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ARTICLE · 20 MAY 2021

Firm Settles FINRA Charges For OBA Violations

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FINRA found that the firm and the principal failed to timely update Forms U4 for a number of representatives with respect to those OBAs.

United StatesFinance and Banking
Hogan Lovells Cadwalader
Hogan Lovells Cadwalader
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A firm and its general securities principal settled FINRA charges for disclosure and supervisory violations on outside business activities and private securities transactions. FINRA found that the firm failed to (i) review its representatives' outside business activities ("OBAs"), (ii) timely amend representatives' Forms U4 to disclose OBAs, (iii) submit required offering documents, and (iv) design a supervisory system regarding OBA rules and due diligence and filing obligations for private placements.

In a Letter of Acceptance, Waiver, and Consent, FINRA found, among other things, that the firm's written supervisory procedures ("WSPs") did not require representatives to provide written notice of their OBAs, nor did its WSPs address the firm's requirement to review OBAs to determine whether the activity should have been determined a private securities transaction. Further, the firm failed to review certain disclosed OBAs and the principal failed to provide factors

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