FINRA Fines Firm for Failing to Record or Oversee Transactions

A firm settled FINRA charges for placing transactions for customers directly with product sponsors, without recording such transactions in the firm's records or supervising their suitability.

In the Letter of Acceptance, Waiver and Consent, FINRA said that the firm received reports from product sponsors of transactions executed by the firm's representatives, including of numerous transactions that the registered representatives failed to report to the firm. FINRA highlighted that while the firm fined the registered representatives for the failure to report the transactions, the firm did not require that reporting deficiencies be corrected. As a result, the firm had incomplete transaction records, failed to collect required information as to clients and did not have any process to determine that the transactions were suitable for the relevant clients.

As a result, FINRA found that the firm violated FINRA Rule 3110(a) ("Supervision"), FINRA Rule 2010 ("Standards of Commercial Honor and Principles of Trade"), FINRA Rule 4511 ("General Requirements") and Exchange Act Section 17(a) ("Records and Reports").

The firm agreed to (i) a censure; (ii) a $5.5 million fine; (iii) a restitution of $651,374.51 plus interest and (iv) to undertake remediation of the supervisory and compliance issues identified.