Kane, McKenna Capital ("KMC"), a Chicago-based firm, settled FINRA charges related to the firm's problems with filing timely notifications with MSRB and FINRA.  Here are FINRA's findings:

Violations of MSRB Rule G-37.   FINRA found that KMC had entered into financial advisory service agreements with municipalities, and was obligated to file a Form G-37 for each.  However, the firm either failed to file the Form G-37, or it failed to timely file the form, on the dates it had entered into the agreements.  As a result, only a fraction of the executed agreements were timely reported on the date of the service agreement. 

The firm’s WSP's covered the need for filing a Form G-37, but it failed to require or even highlight that Forms G-37 must be filed at the time of entering into a service agreement and at the time of settlement date of the offering if the firm is still providing financial advisory services.

Violations of FINRA Rules.   FINRA found that the firm used electronic media storage, but didn't disclose its use to FINRA and, over the same time period, it failed to utilize a 3rd party with access and the ability to retrieve information from the firm’s server.  In addition, the firm apparently wrote over back-up tapes monthly and did not store a duplicate copy. 

The firm had no section in its WSP's regarding the need to disclose electronic storage usage, a 3rd party with access and a duplicate copy kept for the required time.

Sanction.   Kane, McKenna will pay a $17,500 fine - a larger fine would have been imposed - however, FINRA took into consideration, among other things, the firm’s revenues and financial resources.  This is FINRA Case #2009016350601.   [Disciplinary Actions for May]