Reg BI Violations Lead to FINRA's Fine on Another Broker-Dealer

Posted on September 19th, 2023 at 10:26 AM
Reg BI Violations Lead to FINRA's Fine on Another Broker-Dealer

From the desk of Jim Eccleston at Eccleston Law 

The Financial Industry Regulatory Authority (FINRA) has fined and censured broker-dealer Network 1 Financial Securities and its chief compliance officer for violating Regulation Best Interest (Reg BI).

According to FINRA's order, Network 1 failed to establish, maintain, and enforce a supervisory system, including written supervisory procedures (WSPs), reasonably designed to achieve compliance with the suitability requirements of FINRA Rule 2111 and the Care Obligation of Reg BI related to excessive trading in violation of FINRA Rules 3110 and 2010 from January 2016 through March 2022.

Network 1 also violated Reg BI's Compliance Obligation by failing to establish, maintain, and enforce WSPs reasonably designed for compliance with Reg BI, which became effective on June 30, 2020. According to the order, from July 2017 through March 2022, Network 1's chief compliance officer, Michael Molinaro (Molinaro), violated FINRA Rules 3110 and 2010 by not establishing, maintaining, and enforcing a supervisory system, including WSPs, reasonably designed to achieve compliance with FINRA Rule 2111 and Reg BI, with regard to excessive trading.

As reported by ThinkAdvisor, Network 1 received an order to pay a $200,000 fine and restitution totaling $533,587 plus interest. Meanwhile, Michael Molinaro faces a three-month suspension from associating with any FINRA member firm and was fined $5,000.

 

Eccleston Law LLC represents investors and financial advisors nationwide in securities, employment, transition, regulatory, and disciplinary matters.

Tags: eccleston, eccleston law, finra

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