FINRA Hits Two BDs with $950,000 in Fines for Weak Money Movement Controls
FINRA fined two large broker-dealers a total of $950,000 for failing to heed FINRA warnings about weak supervisory controls. According to FINRA, the weak supervisory systems allowed rogue reps to misappropriate money from client accounts with fraudulent/forged checks and wire transfers. The reps exploited systemic holes including coding issues and failures to ensure customer wire confirmations.
OUR TAKE: While it is difficult to stop outright fraud, firms need to implement enhanced procedures for money movement. Some tools may include requiring multiple approvals before allowing cash movement, customer confirmations, and weekly cash flow monitoring. Also, firms must be cognizant to increase compliance resources as their firms grow.