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ARTICLE · 05 FEBRUARY 2021

Firm Settles FINRA Charges For Failure To Properly Screen Non-Registered APs

Hogan Lovells Cadwalader
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A firm settled FINRA charges for its failure to properly screen non-registered associated persons for statutory disqualifications.

United StatesFinance and Banking
Hogan Lovells Cadwalader
Hogan Lovells Cadwalader
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A firm settled FINRA charges for its failure to properly screen non-registered associated persons ("APs") for statutory disqualifications under Section 3(a)(39) of the Exchange Act.

In a Letter of Acceptance, Waiver and Consent, FINRA found that the firm's procedures for screening non-registered APs were designed with respect to statutory disqualification under Section 19 of the Federal Deposit Insurance Act, but not statutory disqualification under SEA Section 3(a)(39). Specifically, the firm's written procedures concerned fingerprinting and screening for the statutory disqualifications of only "registered individuals or those required to be registered," not non-registered APs. As a result, FINRA found that the firm violated FINRA Rules 3110 ("Supervision") and 2010 ("Standards of Commercial Honor and Principles of Trade").

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