FINRA FINES FIRM AND SUSPENDS SUPERVISOR FOR ALLOWING TRADE CHERRY-PICKING
FINRA fined a member firm $750,000, barred its head trader from the industry, and suspended the head trader’s supervisor in connection with the trader’s trade allocation practices. According to FINRA, over the course of two years, the head trader cherry picked attractive investment opportunities for his wife’s personal account over customer accounts. FINRA criticized the firm and the supervisor for supervisory deficiencies that allowed the unlawful conduct. FINRA also charged the firm with failing to protect material nonpublic information, preserve e-mails, and implement an adequate AML program.
OUR TAKE: Firms and supervisors can use the “rogue trader” defense when the firm has implemented adequate polices and procedures. However, when the regulator can show a widespread disregard for implementing an adequate compliance program, the actions of one registered representative can have wider repercussions to the firm.