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FINRA posts fines against 4 broker/dealers


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FINRA posts fines against 4 broker/dealers

The Financial Industry Regulatory Authority disclosed disciplinary actions taken against several companies, including Nomura Securities International Inc., Morgan Stanley & Co. LLC, World Equity Group Inc. and Electronic Transaction Clearing Inc.

The agency on Aug. 9 hit Nomura Securities International with an $875,000 fine over findings that the company incorrectly calculated its proprietary accounts of broker/dealers, or PAB, reserve computation, that resulted in a shortfall in the firm's PAB reserve account. The company applied the wrong debit amount, leading to the understatement of the required sum of its reserve. Nomura consented to the sanctions without admitting or denying the findings.

On Aug. 23, Morgan Stanley & Co. was fined $1.1 million for not establishing and maintaining risk management controls and supervisory procedures and an adequate system of review to manage the financial, regulatory and other risks of its market access business. Of the $1.1 million, $280,000 will be paid to FINRA. The company did not admit or deny the findings but consented to the penalty.

On Aug. 23, World Equity Group was censured, fined $100,000, and ordered to pay an aggregate of at least $380,000 in restitution to eligible customers. The fine was imposed over findings that the company did not maintain and enforce a supervisory system designed to make sure that representatives' recommendations of variable annuities complied with relevant securities regulations and FINRA rules. FINRA also found that the supervisor tasked with overseeing variable annuity sales had no prior experience with the products, and that World Equity Group did not properly train the supervisor after appointing him.

The company did not admit or deny the findings of the regulator.

On Aug. 29, the regulator imposed a fine of $450,000 on Electronic Transaction Clearing for lacking an effective system that would oversee compliance with its order audit trail system, or OATS, reporting obligations. Not establishing the system of oversight allowed OATS reporting violations to arise without being detected. The company consented to the penalty without admitting or denying the findings.