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March 31, 2015 at 09:04 AM
The Financial Industry Regulatory Authority warned broker-dealers Monday to ensure their consolidated reports are clear and accurate after sanctioning three firms for such violations.
H. Beck, Inc., LaSalle St. Securities, LLC, and J.P. Turner & Company, LLC were each fined $425,000, $175,000 and $100,000, respectively, for inadequate supervision of consolidated reports provided to customers and other violations.
While a consolidated report is a single document that combines information regarding most or all of a customer’s financial holdings, regardless of where those assets are held, such reports do not replace official customer account statements required by FINRA rules and disseminated through a separate process, FINRA stated.
During routine exams, FINRA found that numerous registered reps of the three firms prepared and disseminated consolidated reports to customers with little or no prior review by a principal.
“H. Beck and J.P. Turner did not have any written procedures specifically addressing the use and supervision of consolidated reports, while LaSalle St. Securities had written procedures related to consolidated reports, it failed to enforce the procedures and did not provide proper training to its representatives regarding their use,” FINRA said.
Across each firm, many registered reps utilized consolidated report systems that allowed them to enter customized values for accounts or investments “held away from the firm yet the firms’ procedures did not provide safeguards, such as requiring supporting data, to verify accuracy.”
