Monday, November 28, 2016

FINRA Fines Oppenheimer $3.4 Million

What violations did investment bank Oppenheimer commit?

Recently, investment bank Oppenheimer & Co. Inc. agreed to pay $3.4 million in penalties imposed by the Financial Industry Regulatory Authority (FINRA) for several reporting violations.  FINRA fined the massive corporation $1.575 million and ordered the firm to pay its customers $1.85 million for failure to report information to FINRA, withholding discovery during arbitrations, and overcharging customers.  

According to FINRA, Oppenheimer did not timely report over 350 required filings over a period of several years.  These required filings included employee disciplinary actions, securities related regulatory filings, and settlement information for litigation and arbitrations.  These filings were delayed by four years, on average.  

In addition to delayed reporting, Oppenheimer failed to report that its compliance officer and another employee were under investigation by the U.S. Securities and Exchange Commission.  On top of this violation, Oppenheimer also failed to provide discovery in arbitrations brought by customers over the improper dealings of former broker Mark C. Hotton.  Oppenheimer was already forced to pay more than $6 million to customers that claimed they were defrauded out of significant sums of money by Hotton.  

Oppenheimer issued a statement that emphasized the company’s improvements in policies and procedures to mitigate future reporting issues.  As part of the settlement, the company has neither admitted or denied wrongdoing.  Oppenheimer will comply with the financial obligations imposed by FINRA and presumably continue to focus on meeting all regulatory requirements.

Huge Fines Place FINRA On Track for Record Year

FINRA has assessed some massive fines thus far in 2016, surpassing last year’s total by almost 70 percent and breaking a record set in 2014.  During the first half of the year, FINRA assessed close to $80 million in fines against broker-dealers and their representatives.  If this trajectory continues, the agency will likely issue penalties of close to $159 million for the year 2016.  While the overall number of disciplinary actions is not much more than last year’s, FINRA has assessed a number of “supersized” fines, or those over $1 million.  

FINRA compliance is essential for all broker-dealers, but with so many regulations and rules changing every year, it can be hard to comply.  Contact a New York regulatory investigations and enforcement attorney as soon as possible for assistance with any regulatory matters or concerns.  

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