPLETING THE REQUIRED TRAINING. THE FIRM ALSOFELL SHORT OF ITS REQUIREMENT TO PERFORM A MANUAL ENTRY SPOTCHECK WHICH REQUIRED AUDITING 50 PERCENT OF THE REGISTEREDREPRESENTATIVES WHO CREATED CONSOLIDATED REPORTS WITHMANUAL ENTRIES EACH MONTH. THE MANUAL ENTRY SPOT CHECK,MOREOVER, WAS INADEQUATE. ALTHOUGH 50 PERCENT OF THEREGISTERED REPRESENTATIVES WHO CREATED MANUAL ENTRIES WERETO BE AUDITED EACH MONTH, THE FIRM'S WRITTEN PROCEDURES DIDNOT SPECIFY WHAT PORTION OF THOSE REPRESENTATIVES' ENTRIESWOULD BE REVIEWED AND DID NOT IDENTIFY ANY RISK-BASED CRITERIAFOR SELECTING WHICH REPRESENTATIVES' ENTRIES TO REVIEW. AS ARESULT, THE FIRM'S SUPERVISORY PROCEDURES WERE NOTREASONABLY DESIGNED TO ENSURE THAT CONSOLIDATED REPORTSWERE ACCURATE AND NOT MISLEADING. THE FINDINGS ALSO STATEDTHAT SOME EMAIL CORRESPONDENCE OF CERTAIN FIRM HOME OFFICEEMPLOYEES WAS NOT COPIED OR JOURNALED TO THE APPROPRIATESERVER FOR REVIEW OF EMAIL COMMUNICATIONS AT THE FIRM,RESULTING IN THOSE EMAILS NOT BEING SUBJECT TO SUPERVISORYREVIEW. THE FIRM WAS UNABLE TO DETERMINE EXACTLY HOW MANYEMAILS WERE NOT SUBJECTED TO SUPERVISORY REVIEW DURING APERIOD OF TIME.


Resolution:


No









Sanction Details: THE FIRM WAS CENSURED AND FINED $125,000. (ASSOCIATED CASE#2014038871401)FINE PAID IN FULL ON DECEMBER 28, 2015.



Initiated By: FINRA




Docket/Case Number: 2013037301701 AND 2014038871401



Allegations: FINRA ALLEGED THAT THE FIRM VIOLATED NASD RULES 3010 AND 2110,AND FINRA RULE 2010, BY FAILING TO ESTABLISH AND MAINTAINADEQUATE SUPERVISORY SYSTEMS REGARDING THE USE OFCONSOLIDATED REPORTS AND THE REVIEW OF CERTAIN HOME OFFICEEMAIL CORRESPONDENCE.



Resolution:


Sanction Details: WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, THROUGH A FINRALETTER OF ACCEPTANCE, WAIVER AND CONSENT ACCEPTED ON NOV. 9,2015, THE FIRM AGREED TO THE IMPOSITION OF A $125,000 FINE AND ACENSURE.

Firm Statement WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, THROUGH A FINRALETTER OF ACCEPTANCE, WAIVER AND CONSENT ACCEPTED ON NOV. 9,2015, THE FIRM AGREED TO THE IMPOSITION OF A $125,000 FINE AND ACENSURE.








WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, THROUGH A FINRALETTER OF ACCEPTANCE, WAIVER AND CONSENT ACCEPTED ON NOV. 9,2015, THE FIRM AGREED TO THE IMPOSITION OF A $125,000 FINE AND ACENSURE.

Disclosure 4 of 8

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Initiated By: PENNSYLVANIA CONTACT: COUNSEL PAUL E. VON GEIS, JR. (412)-565-5083




QUESTAR CAPITAL CORPORATION PAID A $200,000.00 ADMINISTRATIVEASSESSMENT AND $35,000.00 IN INVESTIGATIVE AND LEGAL COSTS.


Docket/Case Number: 2009-04-02

URL for Regulatory Action:

Principal Product Type: Other

Other Product Type(s): ANNUITIES CONTRACTS AND REAL ESTATE INVESTMENT TRUSTS

Allegations: QUESTAR CAPITAL CORPORATION FAILED TO SUPERVISE AN AGENT WHOSOLD SHAM SECURITIES TO BOTH QUESTAR AND NON-QUESTAR CLIENTSAND USED THEIR MONEY ON HIS PERSONAL AND BUSINESS EXPENSES INVIOLATION OF THE PA SECURITIES ACT OF 1972.



Resolution:


Sanction Details: QUESTAR CAPITAL CORPORATION PAID A $200,000.00 ADMINISTRATIVEASSESSMENT AND $35,000.00 IN INVESTIGATIVE AND LEGAL COSTS.

Regulator Statement FINDINGS OF FACT, CONCLUSIONS OF LAW AND ORDER ISSUED TOQUESTAR CAPITAL CORPORATION.

Sanctions Ordered: Monetary/Fine $200,000.00

Settled


Allegations: ALLEGATIONS THAT QUESTAR CAPITAL CORPORATION VIOLATED CERTAINPROVISIONS OF THE PENNSYLVANIA SECURITIES ACT OF 1972, 70 P.S.SECTION 1-101, ET SEQ., (1972 ACT) IN CONNECTION WITH THE OFFERAND SALE OF SECURITIES IN THE COMMONWEALTH OF PENNSYLVANIA BYA REPRESENTATIVE OF QUESTAR THAT THE FIRM TERMINATED FORCAUSE. QUESTAR CAPITAL AGREES TO AN OFFER OF SETTLEMENT WITHTHE COMMISSION FOR THE PURPOSE OF SETTLING THIS PROCEEDINGAND CONSENTS TO THE COMMISSION MAKING FINDINGS ANDCONCLUSIONS AND IMPOSING SANCTIONS WITHOUT ADMITTING ORDENYING THE ALLEGATIONS.







Initiated By: COMMONWEALTH OF PENNSYLVANIA, PENNSYLVANIA SECURITIESCOMMISSION





Docket/Case Number: 2009-04-02



ALLEGATIONS THAT QUESTAR CAPITAL CORPORATION VIOLATED CERTAINPROVISIONS OF THE PENNSYLVANIA SECURITIES ACT OF 1972, 70 P.S.SECTION 1-101, ET SEQ., (1972 ACT) IN CONNECTION WITH THE OFFERAND SALE OF SECURITIES IN THE COMMONWEALTH OF PENNSYLVANIA BYA REPRESENTATIVE OF QUESTAR THAT THE FIRM TERMINATED FORCAUSE. QUESTAR CAPITAL AGREES TO AN OFFER OF SETTLEMENT WITHTHE COMMISSION FOR THE PURPOSE OF SETTLING THIS PROCEEDINGAND CONSENTS TO THE COMMISSION MAKING FINDINGS ANDCONCLUSIONS AND IMPOSING SANCTIONS WITHOUT ADMITTING ORDENYING THE ALLEGATIONS.


Resolution:


Sanction Details: $200,000 ADMINISTRATIVE ASSESSMENT. $35,000 INVESTIGATIVE ANDLEGAL COST.

Firm Statement COMMONWEALTH OF PENNSYLVANIA, PENNSYLVANIA SECURITIESCOMMISSION FINED QUESTAR $235,000 AND ORDERED IT TO COMPLYWITH PENNSYLVANIA SECURITIES ACT, IN PARTICULAR SECTION 305.


Order

Disclosure 5 of 8

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Reporting Source: Firm

Initiated By: COMMONWEALTH OF KENTUCKY, DEPARTMENT OF FINANCIALINSTITUTIONS

Allegations: FAILURE TO ADEQUATELY SUPERVISE THE ACTIVITIES OF A REGISTEREDREPRESENTATIVE AND PERMITTING A REGISTERED REPRESENTATIVE TOHOLD HIMSELF OUT AS A REGISTERED INVESTMENT ADVISERREPRESENTATIVE







Initiated By: COMMONWEALTH OF KENTUCKY, DEPARTMENT OF FINANCIALINSTITUTIONS


Other


SETTLEMENT AND ORDER


Docket/Case Number: 2009-AH-025




Resolution:


Sanction Details: FINE OF $6,250.00 PAID ON 04/23/2009 AND ACCEPTED ON 04/28/2009 BYCOMMONWEALTH OF KENTUCKY, OFFICE OF FINANCIAL INSTITUTIONS

Firm Statement FINE OF $6,250.00 PAID ON 04/23/2009 AND ACCEPTED ON 04/28/2009 BYCOMMONWEALTH OF KENTUCKY, OFFICE OF FINANCIAL INSTITUTIONS


Decision & Order of Offer of Settlement

Disclosure 6 of 8

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Initiated By: KENTUCKY OFFICE OF FINANCIAL INSTITUTIONS, DIVISION OF SECURITIES


Docket/Case Number:




Allegations: AGENT THOMAS GORTER (CRD# 1008601)HELD HIMSELF OUT AS ANINVESTMENT ADVISER REPRESENTATIVE WHEN HE WAS NOT SOREGISTERED FOR APPROXIMATELY THREE (3) YEARS. QUESTAR CAPITALCORPORATION APPROVED ADVERTISING AND BUSINESS CARDS STATINGHE WAS AN IAR AND FAILED TO DETECT AND CORRECT THE SITUATION ATSEVERAL AUDITS.












Resolution:


Sanction Details: FINE IN THE AMOUNT OF $54,668.53 WAS PAID ON 2/4/2008.

Regulator Statement QUESTAR CAPITAL CORPORATION DISCHARGED THOMAS GORTER (CRD #1008601) EFFECTIVE 1/25/2008.


No




Initiated By: KENTUCKY OFFICE OF FINANCIAL INSTITUTIONS, DIVISION OF SECURITIES





Docket/Case Number: 2008-AH-008



Allegations: AGENT THOMAS GORTER (CRD# 1008601) HELD HIMSELF OUT AS ANINVESTMENT ADVISER REPRESENTATIVE WHEN HE WAS NOT SOREGISTERED FOR APPROXIMATELY THREE (3) YEARS. QUESTAR CAPITALCORPORATION APPROVED ADVERTISING AND BUSINESS CARDS STATINGHE WAS AN IAR AND FAILED TO DETECT AND CORRECT THE SITUATION ATSEVERAL AUDITS.









Resolution:


Sanction Details: FINE IN THE AMOUNT OF $54,668.53 WAS PAID ON 02/04/2008.

Firm Statement QUESTAR CAPITAL CORPORATION DISCHARGED THOMAS GORTER (CRD#1008601) EFFECTIVE 01/25/2008.



Disclosure 7 of 8

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Initiated By: CONNECTICUT


Docket/Case Number: CO-07-7159-S


Allegations: ON JULY 23, 2007, THE BANKING COMMISSIONER ENTERED A CONSENTORDER (NO. CO-07-7159-S) WITH RESPECT TO TOWER SQUARESECURITIES, INC. ("TSSI"), USALLIANZ SECURITIES, INC. ("USAS"); ANDADVANTAGE CAPITAL CORPORATION ("ACC"). IN DECEMBER, 2006, USASMERGED WITH AND ASSUMED THE NAME OF QUESTAR CAPITALCORPORATION, A CONNECTICUT-REGISTERED BROKER-DEALER ANDAFFILIATE OF USAS. THE CONSENT ORDER ALLEGED THAT, AT VARIOUSTIMES FROM 1994 THROUGH 2005, THE FIRMS ENGAGED DAVID M.FAUBERT (CRD NUMBER 2150188) ("FAUBERT") AS A BROKER-DEALERAGENT; THAT THE FIRMS FAILED TO DISCOVER THAT FAUBERT HAD BEENPREPARING FRAUDULENT MONTHLY STATEMENTS THAT IMPROPERLYINFLATED THE VALUE OF CLIENT HOLDINGS AND HAD BEEN FORWARDINGTHOSE STATEMENTS TO CLIENTS; THAT FAUBERT WAS DEPOSITINGCLIENT FUNDS INTO THE ACCOUNT OF FAUBERT FINANCIAL GROUP, INC.AND MISAPPROPRIATING THOSE FUNDS FOR HIS PERSONAL USE; ANDTHAT THE FIRMS, AS A RESULT, HAD FAILED TO ESTABLISH, ENFORCE ANDMAINTAIN AN ADEQUATE SUPERVISORY SYSTEM. ON MAY 3, 2007,FAUBERT HAD BEEN SENTENCED IN NEW HAVEN FEDERAL COURT TO 7YEARS IN PRISON FOR STEALING CLIENT FUNDS. FAUBERT'S BROKER-DEALER AGENT REGISTRATION HAD BEEN REVOKED BY THECOMMISSIONER ON MAY 19, 2005 (DOCKET NO. SS-2005-7159-S).










IMPORTANT NOTE: AGAINST MERGER PARTNER/PREDECESSOR.SEE DESCRIPTION BELOW.





Resolution:

Other Sanctions Ordered: THE CONSENT ORDER IMPOSED FINES OF $300,000 AGAINST TSSI, $75,000AGAINST USAS AND $25,000 AGAINST ACC. THE CONSENT ORDER ALSODIRECTED THE FIRMS TO CONDUCT BRANCH OFFICE AUDITS WITHIN 24MONTHS FOLLOWING THE ENTRY OF THE CONSENT ORDER AND REPORTTHEIR FINDINGS TO THE AGENCY.

Sanction Details: SEE RESPONSE TO ITEM 13.B.

Regulator Statement IN FURTHERANCE OF THEIR DESIRE TO RESOLVE THE MATTERINFORMALLY WITH THE DEPARTMENT, THE FIRMS REPRESENTED TO THECOMMISSIONER THAT THEY HAD EITHER MONETARILY SETTLED THECLAIMS OF AFFECTED INVESTORS OR OFFERED RESTITUTION OF THENET LOSSES ALLEGEDLY INCURRED. INVESTOR LOSSES IN THE MATTERWERE ESTIMATED TO EXCEED $5 MILLION.


No


Consent


Allegations: ON JULY 23, 2007, THE BANKING COMMISSIONER ENTERED A CONSENTORDER (NO. CO-07-7159-S) WITH RESPECT TO TOWER SQUARESECURITIES, INC. ("TSSI"), USALLIANZ SECURITIES, INC. ("USAS"); ANDADVANTAGE CAPITAL CORPORATION ("ACC"). IN DECEMBER, 2006, USASMERGED WITH AND ASSUMED THE NAME OF QUESTAR CAPITALCORPORATION, A CONNECTICUT-REGISTERED BROKER-DEALER ANDAFFILIATE OF USAS. THE CONSENT ORDER ALLEGED THAT, AT VARIOUSTIMES FROM 1994 THROUGH 2005, THE FIRMS ENGAGED DAVID MFAUBERT (CRD NUMBER 2150188) ("FAUBERT") AS A BROKER-DEALERAGENT; THAT THE FIRMS FAILED TO DISCOVER THAT FAUBERT HAD BEENPREPARING FRAUDULENT MONTHLY STATEMENTS THAT IMPROPERLYINFLATED THE VALUE OF CLIENT HOLDINGS AND HAD BEEN FORWARDINGTHOSE STATEMENTS TO CLIENTS; THAT FAUBERT WAS DEPOSITINGCLIENT FUNDS INTO THE ACCOUNT OF FAUBERT FINANCIAL GROUP, INC.AND MISAPPROPRIATING THOSE FUNDS FOR HIS PERSONAL USE; ANDTHAT THE FIRMS, AS A RESULT, HAD FAILED TO ESTABLISH, ENFORCE ANDMAINTAIN AN ADEQUATE SUPERVISORY SYSTEM, ON MAY 3, 2007,FAUBERT HAD BEEN SENTENCED IN NEW HAVEN FEDERAL COURT TO 7YEARS IN PRISON FOR STEALING CLIENT FUNDS. FAUBERT'S BROKER-DEALER AGENT REGISTRATION HAD BEEN REVOKED BY THECOMMISSIONER ON MAY 19, 2005 (DOCKET NO. SS-2005-7159-S).







Initiated By: CONNECTICUT




IMPORTANT NOTE: AGAINST MERGER PARTNER/PREDECESSOR. SEEDESCRIPTION BELOW.


Docket/Case Number: CO-07-7159-S



ON JULY 23, 2007, THE BANKING COMMISSIONER ENTERED A CONSENTORDER (NO. CO-07-7159-S) WITH RESPECT TO TOWER SQUARESECURITIES, INC. ("TSSI"), USALLIANZ SECURITIES, INC. ("USAS"); ANDADVANTAGE CAPITAL CORPORATION ("ACC"). IN DECEMBER, 2006, USASMERGED WITH AND ASSUMED THE NAME OF QUESTAR CAPITALCORPORATION, A CONNECTICUT-REGISTERED BROKER-DEALER ANDAFFILIATE OF USAS. THE CONSENT ORDER ALLEGED THAT, AT VARIOUSTIMES FROM 1994 THROUGH 2005, THE FIRMS ENGAGED DAVID MFAUBERT (CRD NUMBER 2150188) ("FAUBERT") AS A BROKER-DEALERAGENT; THAT THE FIRMS FAILED TO DISCOVER THAT FAUBERT HAD BEENPREPARING FRAUDULENT MONTHLY STATEMENTS THAT IMPROPERLYINFLATED THE VALUE OF CLIENT HOLDINGS AND HAD BEEN FORWARDINGTHOSE STATEMENTS TO CLIENTS; THAT FAUBERT WAS DEPOSITINGCLIENT FUNDS INTO THE ACCOUNT OF FAUBERT FINANCIAL GROUP, INC.AND MISAPPROPRIATING THOSE FUNDS FOR HIS PERSONAL USE; ANDTHAT THE FIRMS, AS A RESULT, HAD FAILED TO ESTABLISH, ENFORCE ANDMAINTAIN AN ADEQUATE SUPERVISORY SYSTEM, ON MAY 3, 2007,FAUBERT HAD BEEN SENTENCED IN NEW HAVEN FEDERAL COURT TO 7YEARS IN PRISON FOR STEALING CLIENT FUNDS. FAUBERT'S BROKER-DEALER AGENT REGISTRATION HAD BEEN REVOKED BY THECOMMISSIONER ON MAY 19, 2005 (DOCKET NO. SS-2005-7159-S).


Resolution:

Other Sanctions Ordered: THE CONSENT ORDER IMPOSED FINES OF $300,000 AGAINST TSSI, $75,000AGAINST USAS AND $25,000 AGAINST ACC. THE CONSENT ORDER ALSODIRECTED THE FIRMS TO CONDUCT BRANCH OFFICE AUDITS WITHIN 24MONTHS FOLLOWING THE ENTRY OF THE CONSENT ORDER AND REPORTTHEIR FINDINGS TO THE AGENCY.

Sanction Details: AS STATED ABOVE, THE CONSENT ORDER IMPOSED FINES OF $300,000AGAINST TSSI, $75,000 AGAINST USAS AND $25,000 AGAINST ACC. THECONSENT ORDER ALSO DIRECTED THE FIRMS TO CONDUCT BRANCHOFFICE AUDITS WITHIN 24 MONTHS FOLLOWING THE ENTRY OF THECONSENT ORDER AND REPORT THEIR FINDINGS TO THE AGENCY.

Firm Statement IN FURTHERANCE OF THEIR DESIRE TO RESOLVE THE MATTERINFORMALLY WITH THE DEPARTMENT, THE FIRMS REPRESENTED TO THECOMMISSIONER THAT THEY HAD EITHER MONETARILY SETTLED THECLAIMS OF AFFECTED INVESTORS OR OFFERED RESTITUTION OF THENET LOSSES ALLEGEDLY INCURRED. INVESTOR LOSSES IN THE MATTERWERE ESTIMATED TO EXCEED $5 MILLION.


Consent






Firm Statement IN FURTHERANCE OF THEIR DESIRE TO RESOLVE THE MATTERINFORMALLY WITH THE DEPARTMENT, THE FIRMS REPRESENTED TO THECOMMISSIONER THAT THEY HAD EITHER MONETARILY SETTLED THECLAIMS OF AFFECTED INVESTORS OR OFFERED RESTITUTION OF THENET LOSSES ALLEGEDLY INCURRED. INVESTOR LOSSES IN THE MATTERWERE ESTIMATED TO EXCEED $5 MILLION.

Disclosure 8 of 8

i


Initiated By: NASD







Allegations: NASD RULES 2110, 3010 AND 6230(A): THE FIRM FAILED TO REPORT TOTRACE 132 TRANSACTIONS IN TRACE-ELIGIBLE SECURITIES EXECUTEDON A BUSINESS DAY DURING TRACE SYSTEM HOURS WITHIN 15 MINUTESOF THE TIME OF EXECUTION. THE FIRM'S SUPERVISORY SYSTEM DID NOTPROVIDE FOR SUPERVISION REASONABLY DESIGNED TO ACHIEVECOMPLIANCE WITH RESPECT TO THE APPLICABLE SECURITIES LAWS,REGULATIONS AND NASD RULES.



Resolution:

Other Sanctions Ordered: UNDERTAKING

Sanction Details: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS;THEREFORE THE FIRM IS CENSURED, FINED $12,500 AND REQUIRED TOREVISE ITS WRITTEN SUPERVISORY PROCEDURES CONCERNING TRACEREPORTING.


No









Sanction Details: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS;THEREFORE THE FIRM IS CENSURED, FINED $12,500 AND REQUIRED TOREVISE ITS WRITTEN SUPERVISORY PROCEDURES CONCERNING TRACEREPORTING.


Initiated By: NASD




Docket/Case Number: 20050021347-02



Allegations: NASD RULES 2110, 3010 AND 6230(A): THE FIRM FAILED TO REPORT TOTRACE 132 TRANSACTIONS IN TRACE-ELIGIBLE SECURITIES EXECUTEDON A BUSINESS DAY DURING TRACE SYSTEM HOURS WITHIN 15 MINUTESOF THE TIME OF EXECUTION. THE FIRM'S SUPERVISORY SYSTEM DID NOTPROVIDE FOR SUPERVISION REASONABLY DESIGNED TO ACHIEVECOMPLIANCE WITH RESPECT TO THE APPLICABLE SECURITIES LAWS,REGULATIONS AND NASD RULES.



Resolution:

Other Sanctions Ordered: UNDERTAKING

Sanction Details: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS;THEREFORE THE FIRM IS CENSURED, FINED $12,500.00 AND REQUIRED TOREVISE ITS WRITTEN SUPERVISORY PROCEDURES CONCERNING TRACEREPORTING.

Firm Statement AS STATED ABOVE, THE FIRM CONSENTED TO THE DESCRIBEDSANCTIONS AND TO THE ENTRY OF FINDINGS; THEREFORE THE FIRM ISCENSURED, FINED $12,500.00 AND REQUIRED TO REVISE ITS WRITTENSUPERVISORY PROCEDURES CONCERNING TRACE REPORTING.








Firm Statement AS STATED ABOVE, THE FIRM CONSENTED TO THE DESCRIBEDSANCTIONS AND TO THE ENTRY OF FINDINGS; THEREFORE THE FIRM ISCENSURED, FINED $12,500.00 AND REQUIRED TO REVISE ITS WRITTENSUPERVISORY PROCEDURES CONCERNING TRACE REPORTING.






Arbitration Award - Award / Judgment

Brokerage firms are not required to report arbitration claims filed against them by customers; however, BrokerCheckprovides summary information regarding FINRA arbitration awards involving securities and commodities disputesbetween public customers and registered securities firms in this section of the report. The full text of arbitration awards issued by FINRA is available at www.finra.org/awardsonline.

Disclosure 1 of 1


Type of Event: ARBITRATION

Arbitration Forum:

Case Initiated:

Case Number:

Allegations:

Disputed Product Type:

Sum of All Relief Requested:

Disposition:

Disposition Date:

Sum of All Relief Awarded:

FINRA

08/23/2013

13-02409

ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-CHURNING; ACCOUNT ACTIVITY-SUITABILITY; ACCOUNT RELATED-FAILURETO SUPERVISE; ACCOUNT RELATED-NEGLIGENCE

REAL ESTATE INVESTMENT TRUST

$150,000.00

AWARD AGAINST PARTY

03/01/2016

$134,533.29

There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.





www.finra.org/awardsonline

https://www.finra.org/arbitration-and-mediation/arbitration-awards-online?search=13-02409


End of Report

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QUESTAR CAPITAL CORPORATION · · 2018-04-28BrokerCheck Report QUESTAR CAPITAL CORPORATION Section Title Report Summary Firm History CRD# 43100 1 10 Firm Profile 2 - 9 Page(s) Firm

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