The FINRA National Adjudicatory Council ("NAC") affirmed a Hearing Panel's charges against a broker-dealer firm and two of its general securities representatives for violating Regulation SHO and for failure to comply with AML requirements.
The NAC stated that it was in agreement with the Hearing Panel's findings that the broker-dealer and general securities representatives failed to:
- find locates for 122 short transactions effected in four low-priced stocks and reasonably supervise the short sales;
- maintain satisfactory supervisory procedures when determining whether certain representatives should be subject to heightened supervision, in addition to monitoring instant message communications; and
- establish satisfactory AML policies and procedures and conduct adequate AML training.
Nonetheless, as explained more fully in the Decision, the NAC modified each of the general securities representatives' and broker-dealer firm's sanctions by reducing the monetary penalties of (i) the broker-dealer to $350,000 for the Regulation SHO Violations and $750,000 for the AML and supervisory failures and (ii) the general securities representatives' to $77,000 and $52,000, respectively.