A firm settled FINRA charges for its failure to properly screen non-registered associated persons ("APs") for statutory disqualifications under Section 3(a)(39) of the Exchange Act.
In a Letter of Acceptance, Waiver and Consent, FINRA found that the firm's procedures for screening non-registered APs were designed with respect to statutory disqualification under Section 19 of the Federal Deposit Insurance Act, but not statutory disqualification under SEA Section 3(a)(39). Specifically, the firm's written procedures concerned fingerprinting and screening for the statutory disqualifications of only "registered individuals or those required to be registered," not non-registered APs. As a result, FINRA found that the firm violated FINRA Rules 3110 ("Supervision") and 2010 ("Standards of Commercial Honor and Principles of Trade").
To settle charges, the firm agreed to (i) a censure, (ii) a $650,000 fine and (iii) an undertaking to ensure its supervisory system complies with relevant securities laws and regulations, specifically FINRA Rule 3110 and FINRA By-Laws Article III, Section 3(b).
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