SEC Charges First Horizon Advisors for Regulation Best Interest Violations

Posted on October 15th, 2024 at 4:09 PM
SEC Charges First Horizon Advisors for Regulation Best Interest Violations

From the desk of Jim Eccleston at Eccleston Law

The Securities and Exchange Commission (SEC) has charged First Horizon Advisors, LLC, a registered broker-dealer, with violating Regulation Best Interest (Reg BI). The charges stem from the firm’s failure to maintain and enforce policies designed to ensure compliance with Reg BI, particularly regarding recommendations of structured notes.

In 2021, First Horizon merged with another broker-dealer, which resulted in the transfer of 5,000 customer brokerage accounts. However, due to system incompatibility between the two firms, First Horizon lacked the necessary customer data to properly review structured note recommendations for Reg BI compliance. Additionally, registered representatives from the merging firm were unable to access First Horizon’s exception reporting system, which prevented them from reviewing flagged transactions as required by the firm's procedures.

Without admitting or denying the SEC’s findings, First Horizon agreed to a cease-and-desist order, a censure, and a $325,000 civil penalty. This case highlights the importance of maintaining robust compliance systems, particularly during mergers.

 

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

Tags: eccleston, eccleston law, sec

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