Lek Securities Corporation (CRD #33135, New City, New York) and Charles Frederik Lek (CRD #4672129, New York, New York)

April 11, 2024 – The firm and Charles Lek appealed an OHO Extended Hearing Panel decision to the NAC. The firm was expelled from FINRA membership and fined $1,130,000 and Charles Lek was barred from association with any FINRA member in all capacities and fined $100,000. The sanctions were based on findings that the firm and Charles Lek accepted deposits and liquidated low-priced securities in contravention of a business line suspension as memorialized in an Order Accepting Offer of Settlement issued by FINRA. The findings stated that when the business line suspension went into effect on the night of December 23, 2019, the firm was suspended from selling or accepting for deposit any low-priced securities. But the evidence shows the firm sold these securities after that night, and that they did not qualify for an exception to the business line suspension, thereby violating the suspension. The findings also stated that the firm and Charles Lek failed to implement 18 of 98 recommendations made by an independent consultant retained under the Order to assess the firm and help improve its supervisory and antimoney laundering (AML) systems and procedures. The findings also showed that the firm and Charles Lek falsely certified to FINRA that the firm had implemented all the independent consultant’s recommendations. FINRA found that the firm and Charles Lek failed to develop and implement an AML program reasonably designed to achieve and monitor the firm’s compliance with the Bank Secrecy Act and its implementing regulations. Part of this compliance required that the firm and Charles Lek detect and investigate suspicious activities such as fraudulent “pump and dumps” of publicly traded securities. Customer deposits and trading in securities issued by various companies exhibited money laundering red flags that the firm and Charles Lek should have detected and investigated but did not. FINRA also found that the firm and Charles Lek failed to establish, maintain, and enforce a supervisory system, including WSPs, reasonably designed to detect, investigate, and prevent illegal activity by customers in the firm’s low-priced securities business line. In addition, FINRA determined that the firm willfully failed to retain records relating to unapproved communication methods. Firm employees, including Charles Lek and senior management, used unapproved methods of electronic communication for the firm’s business, causing the firm to fail to capture and retain records of such communications. The sanctions are not in effect pending review. (FINRA Case #2021071137001) If you have suffered losses as a result of Charles Frederik Lek's act and/or actions we would like to hear from you. We are currently investigating claims on behalf of clients who have suffered significant losses in their portfolios that are managed by Charles Frederik Lek. The Schwartz Law Firm represents investors in claims against financial advisors and their firms. If you have questions about your potential claim or need assistance from an investment fraud lawyer, please contact us at 866-618-0545 or email Matthew Schwartz directly at mschwartz@tslfirm.com.