National investment loss lawyers KlaymanToskes reports Arque Capital, Ltd. and former CEO/owner Michael Cheng Ning (CRD# 1229733) failed to comply with several FINRA and SEC rules and requirements, leading to the firm’s censure and fine of $50,000, and Ning’s 7-month suspension and $15,000 fine.
According to FINRA’s Department of Enforcement, between March 2019 and May 2020, Arque Capital and former CEO Michael Ning failed to comply with four interrelated financial compliance requirements. The matter allegedly originated from FINRA examinations of Arque Capital.
Arque Capital and Michael Cheng Ning are also currently facing a customer complaint which alleges $1,700,000 in damages due to unsuitable investment recommendations in GWG L Bonds. GWG filed for Chapter 11 bankruptcy as a debtor in possession in April 2022, however, investors can contact KlaymanToskes to discuss other recovery options.
According to FINRA, Arque Capital has been registered as a FINRA member since 2002. The firm is headquartered in Scottsdale, Arizona, has seven branch offices, and employs 16 registered representatives. The following is a list of former/current representatives associated with Arque Capital.
Investors that suffered losses with any of the brokers/advisors listed above may have recovery options. Contact attorney Lawrence L. Klayman, Esq., at 888-997-9956 or lklayman@klaymantoskes.com for a free consultation to discuss legal options. We do not collect attorney’s fees unless we are able to obtain a financial recovery for you.
Arquit Capital Ltd. and its registered representative Michael C. Ning entered into a regulatory agreement known as a Letter of Acceptance, Waive, and Consent with FINRA’s Department of Enforcement on May 10, 2023.
According to FINRA’s Department of Enforcement, between March 2019 and May 2020, Arque Capital failed to comply with at least four interrelated financial compliance requirements with regulators, including the following:
1. Arque Capital conducted a securities business while failing to maintain the required minimum net capital:
The firm conducted a securities business on 67 days while it failed to maintain the required minimum net capital, with deficiencies ranging from $24,726 to $46,582. According to the AWC, “These deficiencies occurred because the firm understated its debt relating to commissions payable and misstated allowable assets by overstating commissions receivable from a mutual fund company.”
Therefore, Arque Capital violated Section 15(c) of the Exchange Act, Exchange Act Rule 15c3-1, and FINRA Rules 4110(b)(1) and 2010.
2. Arque Capital failed to provide timely notice, and provided one inaccurate notice, of its net capital deficiencies:
Arque Capital failed to timely notify FINRA and the SEC of its net capital deficiencies for three periods during which the firm’s minimum net capital fell below its minimum requirement. Arque Capital provided one notification that contained a material inaccuracy. The notice provided by the firm on April 8, 2020, inaccurately stated that its net capital deficiency ended that day, when it actually ended on March 11, 2020.
Therefore, Arque Capital violated Section 17(a) of the Exchange Act, Exchange Act Rule 17a-11, and FINRA Rule 2010.
3. Arque Capital failed to make and keep accurate books and records:
From March 2019 through May 2020, Arque Capital maintained inaccurate balance sheets, trial balances, general ledgers, and net capital computations. These inaccurate records resulted from the firm’s failure to accrue and record certain expenses, accurately account for commissions payable, commissions receivable, and direct business receivables, and accurately record assets and liabilities. In addition, the firm miscalculated and overstated its net capital.
Therefore, Arque Capital violated Section 17(a) of the Exchange Act, Exchange Act Rules 17a-3, and FINRA Rules 4511 and 2010.
4. Arque Capital filed inaccurate and untimely FOCUS reports:
Arque Capital inaccurately recorded certain financial information—including its liabilities, expenses, ownership equity, revenue, assets, net capital, and minimum net capital requirement—on two quarterly FOCUS reports and nine month-end FOCUS reports filed for the period March 2019 through May 2020. Arque Capital also filed one late FOCUS report.
Therefore, Arque Capital violated Section 17(a) of the Exchange Act, Exchange Act Rule 17a-5, and FINRA Rule 2010.
5. Ning willfully failed to timely amend his Form U4 to disclose two tax liens:
The IRS filed two tax liens against Ning, one for $79,621, and another for $218,573, in 2017. Although Ning was required to disclose the liens through the filing of an amended Form U-4 within 30 days of receiving notice, Ning failed to amend his Form U-4 to disclose the tax liens until August 16, 2018.
Therefore, Ning violated Article V, Section 2(c) of FINRA’s By-Laws and FINRA Rules 1122 and 2010.
6. Arque Capital and Ning failed to remit withheld employee payroll taxes to the U.S. Treasury:
From January 2016 through March 2019, Arque Capital withheld federal income, social security, and Medicare taxes (payroll taxes) from its employees. During this period, Ning owned Arque Capital and was its CEO. Although Ning was allegedly aware of the firm’s obligation to remit the withheld payroll taxes to the U.S. Treasury when they became due, the firm used those funds to pay for other firm business expenses.
As a result, Arque Capital and Ning failed to remit employees’ payroll taxes to the U.S. Treasury as they became due. By March 2019, the firm owed approximately $125,000 in unpaid payroll taxes. Therefore, Arque Capital and Ning violated FINRA Rule 2010.
KlaymanToskes is a leading national securities law firm which practices exclusively in the field of securities arbitration on behalf of retail and institutional investors throughout the world in large and complex securities matters. The firm has recovered over $250 million in FINRA arbitrations and over $350 million in other securities litigation matters. KlaymanToskes has office locations in California, Florida, New York, and Puerto Rico.
KlaymanToskes, P.A.
Lawrence L. Klayman, Esq.
888-997-9956
lklayman@klaymantoskes.com
www.klaymantoskes.com