FINRA Sanctions Regal Securities for Supervisory Failures
According to the Financial Industry Regulatory Authority (FINRA), the self- regulator that oversees brokers and brokerage firms, has censured and fined Regal Securities (CRD # 7297) for supervisory issues. The firm was ordered to pay $100,000.
According to a Letter of Acceptance Waiver and Consent, from August 2017 through January 2019, Regal reportedly failed to establish and maintain a supervisory system designed to achieve compliance with FINRA rules regarding surveilling for potentially manipulative trading.
Regal Securities reportedly opened a self-directed trading account for a customer whose account it had previously closed. The firm, however, allegedly failed to subject the account to heightened supervision or take other precautions despite red flags. Further, the firm failed to reasonably review or follow up on numerous surveillance alerts indicating that this customer may have engaged in potentially manipulative trading. On more than one occasion, the firm failed to detect such trading. Regal delegated supervisory responsibility for the customer’s account to the account representative and another registered representative, but its written supervisory procedures did not reasonably describe the process for how to carry out that responsibility.
As a result, the firm violated FINRA Rules 3110(a) and (b), and 2010.
FINRA Rule 3110
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 the applicable securities laws and regulations and FINRA rules.
Firms are responsible for ensuring that their associated persons comply with applicable securities laws and regulations, as well as FINRA rules, and must take reasonable steps to prevent violations from occurring.
If a firm fails to supervise adequately, it may be subject to disciplinary action by FINRA, including fines, censures, and suspension or revocation of its membership. In addition, the individuals responsible for supervisory failures may also face disciplinary action, including fines, suspensions, and bars from the industry.
FINRA Rule 2010
FINRA Rule 2010 is a broad ethical principle that requires all FINRA member firms and their associated persons to observe high standards of commercial honor and just and equitable principles of trade. It is known as the “Standards of Commercial Honor and Principles of Trade” rule.
The rule is designed to promote ethical conduct and fair dealing in the securities industry. It covers a wide range of activities, including the solicitation, sale, and execution of securities transactions, as well as the handling of customer accounts and the dissemination of investment recommendations.
Regal Securities Inc. – Regulatory History
Regal Securities Inc. is based in Glenville, Illinois. According to the firm’s CRD, they have fourteen disclosures including ten regulatory actions and four arbitrations.
In 2016 FINRA censured and fined Regal Securities $25,000 after it failed to establish and enforce procedures relating to its review and approval of an outside business activity, in violation ofNASD Rule 3010 and FINRA Rules 3270 and 2010.
Free Consultation with a Securities Fraud Attorney
The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Seattle, Washington. The firm represents investors throughout the country in claims against their brokerage firm.
If you are concerned about your investments with Regal Securities, please call the White Law Group. For a free consultation with a securities attorney, please call us at 1-888-637-5510.
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Tags: failure to supervise, FINRA Rule 3110, finra sanctions, Regal Securities Inc., suitability Last modified: May 22, 2023