Broker-Dealer Settles FINRA Charges for Ignoring Outside Business Activities

A broker-dealer settled charges that the firm "failed to reasonably supervise a registered representative who engaged in an undisclosed business activity."

In the Letter of Acceptance, Waiver, and Consent, FINRA found that the firm violated Rules 3110 ("Supervision") and 2010 ("Standards of Commercial Honor and Principles of Trade") by ignoring red flags that the representative was improperly running an investment club.

The firm agreed to (i) a censure, (ii) a $175,000 fine, and (iii) to certify it would establish, maintain and enforce procedures designed to comply with FINRA Rule 3110(b)(4)("Review of Correspondence and Internal Communications").