FINRA recently fined two firms a total of $850,000 related to broker reporting failures. FINRA fined UBS Financial Services Inc., the broker-dealer unit of UBS Wealth Management Americas, $500,000 for failing to report liens or civil judgments for as many as 100 brokers between 2010 and 2013. Finra also fined The Vanguard Group Inc. $350,000 for similar reporting failures for around 80 brokers between 2011 and 2013.
FINRA rules require firms to disclose customer complaints, regulator actions and criminal charges as well as legal actions taken against brokers, such as tax levies, judgments from creditors or child support orders, within 30 days of receiving notice of these events. Such actions typically are then reported publicly on Finra’s BrokerCheck record.
BrokerCheck disclosure recently has been criticized following calls by plaintiffs’ attorneys in March 2014 for enhanced disclosure of possible red flags and a Wall Street Journal analysis last year that found more than 1,500 brokers with bankruptcy filings from 2004 to 2012 that had not been disclosed on their public records, according to Investment News.
FINRA said the reporting issues at UBS and Vanguard stemmed from supervisory lapses, such as the firms’ payroll departments failing to notify compliance or conduct further investigation when a creditor’s wage garnishment order was received.
In September, Vanguard retained an independent consultant to enhance its policies and procedures on reporting disclosure events, according to Investment News.
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