Former products representative barred for allegedly refusing to produce information and documents
FINRA Rule 2010
FINRA Rule 8210
Securities representative suspended and fined for allegedly participating in conversations utilizing an unapproved comms channel
The representative was included on WeChat conversations that included firm senior executives, employees and customers.
The conversations covered various business topics including customers’ accounts and trading, trade surveillance and related compliance concerns as well as regulatory requests.
The firm did not retain or review the communications sent or received on this messaging platform.
FINRA Rule 2010
FINRA Rule 4511
Velox Clearing censured and fined for alleged AML program and recordkeeping failings
The firm failed to:
- establish and implement an AML program reasonably designed to:
- detect and cause the reporting of suspicious transactions;
- address its high-risk customer base and the trading by such customers in volatile low-priced securities;
- put in place a reasonable trade surveillance system;
- commit adequate staff and resources to its AML program;
- include appropriate risk-based procedures for conducting ongoing customer due diligence.
These issues led to the firm failing to detect and report suspicious transactions.
The firm also failed to investigate red flags of suspicious trading when it had actually identified them or when they were brought to the firm’s attention.
In addition the firm failed to reasonably supervise off-channel communications, including those between the firm’s CEO, its operations staff and customers.
The firm’s compliance staff instructed all employees to cease using unapproved communication methods in September 2022. Despite this off-channel comms usage continued and was known to firm principals including senior management.
The failures led to the firm failing to review and retain over 10,000 off-channel communications.
Finally the firm also failed to reasonably supervise outside brokerage accounts of its associated persons.
The firm has also agreed to undertakings requiring it to:
- certify in writing the remediation of the issues identified;
- retain a third-party consultant to review the adequacy of its compliance with key rules.
This interesting fact pattern and case is covered in more detail in this GRIP article.
FINRA Rule 2010
FINRA Rule 3110
FINRA Rule 3310
FINRA Rule 4511
NASD NTM 02-21
FINRA Reg Notice 19-18
FINRA Reg Notice 22-25
SEA 1934 Rule 17a-4
Former securities representative suspended and fined for allegedly sharing material non-public information with firm customers
The MNPI in question was connected with imminent block order transactions with institutional customers.
The customers with whom the information was shared submitted orders to the firm for execution in the same security and prior to the completion of the block orders.
The firm voluntarily reimbursed all affected customers during FINRA’s investigation of the matter. But a disgorgement of $127,549 plus interest has been ordered.
FINRA Rule 2010
FINRA Rule 5270
Former associated person barred for allegedly failing to appear for on-the-record testimony
FINRA Rule 2010
FINRA Rule 8210
Securities Principal suspended and fined for allegedly failing to supervise business-related electronic communications
The principal, who was also the firm’s CEO, used and knew that other firm personnel used WeChat for business-related communications.
Despite concerns raised by the firm’s compliance team, the principal failed to reasonably supervise or stop these off-channel communications. This led to the firm failing to capture, retain and review these messages.
FINRA Rule 2010
FINRA Rule 3110
FINRA Rule 4511
NewEdge Securities censured and fined for alleged inaccurate TRACE reporting
The firm failed to report over 19,000 interdealer transactions to TRACE and failed to accurately report the capacity for over 2,000 additional transactions.
In addition the firm failed to reasonably supervise its compliance with TRACE reporting rules.
FINRA Rule 2010
FINRA Rule 3010
SEI Investments Distribution (SIDCO) censured and fined for alleged inaccurate TRACE reporting
The firm failed to report over 19,000 interdealer transactions to TRACE.
It failed to accurately report the execution capacity for over 17,000 related transactions with customers, who were also provided with inaccurate trade confirmations for these.
In addition the firm failed to reasonably supervise its compliance with TRACE reporting rules.
FINRA Rule 2010
FINRA Rule 2232
FINRA Rule 4511
FINRA Rule 6730
SEA 1934 Rule 10b-10
SEA 1934 Rule 17a-3
Former securities representative barred for allegedly failing to provide information and documents
FINRA Rule 2010
FINRA Rule 8210
| Unless otherwise noted all respondents accepted and consented to FINRA’s findings without admitting or denying them. |
