IBN Financial Services Censured and Fined $30,000 for Supervisory Failures
According to a Letter of Acceptance, Waiver and Consent, the Financial Industry Regulatory Authority has reportedly censured and fined IBN Financial Services, Inc $30,000 for supervisory failures.
From March 2021 to June 2022, IBN allegedly failed to establish, maintain, and enforce a supervisory system, including written supervisory procedures, to evaluate whether its registered advisors’ proposed outside business activities were actually outside securities activities.
During this time frame, IBN purportedly knew that two of its registered representatives were engaged in outside business activities that involved investment funds and private placement offerings, but the firm allegedly did not evaluate whether the activity constituted an outside securities activity, according to FINRA’s findings. Consequently, IBN allegedly violated FINRA Rules 3110, 3270.01, and 2010.
What is Failure to Supervise?
FINRA Rule 3110 (Failure to Supervise) requires a firm to establish and maintain a system to supervise the activities of its associated persons that is reasonably designed to achieve compliance with securities laws and regulations and FINRA rules.
The rule gives requirements for a firm to have reasonably designed written supervisory procedures (WSPs) to supervise the activities of its associated persons and the types of businesses in which it engages.
Among other things, a firm’s WSPs must address supervision of supervisory personnel and provide for the review of a firm’s investment banking and securities business, correspondence and internal communications, and customer complaints. WSPs should describe:
- the specific individual(s) responsible for each review,
- the supervisory activities such persons will perform,
- the frequency of the review, and
- the manner of documentation.
This is not the first time IBN has been disciplined for regulatory issues. In April we reported that FINRA sanctioned the firm after IBN allegedly failed to tell eight investors in two offerings related to GPB Capital Holdings, LLC that the issuer failed to timely make required filings with the Securities and Exchange Commission, including filing audited financial statements.
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Tags: IBN Financial Services Inc., IBN Financial Services Inc. failure to supervise, IBN Financial Services Inc. fined, IBN Financial Services Inc. FINRA, IBN Financial Services Inc. investigation, IBN Financial Services Inc. sanctioned, IBN GPB automotive Last modified: September 22, 2022