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FINRA Member Fined for Recording Inaccurate Trading Order Details

All Fintech

Compliance Operations

May 31, 2024

The Case

The firm failed to establish and maintain a supervisory system, including WSPs, reasonably designed to supervise the accuracy of order times on its order memoranda. As a result, the firm listed inaccurate order receipts and/or transmission times on 30 percent of the order memoranda for customers’ option orders.

The action also highlights that the firm failed to establish and maintain a supervisory system, including written supervisory procedures (WSPs) designed to oversee the accuracy of order memoranda, including order receipt and transmission times. 

Why Does This Matter?

The enforcement action highlights the importance of establishing and maintaining a supervisory system to ensure regulatory compliance.  

InnReg's Experience

InnReg has over a decade of experience developing effective supervisory frameworks for fintechs based on a systematic approach to identifying risks, implementing effective controls, and enhancing internal documentation to reduce regulatory burdens. InnReg’s compliance consulting services empower fintechs to enhance policies, processes, and technologies for e-communications compliance.

Learn More About This Topic

For additional details, read how InnReg’s Fintech Compliance checklist can help your fintech build best practices to meet evolving regulatory requirements. InnReg’s framework includes an end-to-end guide for reviewing and testing a supervisory system, conducting business reviews, and testing.

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RIAs

The SEC recently brought settled enforcement actions against two registered investment advisers for failing to establish, maintain, and enforce written policies and procedures reasonably designed to prevent the misuse of material nonpublic information (MNPI), in violation of Section 204A of the Investment Advisers Act of 1940 (Advisers Act) and the Compliance Rule.

RIAs

On Sep. 4, 2024, FinCEN published a final rule (Final Rule) adding certain RIAs and ERAs (collectively, Covered Advisers) to the definition of “financial institution” under the regulations implementing the BSA, and imposing on Covered Advisers broad AML and CFT program requirements, as well as other BSA recordkeeping and reporting requirements.

Broker-Dealers

On November 22, the SEC announced (here) that broker-dealers Webull Financial LLC, Lightspeed Financial Services Group LLC, and Paulson Investment Company, LLC agreed to settle charges that they filed with law enforcement SARs that failed to include required information.

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© 2024 InnReg LLC

1101 Brickell Avenue
South Tower, 8th Floor
Miami, FL 33131

LinkedIn Innreg
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Quora Innreg
Blog Innreg

© 2024 InnReg LLC

1101 Brickell Avenue
South Tower, 8th Floor
Miami, FL 33131