FINRA Fines Firm for Reg BI Failures
Jeffrey Matthews Group had inadequate written procedures and training for reps, FINRA said.
The Financial Industry Regulatory Authority has fined The Jeffrey Matthews Financial Group $17,500 for failing to establish, maintain and enforce written policies and procedures reasonably designed to achieve compliance with Reg BI and Form CRS.
According to FINRA’s order, from June 30, 2020, until March 2023, despite the firm’s awareness of Reg BI’s June 30, 2020, implementation date, the firm’s WSPs contained a section titled Reg BI but contained no policies or procedures regarding complying with Reg BI’s requirements.
During the same period, JMFG also failed to establish and maintain WSPs reasonably designed to achieve compliance with its obligations to prepare, file, deliver and update its customer relationship summary, or Form CRS.
Further, the order states, JMFG’s training on Reg BI to its representatives was inadequate as it focused on suitability rather than the requirements of Reg BI.
The firm, headquartered in Florham Park, New Jersey, with nine branch offices and approximately 40 registered representatives, is a full-service broker-dealer that primarily conducts a municipal securities business.
JMFG willfully violated Reg BI, MSRB Rule G-27 and FINRA Rules 3110 and 2010, FINRA says.
JMFG accepted and consented to FINRA’s findings without admitting or denying them.
In a statement, JMFG told ThinkAdvisor that the firm “has since updated the Reg BI section of its WSPs and Form CRS consistent with FINRA’s findings to include all required components of Reg BI and has trained all employees on the updated procedures” as of Dec. 21, 2023.
“We confidently assert that JMFG is now in full compliance with MSRB Rule G-27 and FINRA Rules 2010 and 3110,” the JMFG statement said.
The firm was ordered to pay $17,500 for the Reg BI and Form CRS violations and $17,500 for violating MSRB Rule G-27, which requires BDs to establish and maintain a supervisory system, including written supervisory procedures, to supervise the municipal securities activities of each registered rep.