- within Intellectual Property, International Law, Litigation and Mediation & Arbitration topic(s)
A broker-dealer settled FINRA charges for net capital deficiencies, failing to notify the SEC or FINRA of the deficiencies in a timely manner, and inaccurate recordkeeping.
In a Letter of Acceptance, Waiver and Consent, FINRA found that a broker-dealer violated SEA Rule 15c3-1 ("Net Capital Requirements for Brokers or Dealers") when it entered into a customer arbitration settlement that made it capital-deficient. Further, the broker-dealer continued its securities business while net capital-deficient and failed to give notice of its deficiency, in violation of Sections 15(c) and 17(a) ("Recordkeeping and Reporting") under the Exchange Act, SEA Rules 15c3-1 and 17a-11 ("Notification Provisions for Brokers and Dealers") thereunder, respectively, and FINRA Rules 4110(b) ("Capital Compliance") and 2010 ("Standards of Commercial Honor and Principles of Trade").
In addition, FINRA found that the broker-dealer, in settling a separate customer arbitration for $73,000, failed to timely record the settlement, rendering its books and records inaccurate and causing the broker-dealer to file an inaccurate FOCUS report, in violation of SEA Section 17(a), SEA Rules 17a-3 ("Records to Be Made by Certain Exchange Members, Brokers and Dealers") and 17a-5 ("Reports to Be Made by Certain Brokers and Dealers") thereunder, and FINRA Rules 4511(a) ("General Requirements") and 2010.
To settle the charges, the broker-dealer agreed to (i) a censure and (ii) a $20,000 fine.
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