FINRA Fines Firm for Confirmation Disclosure Lapses
FINRA fined a firm for failing to disclose required mark-up and mark-down information on retail customer confirmations for corporate debt securities transactions.
According to the AWC, the firm failed to disclose required mark-up and mark-down information on 1,379 retail customer confirmations for corporate debt securities transactions due to a coding error. FINRA stated that the confirmations omitted both the total dollar amount and the percentage of the prevailing market price for the mark-ups and mark-downs charged by the firm.
FINRA also found that the firm failed to establish and maintain a supervisory system reasonably designed to ensure compliance with confirmation disclosure requirements. FINRA stated that the firm had no policies or procedures for reviewing retail customer confirmations and conducted no reviews to verify that required disclosures were included.
FINRA determined that the firm violated FINRA Rules 2010 ("Standards of Commercial Honor and Principles of Trade"), 2232 ("Customer Confirmations"), and 3110 ("Supervision").
To resolve the matter, the firm agreed to (i) a censure and (ii) a $20,000 fine. FINRA recognized the firm’s extraordinary cooperation in resolving the matter, noting that the firm voluntarily: (i) conducted an internal review to identify all affected confirmations; (ii) issued supplemental confirmations with the required disclosures; (iii) enhanced its systems and supervisory procedures; (iv) implemented timely remedial measures; and (v) provided substantial assistance during the investigation.