On July 19, FINRA accepted a
Letter of Acceptance, Waiver, and Consent (AWC) from a member firm to resolve alleged Regulation Best Interest (Reg BI) violations. According to the AWC, from June 2020 to March 2023, the member firm allegedly failed to implement written policies and procedures for compliance with Reg BI, which generally requires a broker-dealer to act in the best interest of a retail customer when recommending a securities transaction or an investment strategy involving securities without placing the financial or other interest of the broker, dealer, or associated person ahead of the interest of the retail customer. FINRA alleged that the firm’s written supervisory procedures lacked specific guidelines for Reg BI compliance, and it inadequately addressed Reg BI. As a result, the firm was alleged to have willfully breached Exchange Act Rule 15l-1(a)(1) and Municipal Securities Rulemaking Board (MSRB) Rule G-27, along with FINRA Rules 3110 and 2010. Additionally, the firm allegedly had inadequate written supervisory procedures, which failed to comply with Form CRS requirements issued by the SEC.
Respondent agreed to a censure and a $35,000 fine, $17,500 of which pertained to the violations of MSRB Rule G-27.
