Enforcement Actions
Financial Industry Regulatory Authority (FINRA)
CASES OF NOTE
2010
NOTE: Stipulations of Fact and Consent to Penalty (SFC); Offers of Settlement (OS); and Letters of Acceptance Waiver, and Consent (AWC) are entered into by Respondents without admitting or denying the allegations, but consent is given to the described sanctions & to the entry of findings. Additionally, for AWCs, if FINRA has reason to believe a violation has occurred and the member or associated person does not dispute the violation, FINRA may prepare and request that the member or associated person execute a letter accepting a finding of violation, consenting to the imposition of sanctions, and agreeing to waive such member's or associated person's right to a hearing before a hearing panel, and any right of appeal to the National Adjudicatory Council, the SEC, and the courts, or to otherwise challenge the validity of the letter, if the letter is accepted. The letter shall describe the act or practice engaged in or omitted, the rule, regulation, or statutory provision violated, and the sanction or sanctions to be imposed.
November 2010
Mark Boyar & Company, Inc.
AWC/2008011794901/November 2010

The Firm 

  • issued research reports that the firm labeled ďAsset Analysis FocusĒ (AAF) on a paid subscription basis;
  • did not consider the AAF a research report;
  • did not have in place policies and procedures designed to ensure compliance with the various research related rules applicable to firms that issue research reports, such as those relating to research analyst and research principal registration, disclosures, conflicts, annual attestations and written supervisory procedures;
  • allowed registered representatives at the firm to collaborate in the preparation of AAFs without having passed a qualifying examination,
  • allowed an individual also to collaborate in the preparation of AAFs without being registered as a general securities representative or in any other capacity through the firm, and without having passed a qualifying examination.

A general securities principal supervised the preparation of AAFs without having passed the qualifying examination.

Certain AAFs the firm issued failed to disclose certain NASD Rule 2711 required information, including the financial interest in the issuer of the research analysts who prepared the reports, price charts for issuers where the firm has assigned a price target for at least one year, and the valuation methods used to determine price targets and the risks that may impede achievement of the price targets.

An individual who collaborated in the preparation of AAFs purchased securities of companies during the 30-day period before the publication of the research reports concerning those companies. In addition, The firm did not have the required research report-related written supervisory procedures in place, and the firm did not have a senior officer make the required annual attestation that the firm had adopted and implemented the required written supervisory procedures.

Moreover, the Firm did not make the required annual attestations for several years and filed inaccurate annual attestations for other years.

Mark Boyar & Company, Inc. : Censured; Fined $20,000
Bill Singer's Comment
Talk about a cascade effect!  First, the firm creates the AAFs but fails to discern that the materials are research reports -- which unleashes a number of violations arising from the failed recognition of the nature of the publication.  It's hard to come down too harshly on the Firm simply because if you don't spot the core research issue it's unlikely that you would have realized the need to follow Rule 2711.  All in all, a fairly appropriate sanction that seems to have taken into the consideration the points noted here.
September 2010
Assent LLC
AWC/2007008882402/September 2010

The Firm permitted a then-proprietary trader and associated person to engage in proprietary firm options trading when he was not properly licensed to do so and, as a result, the firm failed to register a person engaged in its investment banking or securities business in the category of registration appropriate to the function to be performed as specified in NASD Rule 1032. The Firm's written supervisory procedures required all proprietary traders to possess the Series 7 general securities representative license and Series 55 equity traders limited representative license (and Series 63 qualification), and provided for no exceptions unless approvals were obtained and the traderís activities were restricted until the licensing deficiency was rectified; the associated person possessed none of the licenses required by the firm nor were activities restricted. As a result, the firm failed to enforce its written supervisory procedures by allowing the associated person to disregard FINRA licensing requirements and the firmís internal licensing requirements applicable to its proprietary traders.

The Firm failed to enforce written internal firm trading limits that applied to the associated person by failing to enforce its written supervisory procedures concerning the imposition of individual trading limits on proprietary traders; the firm failed to take adequate steps to ensure the associated person and other relevant associated persons of the firm understood the meaning and application of the terms of the associated personís individual trading limits, and allowed the associated person to exceed his individual trading limits on several occasions.

Assent LLC : Censured; Fined $79.,000
Tags:  Unregistered RRs    Trading Limits    Proprietary Traders     |    In: Cases of Note : FINRA
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