Broker-Dealer Penalized for Reg BI and Form CRS Failures

A broker-dealer settled FINRA charges for failure to establish written and supervisory procedures to ensure compliance with Regulation Best Interest ("Reg BI") and customer relationship summary ("Form CRS") requirements.

In a Letter of Acceptance, Waiver and Consent, FINRA stated that the broker-dealer recommended two private placements to about 490 retail investors while acting as a placement agent without having established the required written policies and procedures to comply with Reg BI. Further, FINRA found that the broker-dealer failed to establish and maintain a supervisory system to ensure that Form CRS was prepared, filed and delivered when offering services to its retail investors. As a result, FINRA found that the broker-dealer violated Exchange Act Rule 15-1 ("Regulation Best Interest") and FINRA Rules 3110 ("Supervision") and 2010 ("Standards of Commercial Honor and Principles of Trade").

To settle the charges, the broker-dealer agreed to a (i) censure and (ii) $35,000 fine.