FINRA Fines Self-Directed Retail Broker for Unreported Customer Complaints

A broker that offered self-directed trading to retail investors settled FINRA charges for failing to accurately report statistical and summary information about written customer complaints.   

According to the AWC, in a sample of customer communications from six non-consecutive weeks during the relevant period, the firm received but failed to report 71 written customer complaints on varying subject matters. FINRA also found that the firm required its personnel to escalate "grievances" to the compliance department for a reportability determination, but its training and procedures, including written supervisory procedures, did not include specific factors that representatives or their supervisors should consider in deciding whether escalation was warranted. FINRA noted that the firm later revised its training and guidance to include the factors that should be considered.

FINRA charged the firm with violations of Rule 4530(d) ("Reporting Requirements: Complaints,") and FINRA Rules 3110 ("Supervision") and 2010 ("Standards of Commercial Honor and Principles of Trade").

To settle the charges, the firm agreed to a censure and a $200,000 fine.