Broker-Dealer Settles Charges for Failure to Supervise Recommendations for Suitability

A broker-dealer settled FINRA charges for failing to supervise several registered representatives who recommended potentially high-risk securities to customers without assessing suitability.

In a Letter of Acceptance, Waiver and Consent, FINRA found that the registered representatives recommended securities that were not pre-approved and without first providing a rationale for their recommendations, in violation of the firm's internal procedures. FINRA found that a rationale was provided for some recommendations retroactively, but that the broker-dealer failed to review and approve those submissions.

FINRA determined that the broker-dealer violated FINRA Rule 2010 ("Standards of Commercial Honor and Principles of Trade") and FINRA Rule 3110 ("Supervision"). To settle the charges, the broker-dealer agreed to (i) a censure, (ii) a civil monetary penalty of $200,000 and (iii) restitution totaling $497,897 plus interest.