The Financial Industry Regulatory Authority has fined Thurston Springer Financial for failing to comply with Regulation Best Interest as well as failing to review electronic communications to identify potential customer complaints.
The firm agreed to a censure and a $150,000 fine.
According to FINRA's order, from June 2020 through August 2021, Thurston Springer failed to establish, maintain and enforce written policies and procedures for Reg BI compliance or to ensure it filed and delivered the customer relationship summary known as Form CRS.
Thurston Springer, a full-service broker-dealer headquartered in Indianapolis with approximately 118 registered representatives in 34 branch offices, also failed to establish a supervisory system, including written supervisory procedures, to comply with its obligation to review electronic communications.
While the firm’s WSPs discussed Reg BI in general terms, they did not establish procedures for achieving compliance with Reg BI’s care and conflict of interest obligations, according to FINRA.
For example, "the WSPs contained no provisions describing the steps registered representatives should take to ensure that their recommendations are in the best interests of customers. Moreover, the WSPs contained no provisions describing how firm supervisors should review recommendations for compliance with Reg BI’s Care Obligation, including to determine whether the representative considered costs associated with the recommendation, as well as reasonably available alternatives," the order states.
The WSPs also contained "general provisions regarding identifying and mitigating conflicts of interest, but contained no specific provisions regarding disclosure of potential conflicts of interest to retail customers," FINRA states.
As to Form CRS, specifically, "the firm’s WSPs do not include procedures regarding delivering the Form CRS to prospective and new retail customers, updating the Form CRS when necessary, or creating and maintaining records related to the Form CRS," according to the order.
"Moreover, the WSPs do not designate a supervisor with responsibility to achieve compliance with the firm’s Form CRS obligations," violating FINRA Rules 3110 and 2010, the order states.
From January through December 2021, Thurston Springer failed to establish, maintain and enforce a reasonable supervisory system for email reviews, including reasonable procedures for conducting such reviews. Thurston Springer failed to timely amend two Forms U4 and failed to report civil litigation to FINRA.
The firm neither admitted nor denied FINRA's findings.
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