Firms Settle FINRA Charges for Failing to Timely Disclose OBAs

Two broker-dealers settled FINRA charges for failing to timely disclose outside business activities and changes in business addresses.

According to the AWC, the firms failed to file thousands of required amendments to update their registered representatives' Uniform Applications for Securities Industry Registration ("Forms U4").

FINRA found that one firm neglected to file around 1,800 amendments related to outside business activities and 2,800 amendments for changes in business addresses; a second firm failed to file approximately 300 amendments related to outside business activities and 500 amendments for changes in business addresses.

FINRA found supervisory system failures, as neither firm had effective procedures in place to ensure the timely filing of amendments, nor did they track or verify the filing process.

FINRA found that the broker-dealers violated Article V, Section 2(c) ("Application for Registration") of FINRA's By-Laws and FINRA Rules 2010 ("Standards of Commercial Honor and Principles of Trade"), 1122 ("Filing of Misleading Information as to Membership or Registration") and 3110 ("Supervision").

To resolve the charges, both firms agreed to (i) a censure and (ii) monetary fines—one firm paying $215,000 and the other $60,000.