- within Intellectual Property, International Law, Litigation and Mediation & Arbitration topic(s)
A broker-dealer settled FINRA charges for failing to (i) establish and maintain an appropriate supervisory system for newly hired employees and (ii) notify FINRA of material changes in its business.
In a Letter of Acceptance, Waiver and Consent, FINRA found that the broker-dealer's established supervisory procedures were inadequate to ensure compliance with NASD Rule 3010 and FINRA Rules 3110 ("Supervision") and 2010 ("Standards of Commercial Honor and Principles of Trade"). FINRA stated that the broker-dealer did not establish procedures to conduct searches of public criminal, bankruptcy and financial records for its new hires, as is minimally required by such rules. Additionally, FINRA found that the broker-dealer violated NASD Rule 1017 ("Application for Approval of Change in Ownership, Control or Business Operations") by failing to file a continuing membership application with FINRA before expanding its number of associated persons and branch officers.
To settle the charges, the broker-dealer agreed (i) to a censure, (ii) to a $35,000 fine and (iii) to file a continuing membership application with FINRA.
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