Attorney General Jennifer Davenport and the New Jersey Bureau of Securities announced on Mar. 11 that Network 1 Financial Securities, Inc., a broker-dealer based in Red Bank, has agreed to pay a $375,000 civil penalty and implement corrective measures after an investigation found violations of state securities laws related to anti-money laundering procedures.
The announcement highlights the importance of strong oversight in financial markets to protect investors from illegal conduct and market manipulation. The Bureau found that Network 1 failed to establish reasonable procedures for anti-money laundering, did not maintain adequate programs for customer identification, and lacked proper due diligence on companies involved in private placements.
“Investors work hard to build financial security and plan for an affordable future. But those investments are jeopardized when firms ignore their duty to protect the market from illegal conduct, manipulation, and abuse,” said Attorney General Davenport. “We will protect investors’ hard-earned money by ensuring financial firms operating in New Jersey comply with our laws, which require them to maintain strong supervision and anti-money laundering controls.”
Jeremy E. Hollander, Acting Director of the Division of Consumer Affairs, said: “For many people, every dollar invested represents years of hard work and careful planning. New Jersey’s financial markets must be kept fair, transparent, and trustworthy—so investors can participate with confidence and security. Today’s announcement demonstrates the Division’s continuing commitment to that goal.” Bureau Chief Keith A. Alt added: “Broker-dealers and their agents perform the critical role of gatekeepers in our financial markets… When those safeguards break down, investors and market integrity are placed at risk.”
The Bureau’s investigation revealed that Network 1 opened hundreds of accounts for customers in China and Hong Kong without proper identification verification; failed to ensure due diligence was performed on three companies whose shares it sold privately; did not detect or report potentially manipulative trades; and failed to keep required records documenting these activities.
Network 1 had previously been censured by the Financial Industry Regulatory Authority (FINRA) in March 2025 with a $400,000 fine and was required to hire a third-party consultant. The new Consent Order requires this consultant to report on whether FINRA-related recommendations have been implemented as well as review additional procedures relevant to the Bureau’s findings.
As part of remedial actions under the Consent Order, Michael Molinaro has been relieved from his roles as Chief Compliance Officer and Anti-Money Laundering Compliance Officer at Network 1.
According to the official website, the New Jersey Attorney General Matthew Platkin aims to protect residents’ lives and property while upholding legal standards across all counties through enforcement efforts statewide. The office also provides services such as law enforcement oversight, crime lab support, victim advocacy, consumer protection initiatives, legal representation for state agencies, regulation enforcement throughout New Jersey communities—all under its statutory mandate focused on justice and public safety.
