In re Watermark Securities

UNITED STATES OF AMERICA 
 Before the 
 SECURITIES AND EXCHANGE COMMISSION 
 
SECURITIES EXCHANGE ACT OF 1934 
Release No. 94246 / February 15, 2022 
 
ADMINISTRATIVE PROCEEDING 
File No.  3-20769 
 
In the Matter of 
 
Watermark Securities, Inc.,  
 
Respondent. 
 
ORDER INSTITUTING 
ADMINISTRATIVE AND CEASE-AND-
DESIST PROCEEDINGS PURSUANT TO 
SECTIONS 15(b) AND 21C OF THE 
SECURITIES EXCHANGE ACT OF 1934, 
MAKING FINDINGS, AND IMPOSING 
REMEDIAL SANCTIONS AND A CEASE-
AND-DESIST ORDER  
   
 
I. 
 
 The Securities and Exchange Commission (“Commission”) deems it appropriate and in the 
public interest that public administrative and cease-and-desist proceedings be, and hereby are, 
instituted pursuant to Sections 15(b) and 21C of the Securities Exchange Act of 1934 (“Exchange 
Act”) against Watermark Securities, Inc. (“Watermark” or “Respondent”).   
 
II. 
 
In anticipation of the institution of these proceedings, Respondent has submitted an Offer 
of Settlement (the “Offer”) which the Commission has determined to accept.  Solely for the 
purpose of these proceedings and any other proceedings brought by or on behalf of the 
Commission, or to which the Commission is a party, and without admitting or denying the findings  
herein, except as to the Commission’s jurisdiction over it and the subject matter of these 
proceedings, which are admitted, Respondent consents to the entry of this Order Instituting 
Administrative and Cease-and-Desist Proceedings Pursuant to Sections 15(b) and 21C of the 
Securities Exchange Act of 1934, Making Findings, and Imposing Remedial Sanctions and a 
Cease-and-Desist Order (“Order”), as set forth below.   
 
III. 
  
 On the basis of this Order and Respondent’s Offer, the Commission finds that: 
 
Summary 
 
1. This matter involves Watermark’s failure to file with the Commission and to deliver 
to retail investors its Form CRS.  Watermark was required to file its initial Form CRS with the 

 2 
Commission and to begin delivering its Form CRS to prospective and new retail investors, as 
applicable, by June 30, 2020.  Watermark was further required to deliver its Form CRS to existing 
retail investor customers by July 30, 2020.  The firm failed to file and deliver Form CRS by these 
deadlines, not becoming compliant until November 17, 2021.  As a result, Watermark violated 
Exchange Act Section 17(a)(1) and Rule 17a-14 thereunder. 
 
Respondent 
 
2. Watermark is a Delaware corporation with its principal place of business in New 
York, New York.  Watermark is registered with the Commission as a broker-dealer pursuant to 
Section 15 of the Exchange Act.  Watermark offers services to retail investors.   
 
Facts 
 
3. On June 5, 2019, the Commission adopted Form CRS and rules creating new 
requirements—the Form CRS Filing Requirement and the Form CRS Delivery Requirement 
(collectively, the “Requirements”)—for Commission-registered broker-dealers offering services to 
a retail investor.
1
  See Form CRS Relationship Summary; Amendments to Form ADV, Release 
Nos. 34-86032 & IA-5247 (June 5, 2019) (effective September 10, 2019) (“Form CRS Adopting 
Release”). 
 
4. The Form CRS Filing Requirement.  First, Rule 17a-14 under the Exchange Act 
requires all Commission-registered broker-dealers offering services to a retail investor (“Retail 
BDs”) to electronically file on the Central Registration Depository (“Web CRD”) operated by the 
Financial Industry Regulatory Authority, Inc. (“FINRA”) an initial Form CRS satisfying the 
requirements of Rule 17a-14 no later than June 30, 2020. 
 
5. The Form CRS Delivery Requirement.  Second, Rule 17a-14 under the Exchange 
Act requires Retail BDs to deliver their current Form CRS to each retail investor.  Specifically, 
under Rule 17a-14 under the Exchange Act, the Retail BD must deliver:  
(1) to each retail investor its current Form CRS before or at the earliest of:  
 a recommendation of an account type, a securities transaction, or an 
investment strategy involving securities; 
 placing an order for the retail investor; or 
 the opening of a brokerage account for the retail investor. 
(2) to each retail investor who is an existing customer the Retail BD’s current Form CRS 
before or at the time the firm: 
 opens a new account that is different from the retail investor customer’s 
existing account(s); 
                                                 
1
  For purposes of Form CRS, the term “retail investor” means “a natural person, or the 
legal representative of such natural person, who seeks to receive or receives services primarily 
for personal, family or household purposes.”  Rule 17a-14(e)(2) under the Exchange Act. 

 3 
 recommends that the retail investor customer roll over assets from a 
retirement account into a new or existing account or investment; or 
 recommends or provides a new brokerage service or investment that does 
not necessarily involve the opening of a new account and would not be held 
in an existing account. 
See Rule 17a-14(c)(1) & (c)(2).  Rule 17a-14 also requires Retail BDs to post their current Form 
CRS prominently on their website, if they have one, in a location and format that is easily 
accessible to retail investors.  The deadline for Retail BDs to begin complying with the Form CRS 
Delivery Requirement was June 30, 2020 for prospective and new retail investors and July 30, 
2020 for the initial delivery to existing retail investor customers.  See Rule 17a-14(f)(3); Form CRS 
Adopting Release at 239, 242, 406-407; Instructions to Form CRS, General Instruction 7.C (Sept. 
2019). 
 
6. Watermark failed to comply with the Requirements by its regulatory deadlines.  
Watermark filed Form CRS with the Commission on November 16, 2021, and the firm did not 
deliver Form CRS to its existing retail investor customers until November 16, 2021.  In addition, 
Watermark failed to post Form CRS on its website until November 17, 2021.   
 
Violations 
 
7. As a result of the conduct described above, Watermark willfully
2
 violated Exchange 
Act Section 17(a)(1) and Rule 17a-14 thereunder. 
 
IV. 
 In view of the foregoing, the Commission deems it appropriate and in the public interest to 
impose the sanctions agreed to in Respondent Watermark’s Offer. 
 
 Accordingly, pursuant to Sections 15(b) and 21C of the Exchange Act, it is hereby 
ORDERED that: 
 
 A. Respondent cease and desist from committing or causing any violations and any 
future violations of Exchange Act Section 17(a)(1) and Rule 17a-14 thereunder. 
 
B.  Respondent is censured. 
                                                 
2
  “Willfully,” for purposes of imposing relief under Section 15(b) of the Exchange Act 
“‘means no more than that the person charged with the duty knows what he is doing.’”  Wonsover 
v. SEC, 205 F.3d 408, 414 (D.C. Cir. 2000) (quoting Hughes v. SEC, 174 F.2d 969, 977 (D.C. Cir. 
1949)).  There is no requirement that the actor “also be aware that he is violating one of the Rules 
or Acts.”  Tager v. SEC, 344 F.2d 5, 8 (2d Cir. 1965).  The decision in The Robare Group, Ltd. v. 
SEC, which construed the term “willfully” for purposes of a differently structured statutory 
provision, does not alter that standard.  922 F.3d 468, 478-79 (D.C. Cir. 2019) (setting forth the 
showing required to establish that a person has “willfully omit[ted]” material information from a 
required disclosure in violation of Section 207 of the Advisers Act). 

 4 
 
C.  Respondent shall, within 10 days of the entry of this Order, pay a civil money 
penalty in the amount of $25,000 to the Securities and Exchange Commission for transfer to the 
general fund of the United States Treasury, subject to Securities Exchange Act of 1934 Section 
21F(g)(3).  If timely payment is not made, additional interest shall accrue pursuant to 
31 U.S.C. § 3717.   
 
Payment must be made in one of the following ways:   
 
(1) Respondent may transmit payment electronically to the Commission, which 
will provide detailed ACH transfer/Fedwire instructions upon request;  
 
(2) Respondent may make direct payment from a bank account via Pay.gov 
through the SEC website at http://www.sec.gov/about/offices/ofm.htm; or  
 
(3) Respondent may pay by certified check, bank cashier’s check, or United 
States postal money order, made payable to the Securities and Exchange 
Commission and hand-delivered or mailed to:  
 
Enterprise Services Center 
Accounts Receivable Branch 
HQ Bldg., Room 181, AMZ-341 
6500 South MacArthur Boulevard 
Oklahoma City, OK 73169 
 
Payments by check or money order must be accompanied by a cover letter identifying Watermark 
as a Respondent in these proceedings, and the file number of these proceedings; a copy of the 
cover letter and check or money order must be sent to Jennifer S. Leete, Associate Director, 
Division of Enforcement, Securities and Exchange Commission, 100 F. St. NE, Washington, DC 
20549, or such other person or address as the Commission staff may provide. 
 
 D. Amounts ordered to be paid as civil money penalties pursuant to this Order shall be 
treated as penalties paid to the government for all purposes, including all tax purposes.  To 
preserve the deterrent effect of the civil penalty, Respondent agrees that in any Related Investor 
Action, it shall not argue that it is entitled to, nor shall it benefit by, offset or reduction of any 
award of compensatory damages by the amount of any part of Respondent’s payment of a civil 
penalty in this action (“Penalty Offset”).  If the court in any Related Investor Action grants such a 
Penalty Offset, Respondent agrees that it shall, within 30 days after entry of a final order granting 
the Penalty Offset, notify the Commission’s counsel in this action and pay the amount of the 
Penalty Offset to the Securities and Exchange Commission.  Such a payment shall not be deemed 
an additional civil penalty and shall not be deemed to change the amount of the civil penalty 
imposed in this proceeding.  For purposes of this paragraph, a “Related Investor Action” means a 
private damages action brought against Respondent by or on behalf of one or more investors based 

 5 
on substantially the same facts as alleged in the Order instituted by the Commission in this 
proceeding. 
 
 
 By the Commission. 
 
 
 
Vanessa A. Countryman 
       Secretary 
 

UNITED STATES OF AMERICA 

 Before the 

 SECURITIES AND EXCHANGE COMMISSION 

 

SECURITIES EXCHANGE ACT OF 1934 

Release No. 94246 / February 15, 2022 

 

ADMINISTRATIVE PROCEEDING 

File No.  3-20769 

 

In the Matter of 

 

Watermark Securities, Inc.,  

 

Respondent. 

 

ORDER INSTITUTING 

ADMINISTRATIVE AND CEASE-AND-

DESIST PROCEEDINGS PURSUANT TO 

SECTIONS 15(b) AND 21C OF THE 

SECURITIES EXCHANGE ACT OF 1934, 

MAKING FINDINGS, AND IMPOSING 

REMEDIAL SANCTIONS AND A CEASE-

AND-DESIST ORDER  

   

 

I. 
 

 The Securities and Exchange Commission (“Commission”) deems it appropriate and in the 

public interest that public administrative and cease-and-desist proceedings be, and hereby are, 

instituted pursuant to Sections 15(b) and 21C of the Securities Exchange Act of 1934 (“Exchange 

Act”) against Watermark Securities, Inc. (“Watermark” or “Respondent”).   

 

II. 
 

In anticipation of the institution of these proceedings, Respondent has submitted an Offer 

of Settlement (the “Offer”) which the Commission has determined to accept.  Solely for the 

purpose of these proceedings and any other proceedings brought by or on behalf of the 

Commission, or to which the Commission is a party, and without admitting or denying the findings  

herein, except as to the Commission’s jurisdiction over it and the subject matter of these 

proceedings, which are admitted, Respondent consents to the entry of this Order Instituting 

Administrative and Cease-and-Desist Proceedings Pursuant to Sections 15(b) and 21C of the 

Securities Exchange Act of 1934, Making Findings, and Imposing Remedial Sanctions and a 

Cease-and-Desist Order (“Order”), as set forth below.   

 

III. 
  

 On the basis of this Order and Respondent’s Offer, the Commission finds that: 

 

Summary 
 

1. This matter involves Watermark’s failure to file with the Commission and to deliver 

to retail investors its Form CRS.  Watermark was required to file its initial Form CRS with the 



 2 

Commission and to begin delivering its Form CRS to prospective and new retail investors, as 

applicable, by June 30, 2020.  Watermark was further required to deliver its Form CRS to existing 

retail investor customers by July 30, 2020.  The firm failed to file and deliver Form CRS by these 

deadlines, not becoming compliant until November 17, 2021.  As a result, Watermark violated 

Exchange Act Section 17(a)(1) and Rule 17a-14 thereunder. 

 

Respondent 

 

2. Watermark is a Delaware corporation with its principal place of business in New 

York, New York.  Watermark is registered with the Commission as a broker-dealer pursuant to 

Section 15 of the Exchange Act.  Watermark offers services to retail investors.   

 

Facts 

 

3. On June 5, 2019, the Commission adopted Form CRS and rules creating new 

requirements—the Form CRS Filing Requirement and the Form CRS Delivery Requirement 

(collectively, the “Requirements”)—for Commission-registered broker-dealers offering services to 

a retail investor.1  See Form CRS Relationship Summary; Amendments to Form ADV, Release 

Nos. 34-86032 & IA-5247 (June 5, 2019) (effective September 10, 2019) (“Form CRS Adopting 

Release”). 

 

4. The Form CRS Filing Requirement.  First, Rule 17a-14 under the Exchange Act 

requires all Commission-registered broker-dealers offering services to a retail investor (“Retail 

BDs”) to electronically file on the Central Registration Depository (“Web CRD”) operated by the 

Financial Industry Regulatory Authority, Inc. (“FINRA”) an initial Form CRS satisfying the 

requirements of Rule 17a-14 no later than June 30, 2020. 

 

5. The Form CRS Delivery Requirement.  Second, Rule 17a-14 under the Exchange 

Act requires Retail BDs to deliver their current Form CRS to each retail investor.  Specifically, 

under Rule 17a-14 under the Exchange Act, the Retail BD must deliver:  

(1) to each retail investor its current Form CRS before or at the earliest of:  

 a recommendation of an account type, a securities transaction, or an 

investment strategy involving securities; 

 placing an order for the retail investor; or 

 the opening of a brokerage account for the retail investor. 

(2) to each retail investor who is an existing customer the Retail BD’s current Form CRS 

before or at the time the firm: 

 opens a new account that is different from the retail investor customer’s 

existing account(s); 

                                                 
1  For purposes of Form CRS, the term “retail investor” means “a natural person, or the 

legal representative of such natural person, who seeks to receive or receives services primarily 

for personal, family or household purposes.”  Rule 17a-14(e)(2) under the Exchange Act. 



 3 

 recommends that the retail investor customer roll over assets from a 

retirement account into a new or existing account or investment; or 

 recommends or provides a new brokerage service or investment that does 

not necessarily involve the opening of a new account and would not be held 

in an existing account. 

See Rule 17a-14(c)(1) & (c)(2).  Rule 17a-14 also requires Retail BDs to post their current Form 

CRS prominently on their website, if they have one, in a location and format that is easily 

accessible to retail investors.  The deadline for Retail BDs to begin complying with the Form CRS 

Delivery Requirement was June 30, 2020 for prospective and new retail investors and July 30, 

2020 for the initial delivery to existing retail investor customers.  See Rule 17a-14(f)(3); Form CRS 

Adopting Release at 239, 242, 406-407; Instructions to Form CRS, General Instruction 7.C (Sept. 

2019). 

 

6. Watermark failed to comply with the Requirements by its regulatory deadlines.  

Watermark filed Form CRS with the Commission on November 16, 2021, and the firm did not 

deliver Form CRS to its existing retail investor customers until November 16, 2021.  In addition, 

Watermark failed to post Form CRS on its website until November 17, 2021.   

 

Violations 

 

7. As a result of the conduct described above, Watermark willfully2 violated Exchange 

Act Section 17(a)(1) and Rule 17a-14 thereunder. 

 

IV. 

 In view of the foregoing, the Commission deems it appropriate and in the public interest to 

impose the sanctions agreed to in Respondent Watermark’s Offer. 

 

 Accordingly, pursuant to Sections 15(b) and 21C of the Exchange Act, it is hereby 

ORDERED that: 

 

 A. Respondent cease and desist from committing or causing any violations and any 

future violations of Exchange Act Section 17(a)(1) and Rule 17a-14 thereunder. 

 

B.  Respondent is censured. 

                                                 
2  “Willfully,” for purposes of imposing relief under Section 15(b) of the Exchange Act 

“‘means no more than that the person charged with the duty knows what he is doing.’”  Wonsover 

v. SEC, 205 F.3d 408, 414 (D.C. Cir. 2000) (quoting Hughes v. SEC, 174 F.2d 969, 977 (D.C. Cir. 

1949)).  There is no requirement that the actor “also be aware that he is violating one of the Rules 

or Acts.”  Tager v. SEC, 344 F.2d 5, 8 (2d Cir. 1965).  The decision in The Robare Group, Ltd. v. 

SEC, which construed the term “willfully” for purposes of a differently structured statutory 

provision, does not alter that standard.  922 F.3d 468, 478-79 (D.C. Cir. 2019) (setting forth the 

showing required to establish that a person has “willfully omit[ted]” material information from a 

required disclosure in violation of Section 207 of the Advisers Act). 



 4 

 

C.  Respondent shall, within 10 days of the entry of this Order, pay a civil money 

penalty in the amount of $25,000 to the Securities and Exchange Commission for transfer to the 

general fund of the United States Treasury, subject to Securities Exchange Act of 1934 Section 

21F(g)(3).  If timely payment is not made, additional interest shall accrue pursuant to 

31 U.S.C. § 3717.   

 

Payment must be made in one of the following ways:   

 

(1) Respondent may transmit payment electronically to the Commission, which 

will provide detailed ACH transfer/Fedwire instructions upon request;  

 

(2) Respondent may make direct payment from a bank account via Pay.gov 

through the SEC website at http://www.sec.gov/about/offices/ofm.htm; or  

 

(3) Respondent may pay by certified check, bank cashier’s check, or United 

States postal money order, made payable to the Securities and Exchange 

Commission and hand-delivered or mailed to:  

 

Enterprise Services Center 

Accounts Receivable Branch 

HQ Bldg., Room 181, AMZ-341 

6500 South MacArthur Boulevard 

Oklahoma City, OK 73169 

 

Payments by check or money order must be accompanied by a cover letter identifying Watermark 

as a Respondent in these proceedings, and the file number of these proceedings; a copy of the 

cover letter and check or money order must be sent to Jennifer S. Leete, Associate Director, 

Division of Enforcement, Securities and Exchange Commission, 100 F. St. NE, Washington, DC 

20549, or such other person or address as the Commission staff may provide. 

 

 D. Amounts ordered to be paid as civil money penalties pursuant to this Order shall be 

treated as penalties paid to the government for all purposes, including all tax purposes.  To 

preserve the deterrent effect of the civil penalty, Respondent agrees that in any Related Investor 

Action, it shall not argue that it is entitled to, nor shall it benefit by, offset or reduction of any 

award of compensatory damages by the amount of any part of Respondent’s payment of a civil 

penalty in this action (“Penalty Offset”).  If the court in any Related Investor Action grants such a 

Penalty Offset, Respondent agrees that it shall, within 30 days after entry of a final order granting 

the Penalty Offset, notify the Commission’s counsel in this action and pay the amount of the 

Penalty Offset to the Securities and Exchange Commission.  Such a payment shall not be deemed 

an additional civil penalty and shall not be deemed to change the amount of the civil penalty 

imposed in this proceeding.  For purposes of this paragraph, a “Related Investor Action” means a 

private damages action brought against Respondent by or on behalf of one or more investors based 

http://www.sec.gov/about/offices/ofm.htm


 5 

on substantially the same facts as alleged in the Order instituted by the Commission in this 

proceeding. 

 

 

 By the Commission. 

 

 

 

Vanessa A. Countryman 

       Secretary