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Broker-Dealer Settles FINRA Charges for Compliance Failures Related to Non-Traditional Exchange Traded Funds

A broker-dealer settled FINRA charges for compliance failures related to non-traditional exchange traded funds and for supervisory failures of customer recommendations regarding complex options trading strategies.

FINRA charged the broker-dealer with failing to develop appropriate oversight procedures for investing in non-traditional exchange trade products and failing to adequately supervise a representative offering complex options trading to customers of the broker-dealer. FINRA found the representative recommended trades with a maximum potential loss nine times higher than maximum potential gain, and the broker-dealer’s failure to ensure the representative’s activities conformed with customer investment objectives amounted to a supervisory failure.

FINRA alleged this conduct violated Rules 31102360(b)(20)(C), and 2010, as well as NASD Rule 3010. To settle the charges, the broker-dealer agreed to (i) a sanction, (ii) a $35,000 fine and (iii) certification to FINRA of revised policies remedying the supervisory failures within 60 days.

© Copyright 2021 Cadwalader, Wickersham & Taft LLPNational Law Review, Volume XI, Number 329
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