FINRA recently released their monthly report of disciplinary actions. The July report details typical, run of the mill conversion, outside business activity, selling away, U-4, forgery, and improper discretion cases, and a few unusual cases as well. A few that caught my eye are:
A Florida firm and its principal submitted a Letter of Acceptance,Waiver and Consent in which the firm was censured, fined $125,000, jointly and severally, and required to have all of its personnel register for 16 hours of anti-money laundering (AML) training within 60 days of issuance of this AWC. The principal was suspended from association with any FINRA member in any principal or supervisory capacity for three months. Without admitting or denying the findings, the respondents consented to findings that they
failed to adequately implement an AML compliance program, in that it failed to adequately detect, investigate and report potentially suspicious activity. The findings stated that the firm, acting through the principal, failed to conduct sufficient independent tests of its AML program on an annual basis and conduct annual AML training for its personnel. (FINRA Case #2006007424601)
AML remains a hot area for regulators. How do we know? They've told us numerous times in public statements. Some firms apparently don't get the message.
In another case, a New York bank affiliated firm submitted a Letter of Acceptance,Waiver and Consent in which it was censured and fined $200,000. The firm consented, without admitting or denying anything, to the entry of findings that customers whomaintained escrow accounts with the firm’s bank affiliate were charged commissions for fixed income trades that were higher than those charged in the past, and in some cases, higher than the industry standard FINRA found that the firm failed to take adequate steps to assess the fairness of these commissions and the higher commission charges were premised on
the provision of a former registered representative’s additional services to the customers when, in fact, he did not provide such services. FINRA also found that the firm failed to have adequate written supervsisory procedures relating to fixed income products. (FINRA Case # 2007009471401)
See my earlier post regarding FINRA's recent rule change regarding Rule 2440 - applying the fairness rule to all securiites.
In addition to these cases, there were numerous cases against individuals. Forgery seemed to be the most charged offense in cases reported this month, followed by conversion of funds, U-4 related violations, and improper use of discretion. I'll follow up on these topics in a series to start later this week highlighting dumb ways to get in trouble with the regulators. Stay tuned.