Fined for Failing to Supervise

A broker/dealer recently faced a $30,000 fine from FINRA because they failed to detect a representative's involvement in an OBA with a medical cannabis company. The representative not only participated in managing and operating the cannabis company but also co-owned it.
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When a supervisor asked about the representative's involvement in the marijuana business, the representative denied having any knowledge or involvement with the company. Unfortunately, in this case, the broker/dealer mishandled and ignored several warning signs, which raised significant concerns for FINRA. This broker/dealer also dismissed multiple compliance issues when they were identified.

According to FINRA, “The firm failed to take reasonable steps to investigate red flags that the representative was engaged in an undisclosed outside business activity and unapproved private securities transactions.”

Eagle Eye was developed to tackle the challenge of relying solely on OBA disclosures from your registered representatives. It utilizes artificial intelligence and machine learning to automatically monitor their online presence. This proactive approach helps identify any compliance issues that need to be escalated to higher levels of authority for review, tracking, and documentation until they are resolved.

Moreover, Eagle Eye offers the added benefit of conducting Secretary-of-State searches across all 50 states. This feature allows you to uncover any corporate registrations associated with your advisors, seamlessly integrating the findings into Eagle Eye's workflow, accessible throughout your organization.

By leveraging Eagle Eye, you can ensure comprehensive supervision of your registered representatives, effectively mitigate risks, and take proactive steps to address compliance issues.

​Source: finra.org