A broker-dealer settled FINRA charges for registration and inspection failures. In addition, FINRA charged the firm with failing to record liabilities in order to conduct accurate net capital calculations and maintain requisite excess net capital.
According to FINRA, the broker-dealer violated FINRA Rules 1210 ("Registration Requirements"), 1220 ("Registration Categories") and 2010 ("Standards of Commercial Honor and Principles of Trade") for failing to properly register with FINRA one of its investment banking representatives as an "Investment Banking Representative" and that representative's supervisor as an "Investment Banking Principal." In addition, the broker-dealer violated Article IV, Section 8 of FINRA's By-Laws ("Filling of Vacancies"), as well as FINRA Rule 3110 ("Supervision"), for (i) establishing and maintaining more than 31 unregistered branch office locations where associated persons of the broker-dealer were engaged in securities business, and (ii) failing to inspect and supervise several non-branch locations.
FINRA alleged that the broker-dealer did not (i) maintain its required minimum net capital or (ii) keep current books and records accounting for certain liabilities and trial balances (including accurate general ledgers and updated FOCUS Reports). As a result, the broker-dealer violated Securities Exchange Act Rules 15c3-1 ("Net Capital Requirements for Brokers or Dealers"), 17a-3 ("Records to Be Made by Certain Exchange Members, Brokers and Dealers"), 17a-5 ("Reports to Be Made by Certain Brokers and Dealers"), and 17a-11 ("Notification Provisions for Brokers and Dealers"), as well as FINRA Rule 4511 ("General Requirements").
To settle the charges, the broker-dealer agreed to a (i) censure and (ii) $25,000 fine.
Primary Sources
1. FINRA AWC: Corecap Investments, LLC.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
We operate a free-to-view policy, asking only that you register in order to read all of our content. Please login or register to view the rest of this article.