On May 12, the Financial Industry Regulatory Authority announced that the National Adjudicatory Council (NAC) revised its Sanction Guidelines to call for tougher sanctions against those who commit fraud or make unsuitable recommendations to customers.
In cases involving fraud, misrepresentations or material omissions of fact, the revised guidelines call for FINRA adjudicators to strongly consider barring an individual respondent for intentional or reckless fraud and expelling a firm for cases involving fraud where aggravating factors predominate the firm’s misconduct. The revised guidelines also advise adjudicators to suspend an individual for 31 days to two years for negligent misrepresentations or material omissions of fact.
For individuals who violate FINRA’s suitability rule, FINRA Rule 2111, the suspension has increased from one year to two years and, where aggravating factors predominate over mitigating ones, adjudicators are advised to strongly consider barring the individual respondent. When the unsuitable recommendations involve a firm, the revised guidelines suggest that adjudicators consider suspending a firm with respect to a limited set of activities for up to 90 days, and urge adjudicators to strongly consider expulsion of the firm in egregious cases.
Click here for Regulatory Notice 15-15.