[ by Howard Haykin ] Great Point Capital LLC, a Chicago-based firm, agreed to financial and other sanctions to settle FINRA charges that it had violated, among other things, rules pertaining to wash sales.  The firm has been a member of FINRA since December 2001, and its registration remains in effect. FINRA notes that this matter - addressed in AWC #20060051571 - along with matters covered in 2 other AWC's, arose out of an investigation by Market Regulation's Trading Analysis Team into the trading activity of a former RR, Robert Bunda.

Note: In 2011, Bunda agreed to pay nearly $350K in restitution and penalties and to serve a 16-month suspension to settle FINRA charges he engaged in spoofing, wash sales, failing to disclose outside securities accounts and, in connection with some of these accounts, making misrepresentations on account opening documents.

In connection with the Bunda investigation, the Market Reg. staff reviewed Great Point's supervisory system with respect to wash trades, disclosure by employees of outside brokerage accounts, and reviews of transactions in those outside accounts. FINRA Findings and Allegations. FINRA made the determination that the firm's WSPs supervisory system allegedly failed to adequately achieve compliance with respect to securities laws and regs, and NASD rules, concerning:  (i) wash trades, from 6/19/06 through 12/31/06;  and,  (ii) quality of markets, from 7/14/03 through 6/9/09. The firm's WSPs in both areas specifically lacked these basic/minimum procedures - that constitute violations of NASD Rules 2110 and 3010:

• Who: identification of person(s) responsible for supervision;
• What: statement of the supervisory step(s) to be taken by such supervising person(s);
• When: statement as to how often such person(s) should take such step(s); and,
• How: statement as to how the completion of the step(s) included in the WSPs should be documented. 

FINRA further alleges that the firm failed to provide documentation to substantiate that supervisory reviews had been conducted for transactions in associated persons' outside securities accounts - starting on 7/14/03 and running through 6/9/09.  Such conduct would constitute a violation of NASD Rules 2110 and 3010 and FINRA Rule 2010. FINRA Sanctions. Great Point Capital LLC, for having allegedly committed the above violations, agreed to pay a $50K fine and to revise its WSPs re: wash trades, disclosure of outside accounts by associated persons, and reviews of transactions in those outside accounts.   [FINRA Disciplinary Actions for June 2012] For further details, go to:   [FINRA AWC #2006005157102].