Investment Bank to Pay $22 Million Because of Insufficient Policies/Procedures for Analyst Huddle Program
A large investment bank has agreed to pay $22 Million to the SEC and FINRA to settle charges that it failed to implement adequate policies and procedures to ensure that its analyst huddle program did not disseminate material, non-public information. The huddle program involved direct discussions between research analysts and salespeople, traders, and a select group of clients. The SEC Order charges that the firm’s policies allowed discussion of “short-term trading ideas” without adequately defining what information would be material and prohibited. The firm’s policies also did not prohibit the discussion of a specific stock currently under consideration for a changed rating. The SEC also criticized the firm for failing to monitor the huddle program, which ideally should have included documentation of trading recommendations and reviews to determine use of material, non-public information.