Broker-Dealer Fined for Failing to Maintain Minimum Net Capital

A firm settled FINRA charges for failing to maintain minimum net capital and for failing to file same-day notifications of its net capital deficiencies.

According to the Letter of Acceptance, Waiver, and Consent, FINRA found that the firm failed to meet its minimum net capital requirement of $5,000, with deficiencies ranging from $27,914 to $105,137. FINRA found that the firm also failed to file (with FINRA and the SEC) same-day notifications for its net capital deficiencies for 46 days during 4 different periods. FINRA also determined that the firm's procedures were not reasonably designed to achieve compliance with the net capital and financial reporting rules, as they failed to provide any guidance about how the firm should suspend its business operations in the event of a net capital deficiency.

As a result, FINRA concluded that the firm violated Securities Exchange Act Section 15(c) ("Registration and regulation of brokers and dealers"), Section15c3-1 ("Net capital requirements for brokers or dealers"), Section 17(a) ("National system for clearance and settlement of securities transactions"), Rule 17a-11 ("Notification provisions for brokers and dealers"), FINRA Rules 4110(b) ("Capital Compliance") and 2010 ("Standards of Commercial Honor and Principles of Trade").

To settle the charges, the firm agreed to (i) a censure and (ii) a $25,000 fine.