Two BDs Will Pay $1.5 Million for Failing to Stop Reps from Changing Client Reports
Two broker-dealers agreed to pay approximately $1.5 Million in fines and restitution for allowing reps to manually change valuations in consolidated reporting systems. FINRA charges that the systems utilized by the firms to report consolidated values to clients allowed for manual manipulation by the reps, allowing certain reps to falsify account values. FINRA charges the firms with failure to supervise.
OUR TAKE: This case shows FINRA’s view (and the SEC’s) that a firm can’t rely on its personnel to self-regulate by following the rules issued by the firm. Instead, firms need to make systems as compliance-proof as possible and then monitor and supervise.