Broker-Dealer Fined for Failing to Collect Customer Account Information

A broker-dealer settled FINRA charges for failing to (i) collect investment profile information for customers participating in private placement offerings and (ii) file certain required corporate offering filings.

FINRA found that the broker-dealer did not use new account forms to collect customer information for certain private placement offerings, as required under Exchange Act Rule 17a-3 ("Records to be made by certain exchange members, brokers and dealers") and FINRA Rule 4512 ("Customer Account Information") and Rule 2111 ("Suitability"). FINRA stated that the firm relied on alternative collection methods, which also violated the firm's internal policies and that the broker-dealer failed to collect at least one required information component in each of the sampled offerings. FINRA also found that the broker-dealer's supervisory policies did not have any procedures in place to ensure that required documents under FINRA Rule 5110 ("Corporate Financing Rule — Underwriting Terms and Arrangements") were filed within the applicable timeframe.

FINRA concluded that the broker-dealer violated Exchange Act Rule 17a-3 as well as FINRA Rule 2010 ("Standards of Commercial Honor and Principles of Trade"), Rule 3110 ("Supervision"), Rule 4512 and Rule 5110. To settle the charges, the broker-dealer agreed to (i) a censure and (ii) a civil monetary penalty of $35,000.