The allegations read: Without admitting or denying the findings, frey consented to the sanctions and to the entry of findings that he, acting as finop, caused his member firm to fail to maintain its minimum required net capital while engaging in a securities business. The findings stated that there were several factors that led to the net capital deficiencies. First, in connection with a written expense sharing agreement between the firm and its holding company, the firm through frey failed to accrue for all liabilities applicable to the firm. Second, the firm through frey failed to accurately reconcile the firm's bank account statements. Third, the firm through frey failed to accurately compute haircuts on its proprietary positions and on the securities held as collateral for the firm's approved subordinated loan. Fourth, in an attempt to maintain the minimum required net capital, for each of the months that the firm was net capital deficient, frey deposited funds into the firm's bank account at month-end, and withdrew those funds from the bank account typically within a few days of the deposits. The findings also stated that as a result, in addition to net capital deficiencies, the firm through frey failed to prepare and maintain an accurate general ledger, trial balance and balance sheet. The findings also included that as a result, the firm through frey filed inaccurate focus. Moreover, the capital additions and withdrawals resulted in the firm's failure to comply with finra rule 4110(c)(1) because the equity capital remained in the firm less than one year from the date the addition was made, and because the firm failed to receive written approval from finra prior to withdrawing the equity capital.
