The Financial Industry Regulatory Authority filed an administrative complaint against Scottsdale Capital Advisors Corporation, a registered broker-dealer and FINRA member, for the alleged sale of 74 million shares of unregistered microcap stocks of three US-incorporated companies from December 1, 2013, through June 30, 2014. In its complaint, FINRA also named D. Michael Cruz, Scottsdale’s president; Timothy DiBlasi, its chief compliance officer; and John Hurry, a director. FINRA claimed that Mr. Hurry indirectly owned Scottsdale, as well as Alpine Securities Corporation, Scottsdale’s clearing firm. According to FINRA, Mr. Hurry deposited the shares into accounts and subaccounts at Scottsdale in the name of CSCT, which he owned and controlled. FINRA claimed that Mr. Hurry used the three firms he allegedly controlled – CSCT, Scottsdale and Alpine – to facilitate the microcap liquidations “without the scrutiny that the transactions demanded.” FINRA claimed all the liquidations followed a similar pattern: a third party first loaned funds to the issuer of the microcap stock. This loan ultimately was converted to stock shares by a foreign corporate customer of another foreign corporate customer of CSCT. CSCT would then deposit the shares – typically in certificate form — into an account at Scottsdale for the customer of its customer, and then shortly afterwards, liquidate the shares and wire the funds out. None of the shares were registered with the Securities and Exchange Commission or exempt from registration, as required, claimed FINRA. FINRA claimed that Mr. DiBlasi was responsible for implementing and ensuring that all stock certificates were validly issued and owned by its customers, and that resales were made in reliance on an exemption from registration requirements in order to prevent the sale of unregistered non-exempt stocks. He was charged for allegedly failing to fulfill his obligations in connection with the relevant microcap liquidations. FINRA alleged that clients of Scottsdale realized in excess of US $1.7 million as a result of the illicit trading. In November 2011, Scottsdale consented to a fine by FINRA of US $125,000 related to its alleged sale of unregistered securities and not maintaining an adequate anti-money laundering program. In the new complaint, FINRA seeks findings of rule violations and disgorgement of all profits against the respondents, among other sanctions.