On January 13, FINRA accepted a Letter of Acceptance, Waiver and Consent (AWC) from a financial services member firm to address allegations of supervisory failures related to recommendations of alternative investments. From January 2019 to February 2021, the firm and a principal were alleged to have supervised inadequately a representative’s recommendations, resulting in unsuitable investments for two retail customers. These investments involved speculative alternative products, leading to high concentrations that were inconsistent with the customers’ investment profiles. The firm was accused of failing to enforce written supervisory procedures designed to ensure compliance with Regulation Best Interest (BI). As part of the AWC, the firm agreed to a censure, a $50,000 fine, and to improve its supervisory systems. The principal involved agreed to a one-month suspension in all principal capacities, a $5,000 fine, and a requirement to complete additional education on Regulation BI.
