FINRA Fines/Suspends CCO/COO for Failing to Supervise OSJ Managers
FINRA fined and suspended the CCO/COO of a broker-dealer for failing to create a reasonable supervisory system for OSJ branch managers. FINRA alleges that the firm allowed OSJ managers to self-supervise. FINRA also claims that a new supervisory system was inadequate because it relied on three Regional Managers to review thousands of transactions. FINRA claims that the inadequate supervisory system resulted in churning and unsuitable recommendations. FINRA charged the CCO/COO fro failing to fulfill her supervisory responsibilities. In addition to a $35,000 and a two-month suspension from acting as a principal, the CCO/COO must retake her qualifying examination and undergo 15 hours of training. In addition, the firm agreed to pay a $1 Million fine.
OUR TAKE: FINRA intends to prosecute individuals responsible for firm wrongdoing. FINRA has made clear (e.g. Rule 3012) that supervision of producing managers is an important element of the supervisory structure.