Salomon Grey expelled by NASD

LOSSES & LAWSUITS

The firm was charged with extensive supervisory failures, anti-money laundering violations, email retention violations, customer complaint reporting violations and unauthorised searches of NASD's central registration depository (CRD).

James Shorris, NASD executive vice-president and head of enforcement said during the announcement at the end of April: "Any one of these violations is serious and would pose a substantial risk to the firm's customers – and could compromise efforts to prevent financial institutions from being exploited for money laundering. In this unusual case, the occurrence of all of these violations in a single firm calls for the most severe sanction: expulsion."

At its peak, Salomon Grey operated as many as 14 registered branch offices located throughout the US, with a concentration of offices in California, New York and Florida.

NASD found that during the period from approximately January 2000 to March 2005, Salomon Grey's supervisory system was inadequate to supervise its dispersed group of offices and high-risk brokers. NASD found that the firm permitted the brokers in each branch office to hire branch managers, resulting in situations where the branch managers were charged with supervising the very brokers who hired them and had the effective ability to fire them.

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