The Financial Industry Regulatory Authority reported the disciplinary actions it took against firms in November 2019.
On Nov. 4, C. L. King & Associates Inc. was censured and fined $342,000 and ordered to retain an independent consultant after a decision from a National Adjudicatory Council became final. The sanctions were based on findings that the company failed to establish and maintain a supervisory system, including written supervisory procedures, related to its survivor bond business.
The findings stated that no one at the firm had firsthand experience with a unique investment strategy created by a customer, which involved 36 separate accounts at the firm and the redemption of about $62 million in survivor bonds on behalf of the customer and his hedge fund.
On Nov. 12, FINRA censured and imposed a $40,000 fine on BGC Financial LP for its failure to immediately execute, route or display customer orders in over-the-counter securities. The company neither admitted nor denied the findings but consented to the sanctions.
On Nov. 20, NYLIFE Securities LLC was censured and fined $250,000, was ordered to pay $76,643.47 plus interest in restitution to customers for realized losses and was ordered to offer rescission to customers for unrealized losses totaling about $250,000 plus interest. The sanctions stemmed from findings that the company failed to enforce its written procedures for supervising the suitability of sales of higher-risk mutual funds that were subject to significant volatility, which led to losses totaling $1.4 million.
Following customer complaints and without any regulator's intervention, the company voluntarily paid full restitution totaling $1.1 million to those customers. After FINRA's investigation, the company made improvements to its operations, including hiring three new registered principals and a fourth registered person to investigate surveillance alerts related to the concentration of customer holdings in higher-risk mutual funds. Without admitting or denying the findings, the firm consented to the sanctions.
CODA Markets Inc. was censured and fined $90,000 after findings that it failed to transmit reportable order events to its Order Audit Trail System, while other reported order events contained inaccurate, incomplete or improperly formatted data. The firm consented to the sanctions without admitting or denying the findings.