Broker-Dealer Settles FINRA Charges for Failure to Oversee Outside Brokerage Accounts

A broker-dealer settled FINRA charges for failing to properly monitor outside brokerage accounts opened by its representatives.

In a Letter of Acceptance, Waiver, and Consent ("AWC"), FINRA stated that the broker-dealer failed to verify that statements of disclosed outside brokerage accounts belonging to firm representatives were reviewed in accordance with written procedures. As a result, FINRA determined that the broker-dealer did not detect red flags of potential securities violations, including insider trading and frontrunning. FINRA found that the broker-dealer violated 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) pay a $30,000 fine and (iii) the undertakings set forth in the FINRA AWC.

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