Firm Settles FINRA Charges for Supervisory Failures on Account Access

A firm settled FINRA charges for failing to maintain reasonable supervisory systems to prevent unauthorized changes and fraudulent fund transfers from international Stock Plan Services accounts.   

According to the AWC, FINRA found that the firm failed to detect that, "for nearly eight years, an associated person responsible for supporting the maintenance of SPS account data converted approximately $750,000 from 37 international plan participants."

FINRA determined that the firm's supervisory systems, including its written supervisory procedures, permitted the associated person to change customer account data and initiate unauthorized money movements without sufficient oversight or monitoring. Specifically, the supervisory procedures failed to (i) require all changes to account data to be logged and reviewed through the firm's tracking system and (ii) include outgoing fund transfers from certain international accounts in its surveillance processes.

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

To settle charges, the firm agreed to (i) a censure, (ii) pay a $600,000 fine and (iii) the implementation of enhanced supervisory systems and procedures to address these deficiencies.