Broker-Dealer Settles FINRA Charges for Notification Failures Related to Securities Offerings

A multiservice broker-dealer firm settled FINRA charges for notification failures in violation of anti-manipulation rules that apply to securities offerings. ("Regulation M").

In a Letter of Acceptance, Waiver, and Consent, FINRA found that the firm failed to timely and accurately submit required Restricted Period Notifications to FINRA in connection with its participation in distributions of securities pursuant to Regulation M Rule 101 ("Activities by distribution participants"). In other matters, FINRA found that the firm made late filings and certain of the late filings failed to identify all of the syndicate members participating in relevant offerings.

Additionally, FINRA found that the firm did not establish, maintain or enforce reasonably designed written supervisory procedures for compliance with FINRA's notification requirements. Specifically, FINRA said while the firm had operational procedures concerning what steps should be taken when filing Regulation M notifications, it did not carry out any supervisory reviews to ensure such notifications were filed in a timely and accurate manner.

As a result of its findings, FINRA determined the firm violated provisions under Rule 5190 ("Notification Requirements for Offering Participants"), Rule 3110 ("Supervision") and Rule 2010 ("Standards of Commercial Honor and Principles of Trade").

To settle the charges, the firm agreed to (i) a censure and (ii) a $120,298 fine (resolved simultaneously with similar matters for a total fine of $500,000).