November 1, 2022

Broker-Dealer Settles Charges for Failing to Review Employees' Personal Brokerage Accounts

A broker-dealer settled FINRA charges for failing to adequately monitor and supervise an employees' outside brokerage accounts.

In a Letter of Acceptance, Waiver, and Consent, FINRA found that the broker-dealer did not have adequate supervisory controls and procedures in place to properly supervise paper account statements from employees' personal brokerage accounts; the firm did have policies in place to review accounts that provided statements with automated account feeds. FINRA found that the broker-dealer's relevant supervisory policy lacked standards regarding the timeframe for tracking, reconciling and reviewing paper statements, which caused a backlog of reviews.

FINRA determined that the broker-dealer violated FINRA Rule 2010 ("Standards of Commercial Honor and Principles of Trade") and Rule 3110 ("Supervision"). To settle the charges, the broker-dealer agreed to (i) a censure and (ii) a $360,000 civil monetary penalty.

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