Firm Fined for Missing and Late Trading Notifications

A broker-dealer settled FINRA charges for failing to submit timely and complete restricted-period and trading notifications in connection with its participation in security distributions.

According to the AWC, the firm acted as a manager in distributions subject to regulatory restricted periods and, in 90 instances during the relevant period, either failed to file, or filed untimely or incomplete notifications. FINRA noted these failures included 37 untimely restricted-period notifications, 41 incomplete restricted-period notifications that were not amended when new participants joined, and multiple late or missing trading notifications, including one filed 129 days late.

FINRA found that during the relevant period, the firm's procedures did not require supervisory reviews for these filings, did not provide for real-time monitoring of bidding activity during restricted periods, and that the firm did not actually review its filings for timeliness or accuracy in practice. As a result, FINRA found that the firm failed to establish and maintain a supervisory system and written supervisory procedures reasonably designed to ensure timely and accurate regulatory filings. 

In addition, FINRA found the firm made inaccurate statements in a corrective action statement submitted in connection with a prior regulatory settlement. FINRA stated that the firm falsely claimed it was providing continuing education on regulatory filings, had engaged a compliance consultant to review its practices, and had hired outside counsel to develop new written supervisory procedures.

FINRA charged the firm with violating FINRA Rules 5190 ("Notification Requirements for Offering Participants,") Rules 3110 ("Supervision,") and  Rule 2010 ("Standards of Commercial Honor and Principles of Trade").  

To settle the matter, the firm agreed to a $400,000 fine ($185,000 payable to FINRA and the remainder allocated to the Nasdaq Stock Market LLC and NYSE Arca, Inc.). The firm also agreed to certify in writing within 90 days that it remediated the identified issues and implemented a reasonably designed supervisory system.