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Financial Services Law Insights and Observations

FINRA fines broker-dealer for alleged supervision failures

Securities FINRA Enforcement Settlement

Securities

On September 7, the Financial Industry Regulatory Authority (FINRA) entered into a Letter of Acceptance, Waiver, and Consent, with a New York-based broker-dealer subsidiary of a global financial services company to resolve allegations that it distributed reports to the firm’s institutional customers that omitted required disclosures or included inaccurate disclosures. Among other things, FINRA alleged that the firm’s failure to implement a supervisory system reasonably designed to achieve compliance with the disclosure requirements and failure to enforce the supervisory procedures it had in place, led to the publication of 60 debt research reports with a total of 333 disclosure omissions. The letter reports that after identifying the issue and reporting it to FINRA, the firm “immediately ceased the production of all debt research and suspended the issuance of equity research.” The firm neither admitted nor denied the findings set forth in the AWC letter but agreed to pay a $175,000 fine.

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