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FINRA reports disciplinary actions taken against broker/dealers in December


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FINRA reports disciplinary actions taken against broker/dealers in December

FINRA reported disciplinary actions taken against certain broker/dealers in December for violations of its rules and regulations.

Wedbush Securities Inc. was fined $300,000 for failing to properly report 80 events, including customer complaints and settlements. FINRA said the company did not implement corrective measures to address the reporting failures. President Edward Wedbush was fined $50,000 and suspended from association in any principal capacity with a FINRA member for 31 days. The sanctions are not in effect as the matter has been appealed to the U.S. Court of Appeal for the Ninth Circuit.

BGC Financial LP was censured and fined $155,000 over failure to transmit last sale reports of transactions in designated securities and to report the correct execution time of these transactions. BGC Financial is required to revise its written supervisory procedures to achieve compliance with equity trade reporting.

The independent regulator fined BNP Paribas Securities Corp. $85,000 for not reporting the accurate execution time for corporate debt inter-dealer transactions. FINRA also censured the company and levied another penalty of $135,000, saying BNP Paribas did not take reasonable steps to ensure that the intermarket sweep orders routed by it met FINRA requirements.

Investors Capital Corp. was censured, fined $250,000 and ordered to pay $841,532.97 in restitution to customers. FINRA said Investors Capital recommended unsuitable short-term trading of unit investment trusts and steepener notes in customer accounts. Investors Capital has already paid $224,500 in restitution to customers in addition to the restitution amount ordered. The customers suffered losses of about $242,892 due to unsuitable unit investment trusts recommendations and losses of about $125,765 as a result of steepener recommendations, the regulator said. In addition, certain customers ended up paying excessive sales charges of about $472,876 because the company failed to apply sales charges discounts to these customers' eligible purchases of unit investment trusts.

FINRA censured and levied a penalty of $102,500 on Morgan Stanley Smith Barney LLC over failure to report securitized product transactions, agency debt securities and large block S1 transactions. Morgan Stanley Smith Barney was also fined $2.2 million, of which $550,000 will be paid to FINRA, to settle allegations that the company did not accurately report on its large options positions to Options Clearing Corp.

Quantex Clearing LLC was censured and fined $150,000. The regulatory authority said Quantex Clearing omitted facts disclosing the source of $10 million in funds for the purchase of a broker/dealer entity. The funds were provided to the company's CEO in an undocumented loan from a statutorily disqualified person which required disclosure. Quantex Clearing also failed to store its electronic communications and supervise the accuracy of its records, FINRA said.

The regulator levied a penalty of $150,000 and censured Scottrade Inc. FINRA said Scottrade's confirmation statements for approximately 5,000 sales of municipal bonds over a seven-year period for about 1,500 customers did not identify the bonds as callable.