What Can We Learn From Published Disciplinary Actions?

by Julie Mendel, Senior Product Manager | Jun 18, 2019
No one wants to find themselves the subject of a disciplinary action and understanding the types of activities that could result in a disciplinary action is the first step in avoiding investigation and sanctions. FINRA and the SEC take disciplinary action against both firms and individuals. Here is a list of some of the common activities we find in the monthly disciplinary publications:

Inaccurate Books and Records Loans from Customers Outside Business Activities
Private Securities Transactions Failure to Update Form U4 Falsified Records
Refusal to Appear for Testimony Refusal to Provide Requested Documentation Handling of Customer Complaints
Converted Funds Failure to Supervise Churning

In the majority of cases a Letter of Acceptance, Waiver and Consent (AWC) is issued and sanctions are imposed. Sanctions may include:

Fines ranging from $0 to over $1 million Suspension Bar from the industry
Requirement to update systems, processes, and procedures Requirement to complete training on specific topics Requirement to retake qualification exams

As you can see from this list, many of the violations are common and easily avoided through awareness, policies, procedures, and training. Each month FINRA publishes disciplinary actions on their website and you can search the disciplinary actions online database for additional information. The SEC publishes press releases articulating the rule violation and imposed sanctions for several cases each month.

Recommended steps to avoid disciplinary actions against a firm or individuals employed by the firm include an annual review of firm policies and FINRA rules that apply to your business model. This can be accomplished through training courses, the Annual Compliance Questionnaire, or office meetings. You may want to consider adding a review of recent disciplinary actions to your agenda to ensure everyone understands the consequences of violating FINRA, SEC, and Firm rules and regulations.

For a training solution that suits your needs and helps your firm avoid disciplinary actions view WebCE's firm element training solutions.

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