On July 8, FINRA
accepted a firm’s Letter of Acceptance, Waiver, and Consent imposing a censure and a $300,000 fine. The firm is a wholesale distributor of variable insurance products and mutual funds. Between March 2018 and September 2019, FINRA alleged that the firm caused around $2.9 million in compensation to be paid to an unregistered entity. More specifically, according to the AWC, the Firm had paid around $8.7 million in transaction-based compensation to an unaffiliated selling broker-dealer concerning the sale of variable life insurance, a securities product. Of that, FINRA alleges that the Firm directed the unaffiliated broker-dealer to direct $2.9 million to an LLC that was not affiliated with the firm and that was not a FINRA member. As a result, FINRA alleged that the firm violated FINRA Rule 2040 which prohibits FINRA members from paying transaction-based compensation to any person not registered as a broker-dealer if receipt of such payment would require such person to register as such.
