- within Intellectual Property, International Law, Litigation and Mediation & Arbitration topic(s)
A firm settled FINRA charges for failing to implement a supervisory system to ensure that firm employees' outside brokerage accounts were timely and sufficiently monitored.
In a Letter of Acceptance, Waiver, and Consent, FINRA stated that the firm's supervisory system required disclosure of employees' personal brokerage accounts. However, FINRA found that the firm's supervisory system did not include provisions to ensure the timely submission or review of employees' personal trading. As a result, the firm (i) failed to formally discipline employees who did not submit their statements and (ii) conducted its review on the basis of incomplete records. FINRA also found that the firm's insufficient supervision was due in part to (i) significant staff shortage and (ii) a technological mapping error in its Employee Due Diligence System, which prevented review notifications from going out to supervisors.
FINRA determined that the firm violated FINRA Rules 2010 ("Standards of Commercial Honor and Principles of Trade") and 3110 ("Supervision").
To settle the charges, the firm agreed to (i) a censure and (ii) a $350,000 fine.
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