Broker-Dealer Fined for Inaccurate Capital Computations

A broker-dealer settled FINRA charges for failing to compute accurately its aggregate indebtedness and net capital, failing to file accurate reports as a result and failing to respond to FINRA requests for information.

In a Letter of Acceptance, Waiver and Consent, FINRA found that the broker-dealer failed to include the value of a loan it had received from the Small Business Administration when calculating its aggregate indebtedness. Using the incorrect calculation, the broker-dealer filed multiple inaccurate FOCUS reports.

As a result, FINRA found that the broker-dealer 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"), Rule 17a-5 ("Reports to be made by certain brokers and dealers") and Rule 17a-11 ("Notification provisions for brokers and dealers")

FINRA also found that the broker-dealer violated FINRA Rule 2010 ("Standards of Commercial Honor and Principles of Trade"), Rule 4511 ("General Requirements") and Rule 8210 ("Provision of Information and Testimony and Inspection and Copying of Books").

To settle the charges, the broker-dealer agreed to (i) a censure and (ii) a civil monetary penalty of $15,000.