Lyle Wesley Davis, Broker with Wilson-Davis & Co., Agrees to FINRA Settlement Alleging Failure to Supervise

Davis agreed to a $30,000 fine and a suspension for twenty-one months.

Lyle Wesley Davis (CRD#: 62352) is registered as a broker with Wilson-Davis & Co., where he has been employed since 1969. 

Davis has six disclosures on his BrokerCheck report. 

July 2019 Regulatory Judgment

• Status: Final
• Initiated By: FINRA
• Allegations: Davis was named a respondent in a FINRA complaint alleging that he failed to establish, maintain, and enforce a supervisory system, including WSPs, reasonably designed to achieve compliance with applicable securities laws, regulations, and FINRA rules. The complaint alleges that Davis, his member firm, and other designated supervisors failed to reasonably supervise a registered representative’s trading by ignoring various red flags of potentially manipulative trading set forth in his member firm’s WSPs that also failed to establish how the firm’s trading activity should be supervised to detect and prevent manipulative trading. In practice, no one at the firm was conducting a reasonable review of microcap liquidation and trading activity to detect and prevent manipulative trading, including the representative’s manipulative trading activity involving a company. The complaint also alleges that Davis and his firm provided false and misleading information to FINRA by providing a false and misleading spreadsheet purporting to represent a contemporaneous annotated record of the firm’s and Davis’s daily review and supervision of the firm’s trading activity in the company, when, in fact, no such responsive documents existed.
• Resolution: Decision & Order of Offer of Settlement
• Sanctions: Civil and Administrative Penalty(ies)/Fine(s)
• Amount: $30,000.00
• Sanctions: Suspension
• Registration Capacities Affected: All Capacities
• Duration: three months
• Start Date: 8/16/2021
• End Date: 11/15/2021
• Registration Capacities Affected: Any principal capacity
• Duration: 21 months
• Start Date: 11/16/2021
• End Date: 8/15/2023
• Regulator Statement:  Without admitting or denying the allegations, Davis consented to the sanctions and to the entry of findings that he failed to establish, maintain, and enforce a supervisory system, including Written Supervisory Procedures (WSPs), reasonably designed to achieve compliance with the applicable securities laws and regulations and FINRA rules. The findings stated that the firm’s WSPs acknowledged its legal obligation to avoid engaging in or facilitating manipulative behavior, but the WSPs did not explain how the firm’s trading activity would be supervised to ensure compliance with that obligation or what should be done if such activity was detected. Moreover, the firm’s system of reviewing trading activity was limited and could not be reasonably expected to detect and prevent manipulative trading activity at the firm in microcap securities, such as the potentially suspicious or manipulative trading in a certain company (the company). Additionally, the firm, acting through Davis and other principals, failed to reasonably supervise a registered representative’s trading activities in the company to ensure compliance with federal securities laws and regulations, and with applicable FINRA rules. The firm and these designated supervisors failed to detect or otherwise ignored numerous red flags of potentially manipulative activity by the representative and his customers related to the company, including failing to reasonably detect and respond to activity identified as indicative of potential manipulation by the firm’s WSPs. The findings also stated that Davis, in response to a request for documents and information issued by FINRA, provided FINRA with an inaccurate or misleading spreadsheet purporting to represent a contemporaneous annotated record of the firm’s and Davis’s daily review, including handwritten notations, and supervision of the firm’s trading activity in the company, when, in fact, no such responsive documents evidencing the review existed.
• Broker Comment: Mr. Davis settled and resolved the assertion that he provided inadequate supervision and inaccurate information without admitting or denying the findings set forth in the Order Accepting the Offer of Settlement.

May 1996 Customer Dispute

• Status: Settled
• Allegations: Arbitration proceeding filed by [customer], et al. alleging damages of $3,561,200
• Damage Amount Requested: $28,489,760.00
• Settlement Amount: $25,000.00
• Broker Comment: We have had no dealings, contact, communications nor conversations with any of the claimants. None are customers of Wilson-Davis. None have asked to open accounts They are completely unknown to us.

January 1992 Regulatory Judgment

• Status: Final
• Initiated By: National Association of Securities Dealers, Inc.
• Resolution: Decision & Order of Offer of Settlement
• Sanctions: Monetary/Fine
• Amount: $5,000.00
• Sanctions: Censure
• Broker Comment: Not provided.

May 1990 Regulatory Judgment

• Status: Final
• Initiated By: National Association of Securities Dealers, Inc.
• Resolution: Decision
• Sanctions: Monetary/Fine
• Amount: $5,000.00
• Sanctions: Censure
• Broker Comment: Not provided.

June 1989 Regulatory Judgment

• Status: Final
• Initiated By: National Association of Securities Dealers, Inc.
• Resolution: Acceptance, Waiver & Consent (AWC)
• Sanctions: Monetary/Fine
• Amount: $500.00
• Sanctions: Censure
• Broker Comment: Not provided.

December 1985 Regulatory Judgment

• Status: Final
• Initiated By: Iowa
• Resolution: Consent
• Sanctions: Censure
• Broker Comment: Not provided.

Contact Us Today

The Sonn Law Group is currently investigating allegations surrounding Lyle Wesley Davis. We represent investors in claims against negligent brokers and brokerage firms. If you or your loved one experienced investment losses, we are here to help. For a free consultation, please call us now at 866-827-3202 or complete our contact form.