Litigation Release No. 16410 / January 19, 2000

Securities and Exchange Commission v. GKN Securities Corp., 99 Civ. 12417 (MP) (S.D.N.Y. December 29, 1999)


The Securities and Exchange Commission today announced that the Honorable Milton Pollack, Senior United States District Judge, Southern District of New York, ordered GKN Securities Corp., a registered broker-dealer headquartered in New York City, to comply with an order that the Commission had issued against GKN on January 15, 1997. Without admitting or denying the allegations in the Commission's complaint, GKN consented to the court's order which was entered on December 29, 1999. The Commission's complaint made the following allegations:

  • The Commission's January 15, 1997 order found that between 1990 and 1993, GKN failed to establish adequate procedures to supervise the sales practices of its registered representatives, failed to monitor or adequately review and respond to customer complaints, and failed to institute measures designed to prevent sales practice violations (In the Matter of GKN Securities Corp. et al., Exchange Act Release No. 38173).

  • In order to protect investors from the possibility of future problems at the firm, the Commission ordered GKN to:

    1) implement and maintain policies and procedures reasonably designed to detect and prevent the types of sales practice abuses which gave rise to the Commission proceeding;
    2) retain an independent consultant to prepare a written report containing recommendations about the firm's supervisory and compliance policies and procedures; and
    3) adopt all recommendations contained in the independent consultant's written report and to submit an affidavit certifying that it had implemented those recommendations.

  • Although GKN submitted such an affidavit in November 1997, a recent Commission examination revealed that GKN either failed to comply, or failed to comply fully, with certain of the independent consultant's recommendations relating to supervision, contact with customers, hiring and compliance. Therefore, GKN failed to comply with the Commission's January 15, 1997 order, to which it had consented.

Judge Pollack's order requires GKN to comply fully with the Commission's order within 30 days. Failure to comply with the court order could subject GKN to sanctions, including fines.