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November 13, 2015 at 04:47 AM
Among recent enforcement actions, the Financial Industry Regulatory Authority went after failures in research report disclosures. It censured and fined JMP Securities, Pacific Crest Securities and William Blair & Co. individually for various failures in research reports the firms issued. Each of the firms consented to FINRA’s sanctions while neither admitting nor denying the agency’s findings.
William Blair & Co.Censured, Fined on Disclosure Failures
FINRA censured Chicago-based William Blair & Co. and fined the firm $350,000 after it found that the firm failed in several respects to make clear, comprehensive and prominent disclosures in its research reports.
According to the agency, the firm used an indefinite or conditional statement in certain research reports that was not specific enough to satisfy regulations, and was not clear, comprehensive and prominent. In addition to the disclosure required by Rule 2711(h)(8), the firm also included a conditional statement in certain research reports; the firm’s disclosures were not clearly identified or sufficiently prominent to satisfy regulations. The firm also commingled required disclosures with other disclosures and disclaimers that were not required by the rule. During one specific period of time, these deficiencies were present in most of the research reports the firm published.
In addition, the firm omitted from four of its research reports disclosures regarding if the firm managed or comanaged a public offering of securities for the subject company in the past 12 months and, in two of its research reports, it failed to adequately define research ratings. It did not did not disclose its relevant relationship to the companies covered in the compendium research reports, and did not direct readers in a clear manner to where applicable disclosures could be found. And it improperly published two research reports during the quiet period after a secondary offering.
JMP Securities Censured, Fined on Disclosure Failures
FINRA has censured and fined San Francisco-based JMP Securities $125,000 for failing to adequately disclose information in research reports.
According to the agency, the firm sought investment banking business from each company covered by its research at least once a quarter. But instead of complying with a specific disclosure requirement, the firm used a much less specific boilerplate statement that not only failed to be comprehensive but also was not prominently featured in the reports.
