The FINRA National Adjudicatory Council ("NAC") affirmed a Hearing Panel's findings against a broker-dealer firm and two of its general securities representatives for violating Regulation SHO ("Regulation of Short Sales") and for failure to comply with AML requirements.
The NAC stated that it was in agreement with the Hearing Panel's findings that the broker-dealer and general securities representatives failed to:
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find locates for 122 short transactions effected in four low-priced stocks, and reasonably supervise the short sales;
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adequately supervise certain registered personnel, maintain and enforce satisfactory supervisory procedures for determining whether certain representatives should be subject to heightened supervision, and monitor instant message communications appropriately; and
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establish satisfactory AML policies and procedures and conduct adequate AML training.
The NAC fined (i) the broker-dealer $350,000 for the Regulation SHO violations, and $750,000 for the AML and supervisory failures, and (ii) the general securities representatives for supervisory failures $77,000 and $52,000, respectively.
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