Broker-Dealer Fined for ETN Confirmation Disclosure Violations

A broker-dealer settled FINRA charges for omitting required disclosures on transaction confirmations related to exchange-traded notes ("ETNs") and preferred securities.

In a Letter of Acceptance, Waiver, and Consent, FINRA stated that approximately 9.8 million transaction confirmations provided to customers by the broker-dealer failed to disclose that (i) securities were callable and (ii) early redemption, with regard to ETNs, could affect the securities' yield.

As a result, FINRA found that the broker-dealer violated Exchange Act Rule 10b-10(a)(4) ("Confirmation of transactions") and FINRA Rules 2232 ("Customer Confirmations") and 2010 ("Standards of Commercial Honor and Principles of Trade").

To settle the charges, the firm agreed to a censure and $500,000 fine.