Broker-Dealer Settles FINRA Charges for Failure to Demonstrate Exemption Eligibility for Quotations in OTC Equity Securities

A broker-dealer settled FINRA charges for publishing quotations without demonstrating its eligibility to do so under unsolicited quotation exemption regulations.

In a Letter of Acceptance, Waiver and Consent, FINRA alleged that the broker-dealer purported to rely on the unsolicited quotation exemption in SEA Rule 15c2-11 ("Initiation or Resumption of Quotations without Specific Information") but did not maintain the records required by either Rule 15c2-11(f)(2) or FINRA Rule 6432 ("Compliance with the Information Requirements of SEA Rule 15c2-11").

FINRA also found that the broker-dealer failed to establish and maintain a supervisory system that would achieve compliance with the requirements under SEA Rule 15c2-11 and FINRA Rule 6432, in violation of FINRA Rules 3110 ("Supervision") and 2010 ("Standards of Commercial Honor and Principles of Trade").

To settle the charges, the broker-dealer agreed to (i) a censure, (ii) a fine of $32,500 ($17,500 for the violations pertaining to FINRA Rule 6432 and $15,000 for supervisory violations) and (iii) an undertaking to correct the deficiencies in its written supervisory procedures.