FINRA Sanctions UBS Puerto Rico $18.5 Million for Supervisory Failures Regarding Sales of Puerto Rican Closed-End Funds and Related Loans

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FINRA Sanctions UBS Puerto Rico $18.5 Million for Supervisory Failures Regarding Sales of Puerto Rican Closed-End Funds and Related Loans

FINRA fined UBS Financial Services Incorporated of Puerto Rico (UBS PR) $7.5 million for supervisory failures related to the suitability of transactions in Puerto Rican closed-end fund (CEF) shares and ordered UBS PR to pay approximately $11 million in restitution to 165 customers who were forced to realize losses on their CEF positions.

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FINRA Sanctions Santander Securities LLC $6.4 Million for Supervisory Failures Related to Sales of Puerto Rican Bonds

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FINRA Sanctions Santander Securities LLC $6.4 Million for Supervisory Failures Related to Sales of Puerto Rican Bonds

FINRA ordered Santander Securities LLC to pay approximately $4.3 million in restitution to certain customers who were solicited to purchase Puerto Rican Municipal Bonds (PRMBs). Additionally, the firm will pay restitution of $121,000 and make offers of rescission to buy back the securities sold to certain customers impacted by the firm's failure to supervise employee trading. FINRA also censured and fined Santander $2 million for supervisory failures.

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FINRA Sanctions 12 Firms a Total of $6.7 Million for Failing to Apply Sales Charge Discounts to Customers' Purchases of UITs

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FINRA Sanctions 12 Firms a Total of $6.7 Million for Failing to Apply Sales Charge Discounts to Customers' Purchases of UITs

FINRA ordered 12 firms to pay restitution totaling more than $4 million and fines totaling more than $2.6 million for failing to apply available sales charge discounts to customers' purchases of Unit Investment Trusts (UITs), and related supervisory failures.

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FINRA Orders an Additional Five Firms to Pay $18 Million in Restitution to Charities and Retirement Accounts Overcharged for Mutual Funds

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FINRA Orders an Additional Five Firms to Pay $18 Million in Restitution to Charities and Retirement Accounts Overcharged for Mutual Funds

FINRA order Edward Jones, Stifel Nicolaus, Janney Montgomery, AXA and Stephens to pay $18 million in restitution for overcharging customers and failing to adequately supervise the sale of mutual funds that offered sales charge waivers. 

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FINRA Fines Cantor Fitzgerald & Co. $7.3 Million for Selling Billions of Unregistered Microcap Shares

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FINRA Fines Cantor Fitzgerald & Co. $7.3 Million for Selling Billions of Unregistered Microcap Shares

FINRA has fined Cantor Fitzgerald & Co. $6 million and ordered disgorgement of nearly $1.3 million in commissions, plus interest, for selling billions of unregistered microcap shares in violation of federal law and failing to have adequate supervisory or anti-money laundering (AML) programs tailored to detect "red flags".

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FINRA Fines Scottrade $2.6 Million for Failures in Electronic Records Retention

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FINRA Fines Scottrade $2.6 Million for Failures in Electronic Records Retention

FINRA fined Scottrade, Inc. $2.6 million for failing to retain a large number of securities-related electronic records in the required format, and for failing to retain certain categories of outgoing emails. Scottrade also did not have a reasonable supervisory system in place to achieve compliance with certain Securities and Exchange Commission (SEC) and FINRA books and records rules, which contributed to its record-retention failures.

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FINRA Fines Fidelity Brokerage Services LLC $1 Million for Supervision Failures

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FINRA Fines Fidelity Brokerage Services LLC $1 Million for Supervision Failures

Fidelity Failed to Follow Up on Red Flags to Detect or Prevent Theft of Funds From Senior Investors by Fraudster Posing as Fidelity Broker.

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FINRA Fines Merrill Lynch a Total of $6 Million for Reg SHO Violations and Supervisory Failures

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WASHINGTON — The Financial Industry Regulatory Authority (FINRA) announced today that it has censured and fined Merrill Lynch Professional Clearing Corp. (Merrill Lynch PRO) $3.5 million for violating Regulation SHO, an SEC rule that established a regulatory framework to govern short sales and prevent abusive naked short selling. FINRA also censured and fined its affiliated broker-dealer, Merrill Lynch, Pierce, Fenner & Smith Incorporated (Merrill Lynch), $2.5 million for failing to establish, maintain and enforce supervisory systems and procedures related to Regulation SHO and other areas.

In addition to curtailing naked short selling, among other things, Regulation SHO also aims to reduce the number of instances in which sellers fail to timely deliver securities. Regulation SHO requires a firm to timely "close out" any fail-to-deliver positions by borrowing or purchasing securities of like kind and quantity. Additionally, Reg SHO permits firms to reasonably allocate fail-to-deliver positions to its broker-dealer clients that caused or contributed to the firm's fail-to-deliver position.

FINRA found that from September 2008 through July 2012, Merrill Lynch PRO did not take any action to close out certain fail-to-deliver positions, and did not have systems and procedures in place to address the close-out requirements of Regulation SHO for the majority of that period. FINRA also found that from September 2008 through March 2011, Merrill Lynch's supervisory systems and procedures were inadequate and improperly permitted the firm to allocate fail-to-deliver positions to the firm's broker-dealer clients based solely on each client's short position without regard to which clients caused or contributed to Merrill Lynch's fail-to-deliver position.

FINRA's investigation was conducted by the Departments of Enforcement and Market Regulation.

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