Firm Settles FINRA Charges for Failing to Review Outside Brokerage Accounts

A firm settled FINRA charges for failing to adequately review securities transactions in associated persons' outside brokerage accounts.

According to the AWC, the firm required trade disclosures by employees, but failed to adequately review account statements. FINRA said that the firm's supervisory deficiencies persisted for several years, during which the firm did not review statements for over 100 disclosed accounts.

FINRA also found that the firm lacked procedures to guide supervisors on identifying and investigating suspicious trading activity, such as insider trading or manipulative practices. FINRA said the oversight system failed to include processes for tracking or verifying compliance with the receipt and review of account information.

As a result, FINRA determined that the firm violated FINRA Rules 3110 ("Supervision") and 2010 ("Standards of Commercial Honor and Principles of Trade").

To settle the charges, the firm agreed to (i) a censure, (ii) a $50,000 fine and (iii) remediate its supervisory framework.