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SEC fines RIA for reverse repo transaction

The SEC has ordered broker-dealer FTN Financial Securities to pay nearly $2 million for allowing a registered investment advisor, Sentinel Management, to defraud its clients through a reverse repurchase transaction.

FTN Financial Securities, headquartered in Nashville, was ordered to pay disgorgement of $1.5 million and prejudgement interest of about $377,758.73 within ten days of the SEC’s decision. That decision was made on November 17.

By engaging in the reverse repo transaction Sentinel was able to hide its poor financial health, the SEC claims. Sentinel eventually filed for bankruptcy in 2007.