A firm settled FINRA charges for failing to fingerprint and adequately screen U.S.-based non-registered associated persons.
In a Letter of Acceptance, Waiver, and Consent, FINRA determined that the firm's supervisory system was not reasonably designed to ensure that the firm would identify, adequately screen, and maintain records relating to individuals associated with the firm in a non-registered capacity. The firm self-reported that it (i) failed to timely or generally fingerprint over a thousand non-registered associated individuals, (ii) was unable to conclude whether it had fingerprinted several thousand non-registered associated persons, (iii) did not keep fingerprint records for an additional several hundred non-registered associated persons and (iv) enabled statutorily disqualified individuals to associate with the firm in a non-registered capacity.
As a result of the firm's fingerprinting, supervisory and recordkeeping failures, FINRA determined that the firm violated Sections 17(f) ("Missing, Lost, Counterfeit, and Stolen Securities") and 17(a) ("Rules and Regulations") of the Exchange Act, SEA Rules 17f-2 ("Fingerprinting of Securities Industry Personnel") and 17a-3 ("Records to be Made by Certain Exchange Members, Brokers and Dealers"), FINRA By-Laws, Article III, Section 3(b), and FINRA Rules 2010 ("Standards of Commercial Honor and Principles of Trade"), 3110 ("Supervision") and 4511 ("General Requirements").
To settle the charges, the firm agreed to (i) a censure, (ii) a $1,250,000 fine and (iii) an undertaking to review and modify its supervisory system with respect to the fingerprinting and screening of non-registered associated persons.
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