BROWSE BY TOPIC
- Bad Brokers
- Compliance Concepts
- Investor Protection
- Investments - Unsuitable
- Investments - Strategies
- Investments - Private
- Features/Scandals
- Companies
- Technology/Internet
- Rules & Regulations
- Crimes
- Investments
- Bad Advisors
- Boiler Rooms
- Hirings/Transitions
- Terminations/Cost Cutting
- Regulators
- Wall Street News
- General News
- Donald Trump & Co.
- Lawsuits/Arbitrations
- Regulatory Sanctions
- Big Banks
- People
TRENDING TAGS
Stories of Interest
- Sarah ten Siethoff is New Associate Director of SEC Investment Management Rulemaking Office
- Catherine Keating Appointed CEO of BNY Mellon Wealth Management
- Credit Suisse to Pay $47Mn to Resolve DOJ Asia Probe
- SEC Chair Clayton Goes 'Hat in Hand' Before Congress on 2019 Budget Request
- SEC's Opening Remarks to the Elder Justice Coordinating Council
- Massachusetts Jury Convicts CA Attorney of Securities Fraud
- Deutsche Bank Says 3 Senior Investment Bankers to Leave Firm
- World’s Biggest Hedge Fund Reportedly ‘Bearish On Financial Assets’
- SEC Fines Constant Contact, Popular Email Marketer, for Overstating Subscriber Numbers
- SocGen Agrees to Pay $1.3 Billion to End Libya, Libor Probes
- Cryptocurrency Exchange Bitfinex Briefly Halts Trading After Cyber Attack
- SEC Names Valerie Szczepanik Senior Advisor for Digital Assets and Innovation
- SEC Modernizes Delivery of Fund Reports, Seeks Public Feedback on Improving Fund Disclosure
- NYSE Says SEC Plan to Limit Exchange Rebates Would Hurt Investors
- Deutsche Bank faces another challenge with Fed stress test
- Former JPMorgan Broker Files racial discrimination suit against company
- $3.3Mn Winning Bid for Lunch with Warren Buffett
- Julie Erhardt is SEC's New Acting Chief Risk Officer
- Chyhe Becker is SEC's New Acting Chief Economist, Acting Director of Economic and Risk Analysis Division
- Getting a Handle on Virtual Currencies - FINRA
ABOUT FINANCIALISH
We seek to provide information, insights and direction that may enable the Financial Community to effectively and efficiently operate in a regulatory risk-free environment by curating content from all over the web.
Stay Informed with the latest fanancialish news.
SUBSCRIBE FOR
NEWSLETTERS & ALERTS
FOLLOW US
Small FOCUS Errors Opens Pandora’s Box to Other Violations
[Image: by infinitymultimediaproductions, LLC / sofiawellman.com]
by Howard Haykin
A small and relatively financially-strapped broker-dealer agreed to pay a $7.5K fine to settle FINRA charges that it maintained inaccurate financial books and records, filed inaccurate FOCUS Report filings and failed to timely file notifications pursuant to Rule 17a-11 of the Securities Exchange Act of 1934 (Exchange Act). [A lower fine was imposed after considering the firm’s financial difficulties.]
Exchange Act Rule 17a-11, in relevant part, provides that … every broker or dealer whose net capital declines below the minimum amount required or is insolvent must give notice of such deficiency that same day to its DEA (“designated examining authority” – i.e., FINRA) or the SEC.
FINRA FINDINGS. Between November 2013 and February 2015, the broker-dealer – a FINRA member since 2002 with only 4 brokers and one branch office - incorrectly classified certain assets as “allowable” and inaccurately treated liabilities and revenues. Those errors resulted from an inadequate expense-sharing agreement and the firm's failure to enforce its WSPs and apparently caused the firm’s net capital to fall below its required minimum amount - which was not reported to FINRA.
In all probability, FINRA developed concerns about what other 'skeletons might lurk in the firm’s closets’. Lo and behold, here’s what FINRA found:
- Between March 2003 and February 2015, the firm failed to maintain and review certain of its FinOp’s business-related emails sent to and received from her 3rd party email account.
- Consequently, those emails were not maintained in non-rewriteable, non-erasable (‘WORM’) format.
- Thus FINRA concluded that the broker-dealer did not have in place an audit system to ensure that the emails were properly maintained and did not enforce its written supervisory procedures.
This case was reported in FINRA Disciplinary Actions for June 2018.
For details on this case, go to ... FINRA Disciplinary Actions Online, and refer to Case #2015043418701.
