Enforcement Actions
Financial Industry Regulatory Authority (FINRA)
CASES OF NOTE
2009
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.
December 2009
Mesirow Financial, Inc.
AWC/2008012747801/December 2009
Mesirow's clearing agreement with correspondent firms impermissibly allocated the detection and reporting of suspicious activity with respect to trading activities of introduced customer securities accounts to the introducing correspondent firms. The Bank Secrecy Act imposes an independent obligation to detect and report suspicious activity on all broker-dealers.  Consequently, the firmís AML program was not reasonably designed to detect and cause the reporting of suspicious trading activity in customer accounts.
Mesirow Financial, Inc.: Censured; Fined $75,000
Tags:  Clearing Agreement    AML     |    In: Cases of Note : FINRA
Bill Singer's Comment
Given the many compliance and legal concerns on Wall Street, member firms tend to pay lots of bucks to lawyers and compliance consultants to draft all sorts of documents.  Unfortunately, those materials tend to take on the aura of carved-in-stone when they should be reviewed to ensure that they reflect new rules, regulations, policies, and procedures -- and that production/reproduction errors have not altered the language.  Given the blanket application of the Bank Secrecy Act, it's somewhat odd that Mesirow failed to detect the critical omission in its Clearing Agreement.

All of which reminds me of an incident some 30 years ago when I was working in-house at a major brokerage firm and in diligently reading through a hoary internal document, I uncovered a paragraph that made no sense -- literally, no sense whatsoever.  Why?  Well, as best that I could tell, a prior editing resulted in a failed cut-and-paste that produced two sentence fragments.  One of my bosses laughed when I showed him my discovery, said that I had done a good job finding a mistake that had likely passed through many prior reviewers over the years, but concluded that since no one had ever pointed out hte errors that it was probably best to just leave things as they were! 
Enforcement Actions
Tags
Email Bill Singer Connect with Bill Singer on Facebook Follow Bill Singer on Twitter Link up with Bill Singer on LinkedIn Join Bill Singer on Google+