An investment banking and broker-dealer firm settled FINRA charges for failing to file and failing to timely file notifications under SEC regulations prohibiting manipulation of securities offerings ("Regulation M").
In a Letter of Acceptance, Waiver, and Consent ("AWC"), FINRA found that the firm failed to timely and accurately submit Restricted Period Notifications, Trading Notifications, and Trading Notifications for Actively Traded Securities pursuant to Regulation M Rule 101 ("Activities by distribution participants") as a result of:
- administrative errors;
- failure to monitor for publicly available information that triggered notification requirements; and
- misunderstandings as to the notification requirements, including (i) basing its Restricted Period Notification submissions on the anticipated date of the first concluded trading session instead of five days prior to the offering price determination and (ii) filing its Trading Notifications as soon as possible following its knowledge of the outcome of the shareholder vote instead of the date of the shareholder meeting.
Additionally, FINRA found that the firm did not establish, maintain or enforce reasonably designed written supervisory procedures for compliance with FINRA's notification requirements. Specifically, FINRA stated that while the firm had operational procedures concerning what steps should be taken when filing Regulation M notifications, it did not carry out any supervisory reviews to ensure that such notifications were filed in a timely and accurate manner.
As a result of its findings, FINRA determined that the firm violated FINRA Rules 5190(c)(1)(A), 5190(c)(1)(B), 5190(d), 3110(b) ("Written Procedures") and 2010 ("Standards of Commercial Honor and Principles of Trade").
To settle the charges, the firm agreed to (i) a censure and (ii) a $85,000 total fine, $28,000 of which is payable to FINRA.
FINRA noted that acceptance of the AWC is conditioned upon the acceptance of similar settlement agreements with the Nasdaq Stock Market LLC, NYSE Arca, Inc. and NYSE American LLC for related violations in connection with this misconduct.
Primary Sources
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
