M1 Finance censured and fined for alleged short sales regulation and recordkeeping shortcomings
The firm treated all sales as long and so effected more than 12 million sell orders without obtaining the requisite locate for the short sale. The incorrect marking also resulted in the maintenance of inaccurate memoranda for each of these orders and executions.
In addition the firm failed to establish a system that would adequately review and monitor its compliance with locate, order marking and associated recordkeeping rules.
The firm has also consented to the imposition of an order requiring it to certify in writing the remediation of the issues identified.
FINRA Rule 2010 FINRA Rule 3110 FINRA Rule 4511 Regulation SHO Rule 200(g) SEA 1934 Rule 17a-3
Securities principal charged with alleged conversion and improper use of customer funds
FINRA Rule 2010 FINRA Rule 2150
Mizuho Securities USA censured and fined for allegedly preparing inaccurate or incomplete institutional customer confirmations
Despite being on notice of deficiencies in its customer confirmations since 2017, the firm continued to include inaccurate information in over 300,000 trade confirmations:
- indicating that transactions filled via multiple executions were executed at a single rather than average price;
- indicating a commission equivalent mark-up/mark-down had been charged even though the firm only charged a commission;
- including incomplete information regarding remuneration received.
The firm did not have in place a system reasonably designed to supervise customer confirmations, failing to investigate red flags its reviews uncovered between October 2017 and December 2019. Between December 2019 and April 2022 the firm failed to perform the requisite sampling reviews at all as a result of a coding error.
FINRA Rule 2010 FINRA Rule 2232 FINRA Rule 3110 FINRA Rule 4511 SEA 1934 Rule 10b-10 SEA 1934 Rule 17a-3
Oppenheimer & Co censured and fined for allegedly failing to supervise direct business transactions
The firm did not have in place systems or procedures that would require its registered representatives to report direct business transactions to the firm. As a result 490,000 transactions involving over 14,000 customers went unreported on the daily trade blotter.
No information on direct transaction customer profiles was collected, which meant that information that was key to making suitability decisions was not available to the firm, compromising its ability to effectively supervise these transactions.
FINRA Rule 3110 FINRA Rule 4511 NASD Rule 3010 SEA 1934 Rule 17a-3
Former securities principal barred for refusing to appear for on-the-record testimony
FINRA Rule 2010 FINRA Rule 8210
Former securities representative barred for refusing to appear for on-the-record testimony
FINRA Rule 2010 FINRA Rule 8210
Merril Lynch, Pierce, Fenner & Smith censured and fined for alleged failings connected with best execution obligations
The firm failed to monitor the order handling time of its electronic order system prior to the system routing the order to a market center.
In addition the firm did not conduct supervisory reviews to ensure the accuracy of information recorded on the firm’s order memoranda for electronic retail brokerage equity orders.
The firm has agreed to the imposition of an undertaking requiring it to certify in writing the remediation of the issues identified.
FINRA Rule 2010 FINRA Rule 3110
Former products representative barred for failing to respond to requests for information and documents
FINRA Rule 2010 FINRA Rule 3110
Former products representative barred for refusing to appear for on-the-record testimony
FINRA Rule 2010 FINRA Rule 3110
| Unless otherwise noted all respondents accepted and consented to FINRA’s findings without admitting or denying them. |
