- within Intellectual Property, International Law, Litigation and Mediation & Arbitration topic(s)
A broker-dealer settled FINRA charges for failing to disclose unsatisfied tax liens and judgments on a number of its registered representatives.
In a Letter of Acceptance, Waiver, and Consent, FINRA found that after receiving wage garnishment orders from courts and tax authorities for certain of its registered representatives, the broker-dealer did not sufficiently investigate the events underlying each order to determine if they needed to be disclosed on the representatives' Form U4s. This resulted in the broker-dealer's failure to, or failure to timely, amend the representatives' Form U4s to disclose the unsatisfied liens or judgments. FINRA also found that this failure was caused by deficiencies in the broker-dealer's supervisory system, which led the broker-dealer to rely on its representatives' assessments of the events rather than to conduct an independent review.
As a result of its findings, FINRA determined that the broker-dealer violated Article V, Section 2(c) ("Application for Registration") of FINRA's By-Laws and FINRA Rules 2010 ("Standards of Commercial Honor and Principles of Trade") and 3110 ("Supervision").
To settle the charges, the broker-dealer agreed to (i) a censure and (ii) a $375,000 fine.
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