A broker-dealer and one of its representatives settled FINRA charges for inaccurately reporting the broker-dealer's business expenses and the representative's personal expenses.
In a Letter of Acceptance, Waiver and Consent, FINRA stated that the representative inaccurately labeled a portion of his personal expenses as business expenses on the broker-dealer's general ledger, which he then used to prepare the firm's monthly Financial and Operational Combined Uniform Single reports. As a result of his inaccurate classification of the expenses, the representative violated FINRA Rule 4511 ("General Requirements") and caused the firm to violate Section 17(a) of the Exchange Act and SEA Rules 17a-3 ("Records to Be Made by Certain Exchange Members, Brokers and Dealers") and 17a-5 ("Reports to Be Made by Certain Brokers and Dealers") for having inaccurate books and records. FINRA also determined that both the broker-dealer and the representative violated FINRA Rules 3110(a) and 3110(b), and 2010 ("Standards of Commercial Honor and Principles of Trade"), for failing to design and maintain a sufficient supervisory system for ensuring compliance with the aforementioned regulations.
To settle the charges, the broker-dealer agreed to a (i) censure and (ii) $10,000 fine. The representative also agreed to a (i) one-month suspension from associating with any FINRA member and (ii) $10,000 fine. Additionally, the broker-dealer and representative agreed to a "joint and several" $10,000 fine, for a total fine of $30,000 to the parties, collectively.
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