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FINRA AWC Letter No. 2008015443301 April 11, 2011 FINRA announced that it fined a broker-dealer $2 million and ordered it to pay $8.25 million in restitution in connection with allegedly misleading investors as to the "principal protection" feature of certain Lehman-issued notes. In particular, FINRA alleges that the firm failed to properly emphasize to investors that the notes were unsecured obligations of Lehman when they sold them to investors in the summer of 2008. FINRA also cited the firm's failure to advise sales personnel of signs of weakness in Lehman's financial strength, and that it

February 2, 2011 The NYSE fined a broker-dealer nearly $400,000 for a number of violations, including, (1) violation of Rule of Rule 411(b)(1) for entering numerous principal odd lot market orders without aggregating them into round-lots; (2) violation of Rule 410A by failing to submit complete and accurate information on blue sheet response requests; (3) violation of Rule 342 by failing to reasonably supervise and implement controls designed to comply with NYSE rules as to odd-lot orders and blue sheet submission. The action also addresses similar violations by the firm on NYSE Arca. Cross

FINRA AWC Letter No. 20080117193-01 April 12, 2011 FINRA announced that it fined a broker-dealer for deficiencies in its structured products business, including (1) unsuitable sales of reverse convertible securities; (2) inadequate supervision of sales practices; and (3) inadequate supervision of accounts funded loans from its affiliated bank. FINRA alleges that the BD, despite increased sales in structured products, failed to implement processes for reviewing or approving any particular structured product prior to offering to customers. In addition, FINRA alleges that the firm did not have

FINRA AWC Letter No. 2008013863701 April 14, 2011 FINRA announced a $1.5 million fine (and $425,000 in required returns to customers) against a broker-dealer for its alleged failure to disclose certain compensation received and conflicts of interest in connection with sales of auction rate securities (ARS). The FINRA action alleges that three brokers at the firm failed to disclose that they received compensation for transactions in ARS which they purchased for accounts over which they had discretionary authority. FINRA also found that the brokers "failed to disclose the existence of comparable

SR-FINRA-2011-018 April 19, 2011 FINRA submitted to the SEC a proposal to adopt NASD Rule 2830 as FINRA Rule 2341, with significant changes. Rule 2830 generally limits the sales charges that may be paid to broker-dealers in connection with the distribution of investment company securities. Among other things, the FINRA proposal would amend the rule by (1) requiring firms to make new disclosures to investors on cash compensation arrangements; (2) amending the recordkeeping requirements relating to non-cash compensation; (3) eliminating a condition regarding discounted sales of investment