Blog

Summaries and explanations of the latest regulatory compliance announcements, reports and related stories.

Regulatory Briefs Olivia Scuteri, CAMS Regulatory Briefs Olivia Scuteri, CAMS

SEC Approves Electronic Signatures for Discretionary Accounts

Beginning May 6, 2019, the SEC will permit an amendment to FINRA Rule 4512 allowing authorized individuals to use electronic signatures for discretionary accounts held at member firms. Presently, Firms are required to maintain manually executed signatures for all individuals authorized to exercise discretion in applicable accounts.

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Regulatory Briefs Olivia Scuteri, CAMS Regulatory Briefs Olivia Scuteri, CAMS

March 2019 FINRA Disciplinary Actions

The following disciplinary actions were taken against both firms and individuals due to violations of FINRA rules, federal securities laws and MSRB rules: Firms Fined: Advisory Group Equity Services Ltd. The Firm was fined $20,000 for failing to create and implement proper written supervisory procedures (“WSPs”) in regard to email review of newly hired Registered Representatives (“RRs”).

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Regulatory Briefs Jon Hurd Regulatory Briefs Jon Hurd

Wedbush Securities, Inc. SEC Enforcement Action March 2019

The following disciplinary action was taken against both Wedbush Securities, Inc and one of its registered representatives, (“RR”) due to violations of Section 17(a)(1) and (3) of the Securities Act, Sections 9(a)(2) and 10(b) of the Exchange Act and Rule 10b-5(a) and (c) thereunder. Firms Fined. Wedbush Securities, INC. The Firm was fined $250,000 for failing to reasonably supervise one of its RR, Timary Delorme.

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Regulatory Briefs Olivia Scuteri, CAMS Regulatory Briefs Olivia Scuteri, CAMS

February 2019 FINRA Disciplinary Actions

The following disciplinary actions were taken against both firms and individuals due to violations of FINRA rules, federal securities laws and MSRB rules: Firms Fined: Cetera Advisor Networks LLC. The Firm was fined $700,000 and ordered to pay $691,755.27 in restitution to customers for failing to identify red flags of unsuitable mutual fund switching and unsuitable stock trading that ensued to conceal the switching by a Registered Representative (“RR”) of the Firm.

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Regulatory Briefs Olivia Scuteri, CAMS Regulatory Briefs Olivia Scuteri, CAMS

January 2019 Disciplinary Actions

The following disciplinary actions were taken against both firms and individuals due to violations of FINRA rules, federal securities laws and MSRB rules. Firms Fined. Third500, LLC fka Healthios Capital Markets, LLC. The Firm was fined $50,000 for allowing four employees to engage in investment banking transactions without the applicable Series 79 Investment Banking registration.

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Regulatory Briefs Olivia Scuteri, CAMS Regulatory Briefs Olivia Scuteri, CAMS

December 2018 Disciplinary Actions

The Office of Compliance Inspections and Examinations (OCIE) of the U.S. Securities and Exchange Commission (SEC) released its 2019 examination priorities. The protection of retail investors, including seniors and those saving for retirement, remain a priority.

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Regulatory Briefs Jonathan Hurd, CAMS Regulatory Briefs Jonathan Hurd, CAMS

2019 SEC Examination Priorities

The Office of Compliance Inspections and Examinations (OCIE) of the U.S. Securities and Exchange Commission (SEC) released its 2019 examination priorities. The protection of retail investors, including seniors and those saving for retirement, remain a priority.

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Regulatory Briefs Jonathan Hurd, CAMS Regulatory Briefs Jonathan Hurd, CAMS

SEC Risk Alert: Electronic Communications

On Friday December 14, 2018, the Securities and Exchange Commission (“SEC”) published a Risk Alert advising Registered Investment Advisers (“RIAs”) of their obligation to revise written policies and procedures related to electronic messaging utilized by their personnel as a recent examination conducted by the Office of Compliance Inspections and Examinations (“OCIE”) identified shortfalls.

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Regulatory Briefs Olivia Scuteri, CAMS Regulatory Briefs Olivia Scuteri, CAMS

November 2018 Disciplinary Actions

The following disciplinary actions were taken against both firms and individuals due to violations of FINRA rules, federal securities laws and MSRB rules. Firms Fined: Lincoln Investment Planning, LLC. The Firm was fined $35,000 for failing to implement adequate surveillance procedures to effectively monitor registered representative’s rate of variable annuity exchanges.

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Regulatory Briefs Olivia Scuteri, CAMS Regulatory Briefs Olivia Scuteri, CAMS

October 2018 Disciplinary Actions

The following disciplinary actions were taken against both firms and individuals due to violations of FINRA rules, federal securities laws and MSRB rules. Firms Fined: Seven Points Capital, LLC (New York, New York). The Firm was fined $40,000 for failing to implement an adequate AML program.

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Regulatory Briefs Olivia Scuteri, CAMS Regulatory Briefs Olivia Scuteri, CAMS

September 2018 Disciplinary Actions

The following disciplinary actions were taken against both firms and individuals due to violations of FINRA rules, federal securities laws and MSRB rules. Firms Fined: Cetera Financial Specialist LLC. The Firm was fined $200,000 for failing to implement a supervisory system and establish WSPs that adequately enforced OBA guidelines to evaluate the outside business activities of representatives to see if activities interfered with responsibilities owed to the Firm and customers.

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Regulatory Briefs Jonathan Hurd, CAMS Regulatory Briefs Jonathan Hurd, CAMS

SEC Charges Firm with Cyber and Identity Theft Prevention Failures

The Securities and Exchange Commission (“SEC”) settled charges against Voya Financial Advisors Inc. (VFA”), a dual FINRA member broker-dealer and SEC registered investment adviser for its failure in adopting written policies and procedures designed to protect customer information and protect customers from the risk of identity theft.

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Regulatory Briefs Olivia Scuteri, CAMS Regulatory Briefs Olivia Scuteri, CAMS

October 1st Deadline - Principal Financial Officer and Principal Operations Officer Requirement

As of October 1st, 2018, all Firms must have a designated Principal Financial Officer (“PFO”) and a designated Principal Operations Officer (“POO”). All designees must have the S27 (“Financial and Operations Principal” or “FINOP”) registration to act as a PFO or a POO. This new rule also includes Firms currently exempt from the requirement of having a FINOP or an Introducing Broker-Dealer Financial and Operations Principal.

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Regulatory Briefs Olivia Scuteri, CAMS Regulatory Briefs Olivia Scuteri, CAMS

July 2018 Disciplinary Actions

The following disciplinary actions were taken against both firms and individuals due to violations of FINRA rules, federal securities laws and MSRB rules. Firms Fined: EFG Capital International Corp. (Miami, Florida). The firm was fined $800,000 and ordered to implement supervisory systems and procedures pursuant to FINRA Rule 3110.

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Regulatory Briefs Eden Turner, CAMS Regulatory Briefs Eden Turner, CAMS

Qualification and Registration Examinations

Examination Restructuring: Effective October 1, 2018, the SEC is restructuring the representative-level qualification examinations by creating a general knowledge examination called the Securities Industry Essentials (“SIE”) and transforming the representative-level examinations into specialized knowledge exams.

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Regulatory Briefs Olivia Scuteri, CAMS Regulatory Briefs Olivia Scuteri, CAMS

June 2018 FINRA Disciplinary Actions

The following disciplinary actions were taken against both firms and individuals due to violations of FINRA rules, federal securities laws and MSRB rules. Firms Fined: The firm Lombard Securities Incorporated in Baltimore Maryland was fined $10,000 for executing municipal securities transactions without having the adequate Municipal Securities Principal registered with the firm.

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Regulatory Briefs Jonathan Hurd, CAMS Regulatory Briefs Jonathan Hurd, CAMS

Digital Assets

On Friday July 6, 2018 FINRA published Regulatory Notice 18-20 with respect to its efforts to ascertain the extent in which its members or its associated persons, or affiliates currently engages or intends to engage, in any activities related to digital assets such as cryptocurrencies, virtual coins and tokens.

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Regulatory Briefs Jonathan Hurd, CAMS Regulatory Briefs Jonathan Hurd, CAMS

Enhancements to FINRA’s Disclosure Review Process Relating to Public Records

A few years ago, (see Asgard Regulatory Brief – Late Disclosure Review May 15, 2015), FINRA had conducted a retrospective review related to judgements and liens that were not reported under Question 14M of the Form U4. At that time many firms received Disclosure Review inquiries related to potential unreported bankruptcies, judgements or liens that went back as long as fifteen years.

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