Broker-Dealer Fined for Reg BI Violations

A broker-dealer settled charges with the SEC for failing to ensure that the firm's representatives were providing suitable recommendations.

In an Order, the SEC stated that the broker-dealer's representatives recommended an "in-and-out trading" strategy to nine of the broker-dealer's customers. The SEC found that the representatives had "no reasonable basis" to believe this was a suitable strategy for the customers due to the high costs associated with the trading. Additionally, the SEC found that the broker-dealer did not have a system established to ensure that the representatives acted in compliance with the Care Obligation under Regulation Best Interest.

The SEC determined that the broker-dealer violated Exchange Act Rules 15l-1(a)(1) and (2) ("Regulation Best Interest").

To settle the charges, the broker-dealer agreed to (i) cease and desist from further regulatory violations, (ii) a censure and (iii) pay disgorgement of $547,712, prejudgment interest of $51,844 and civil penalties of $223,328.