Broker-Dealer Fined for Mismarking Trades
Commentary by Glen Barrentine
A firm settled FINRA charges for mismarking orders.
In a Letter of Acceptance, Waiver, and Consent, FINRA found that the firm mismarked approximately 140 transactions as "unsolicited" when they were "discretionary." FINRA concluded that the firm maintained inaccurate books and records.
FINRA determined that the firm violated Exchange Act Section 17(a) ("Records and Reports"), Exchange Act Rule 17a-3 ("Records to be made by certain exchange members, brokers and dealers"), and FINRA Rules 4511 ("General Requirements") and 2010 ("Standards of Commercial Honor and Principles of Trade") for failing to implement supervisory procedures designed to ensure regulatory compliance.
To settle the charges, the firm agreed to a (i) a censure and (ii) $10,000 fine.
Commentary
The AWC serves as a reminder not only of the importance of keeping records, but of the importance of keeping accurate records. Accurate books and records form the bedrock upon which examinations and inspections are based. As a result, substantive inaccuracies in books and records are generally taken seriously by FINRA and the SEC and, not infrequently, result in enforcement actions. This is true even where, as in the current AWC, the number of inaccurately recorded transactions is small.