A broker-dealer settled FINRA charges for failing to disclose the relationship between the firm and the subject company featured in the firm's published research reports.
In a Letter of Acceptance, Waiver, and Consent, FINRA found that the firm did not:
- enter into its disclosure database relevant information concerning (i) investment banking services provided to companies that were the subject of its research reports and (ii) investment banking and other types of compensation received from companies that were the subject of its research reports;
- disclose in its research reports that the firm had served as co-manager of securities public offerings for the companies that were the subject of those same reports; and
- accurately disclose in research reports the percentage of companies for which it provided investment banking services, that were within "buy," "hold" and "sell" categories.
FINRA determined that the firm violated FINRA Rules 2010 ("Standards of Commercial Honor and Principles of Trade"), 2241 ("Research Analysts and Research Reports"), and 3110 ("Supervision").
To settle the charges, the firm agreed to (i) a censure, (ii) a $105,000 fine and (iii) provide written certification that the firm has reviewed and modified its supervisory system and written supervisory procedures, accordingly.
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