A broker-dealer settled FINRA charges for failing to amend its Uniform Application for Securities Industry Registration or Transfer ("Form U4") in a timely manner and failing to establish and maintain a supervisory system designed to ensure timely disclosure of reportable financial events.
According to FINRA, the broker-dealer violated Article V, Section 2(c) of FINRA's By-Laws and FINRA Rule 2010 ("Standards of Commercial Honor and Principles of Trade") by failing to amend the Forms U4 for 52 of its registered representatives. Such failure resulted in the untimely disclosure of 163 liens, judgments and bankruptcies of the registered representatives totaling more than $5.6 million.
FINRA also alleged that the broker-dealer violated FINRA Rule 3110 ("Supervision") by failing to implement a supervisory system and written supervisory procedures that would ensure timely reporting of Form U4 disclosures. FINRA said that the firm failed to reasonably respond to numerous alerts it received from internal reviews as well as FINRA inquiries concerning whether representatives were making timely Form U4 disclosures.
To settle the charges, the broker-dealer agreed to (i) a censure, (ii) a $325,000 fine, and (iii) retaining a qualified independent consultant to conduct a thorough review of the broker-dealer's Form U4 filing policies and procedures.
Originally published May 04, 2020.
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