Today's cases involve firms sanctioned re: (i)  heightened supervision, (ii) outsourced services, and (iii) best ex on corporate bond trades. For complete details, click onto:   [FINRA Disciplinary Action for December]

    1.  An "F" for Heightened Supervision, Customer Complaints.   A&F Financial Securities (Syosset, NY) agreed to pay $27.5K in fines to settle FINRA charges related to customer complaints and its own heightened supervisory procedures.  Specifically, it's alleged the firm:

• failed to create and maintain adequate records of customer complaints;
• failed to report timely statistical and summary information re: the complaints; 
• failed to timely report the settlement of one of the complaints. 
• failed to timely update a registered person’s Form U4 upon learning of the facts and circumstances giving rise to the amendments.

• failed to implement its own heightened supervisory ("HS") procedures for RR's - when establishing such procedures, firm decided to exclude brokers on HS from its monthly surveillance report; accordingly, the activities of the RR's under HS weren't shown. 
• through the special supervisor designated to manually review all trades of RR's on HS for suitability and excessive trading relied on his manual review when determining which accounts should be reviewed and contacted  for cause,” rather than choosing clients at random and with cause based on trading activity.
• conducted inadequate HS because the manual review failed to ID numerous accounts that had turnover ratios in excess of 6 times the average equity annualized.  (FINRA Case #2008011649201)

    2.  Monitoring Outsourcing Responsibilities.   Activa Capital Markets (Miami, FL) agreed to pay $30K in fines to settle FINRA charges related to outsourced services.  It's alleged the firm failed to implement an audit system re: a third-party vendor’s maintenance and preservation of the firm’s electronic records, and thus failed to adequately retain and maintain its business-related electronic communications during that period.  (FINRA Case #2009015972001)

    3.  Best Ex on Corporate Trades with Customers.   Dougherty & Company (Minneapolis, MN) agreed to pay $95K+ in fines, restitution and interest to settle FINRA charges related to proprietary corporate bond transactions with customers.  It's alleged the firm:  

• sold (bought) corporate bonds to (from) customers and failed to sell (buy) such bonds at a price that was fair, taking into consideration all relevant circumstances; 
• failed to fully and promptly execute orders;
• in transactions for or with a customer, firm failed to use reasonable diligence to ascertain the best inter-dealer market and failed to buy or sell in such market so that the resultant price to its customers was as favorable as possible under prevailing market conditions;
• failed to contemporaneously or partially execute customer limit orders in Nasdaq securities after it traded each subject security for its own market-making account at a price that would have satisfied each customer’s L/O;
• failed to make a report on the covered orders in NMS securities that it received for execution from any person publicly available. (FINRA Case #2006006276101)