According to a FINRA’s letter of acceptance, waiver, and consent published on June 10, the employee Kyung Soo Kim has served Merrill Lynch as a General Securities Representative and an Investment Company Variable Contracts Products Representative from March 2014 to April 2018. However, in December 2017, he reportedly formed a company called S Corporation to participate in crypto mining activities.
Kim, who was reportedly the sole shareholder and director of S Corporation, entered into a deal with another company to build and operate the mining hardware and software for the operations and paid the third party for its services.
He should have provided written notice to FINRA when he founded his own firm while still employed. According to Cointelegraph, Merrill Lynch had already raised the issue in March 2018 after it dismissed him for the same reason.
The crypto entrepreneur, who had no prior disciplinary records, violated FINRA’s rules 3270 and 2010. Both policies require that businesses made outside the FINRA-registered employment to be declared in writing and the FINRA-associated persons should observe “high standards of commercial honor and just and equitable principles of trade.”
The organization has penalized Kim $5,000 for the infraction and suspended him for a month from association with any FINRA member firm.
The case underlines the keen attention U.S. regulators have on any cryptocurrency-related activities. As previously reported, the Financial Action Task Force (FATF) will reportedly release a note to clarify how participant nations should manage the digital assets sector, with new rules applicable to businesses dealing with tokens and cryptocurrencies, including crypto exchanges, custodians and crypto hedge funds.