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Broker-Dealer Settles FINRA Charges for Customer Notification and Supervisory Failures

A broker-dealer settled FINRA charges for failing to provide customers with required annual notifications and other information on customers' trades, pursuant to Regulation National Market System ("NMS") Rule 606 ("Disclosure of Order Routing Information").

In a Letter of Acceptance, Waiver, and Consent, FINRA determined that the broker-dealer did not notify customers that they may request information regarding the manner in which orders were executed. Additionally, the broker-dealer failed to notify customers with orders involving options contracts that they could request information concerning (i) the venue to which the order was routed for execution, (ii) whether the order was a directed or nondirected order, and (iii) the time of any transactions resulting from an order. FINRA also found that the broker-dealer's supervisory system did not include provisions for (i) confirmation that customers received the annual required notification or (ii) a review to ensure accuracy of the firm's required NMS Rule 606 reports.

As a result of its conduct, the broker-dealer violated NMS Rule 606, NASD Rule 3010 and FINRA Rules 3110 ("Supervision") and 2010 ("Standards of Commercial Honor and Principles of Trade").

To settle the charges, the broker-dealer agreed to (i) a censure, (ii) a $25,000 fine and (iii) an undertaking to revise its written supervisory procedures.

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Rule 605 and Rule 606
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