Walker's member firm was issued a Letter of Caution following a FINRA examination, which advised of numerous deficiencies in the firm’s WSPs; these deficiencies included maintenance of the firm’s Form BD, prohibition of commission payments to non-registered entities, designation of an appropriately licensed principal for each of the firm’s product lines, maintenance of WSPs at each OSJ, investigation into the qualifications of new hires, obligations of the firm when handling accounts of associated persons employed at other FINRA-regulated broker-dealers, timely providing account records to customers, prompt notification to regulators of deficiencies in required net capital, and prohibition of the sale of unregistered securities beyond the private offering’s expiration dates. The Letter of Caution also indicated that the firm’s WSPs were deficient with respect to Regulation S-P.
Although issued only to the firm, the Letter of Caution was delivered to Walker in his capacity as president and chief compliance officer of the firm; thus, Walker had notice of the deficiencies but failed to update and amend the WSPs to correct the deficiencies. A later FINRA examination disclosed the same deficiencies outlined in the Letter of Caution, but Walker failed to update and amend the WSPs to correct the deficiencies. In addition, FINRA determined that Walker failed to establish, maintain and enforce WSPs and supervisory control procedures in the cited areas to ensure compliance with applicable securities laws and regulations, including Regulation S-P.