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IX. Reporting/Provision of Information [Version up to Mar. 22, 2011]

FOCUS Reports—Late Filing; Failing to File; Filing False or Misleading Reports

FINRA Rule 2010 and SEC Rule 17a-51

Principal Considerations in Determining Sanctions Monetary Sanction Suspension, Bar or Other Sanctions
See Principal Considerations in Introductory Section
1. Number of days late respondent filed reports.
2. Whether respondent filed late to delay reporting a recordkeeping, operational, or financial deficiency.
Late Filing

Fine of $1,000 to $20,000.

Failure to File or Filing False or Misleading Reports

Fine of $10,000 to $50,000.
Late Filing

In egregious cases, consider suspending the firm from all solicited retail business for up to 20 business days; also consider suspending the Financial Principal or other responsible principal in any or all capacities for up to 10 business days.

Failure to File or Filing False or Misleading Reports

Consider suspending the firm from all solicited retail business for up to 30 business days and thereafter until the firm corrects all deficiencies; also consider suspending the Financial Principal or other responsible principal in any or all capacities for up to two years.

1 This guideline is intended to apply to FOCUS Reports Parts I, II and IIA.


Forms U4/U5—Late Filing of Forms or Amendments; Failing to File Forms or Amendments; Filing of False, Misleading or Inaccurate Forms or Amendments (continued)

Article V of FINRA By-Laws and FINRA Rule 20101

Principal Considerations in Determining Sanctions Monetary Sanction Suspension, Bar or Other Sanctions
See Principal Considerations in Introductory Section
1. Nature and significance of information at issue.
2. Whether failure resulted in a statutorily disqualified individual becoming or remaining associated with a firm.
3. Whether respondent member firm's misconduct resulted in harm to a registered person, another member firm or any other person or entity.
Late Filing of Forms or Amendments

Individual
Fine of $2,500 to $25,000.

Firm and/or Responsible

Principal
Fine of $5,000 to $50,000.

Failure to File or Filing False, Misleading or Inaccurate Forms or Amendments2

Individual
Fine of $2,500 to $50,000.
Failure to File or Filing False, Misleading or Inaccurate Forms or Amendments

Individual

Consider suspending individual in any or all capacities for five to 30 business days.

1 This guideline also is appropriate for violations of MSRB Rule G-7 and for failures to report changes in ownership or control of member firms.

2 As set forth in General Principle No. 6, Adjudicators may increase the recommended fine amount by adding the amount of a respondent's financial benefit.


Forms U4/U5—Late Filing of Forms or Amendments; Failing to File Forms or Amendments; Filing of False, Misleading, or Inaccurate Forms or Amendments

Article V of FINRA By-Laws and FINRA Rule 2010

Principal Considerations in Determining Sanctions Monetary Sanction Suspension, Bar or Other Sanctions
See Principal Considerations in Introductory Section Responsible Principal and/or Firm

Fine of $5,000 to $100,000.
Responsible Principal at the Firm

Consider suspending responsible principal in all supervisory capacities for 10 to 30 business days.

In Egregious Cases (such as: those involving repeated failures to file, untimely filings or false, inaccurate, or misleading filings; those involving the failure to disclose or timely to disclose a statutory disqualification event or customer complaint; or where the failure to disclose or timely to disclose delayed regulatory investigation of terminations for cause):

Individual —Consider a longer suspension in any or all capacities (of up to two years) or a bar.

Responsible Principal at the Firm —Consider a suspension in any or all capacities (of up to two years) of responsible principal or bar of responsible principal in all supervisory capacities.

Firm — Suspend firm with respect to any or all activities or functions until the firm corrects the deficiency.

MSRB Rule G-36 (Timely Filing of Offering Documents With the MSRB)—Late Filing and Failing to File

MSRB Rule G-36

Principal Considerations in Determining Sanctions Monetary Sanction Suspension, Bar or Other Sanctions
See Principal Considerations in Introductory Section
1. Average number of days late.
2. Whether respondent also failed to comply with the recordkeeping requirements of MSRB Rule G-8 concerning the delivery of Official Statements and Advance Refunding Documents to the MSRB.
3. Evidence of improper mailing; i.e., by means that do not provide a record of sending.
4. Extent to which violative conduct deprived the investors or other market participants of publicly available information regarding the issuer.
Late Filing

Fine of $5,000 to $10,000. Consider imposing a fine on a per violation basis.

Failure to File

Fine of $5,000 to $20,000. Consider imposing a fine on a per violation basis.
Late Filing

In egregious cases, consider suspending the firm from engaging in all municipal underwriting activities for up to 30 business days. Also consider suspending the responsible individual in any or all capacities for up to 30 business days.

Failure to File

In egregious cases, consider suspending the firm from engaging in all municipal underwriting activities for up to 30 business days. Also consider suspending the responsible individual in any or all capacities for up to 60 business days.

MSRB Rule G-37 Reporting—Late Filing; Failing to File; Filing False or Misleading Reports

MSRB Rule G-37

Principal Considerations in Determining Sanctions Monetary Sanction Suspension, Bar or Other Sanctions
See Principal Considerations in Introductory Section
1. Whether the report is inaccurate, outdated or both.
2. Whether respondent is active in the municipal underwriting business and generally makes political contributions.
3. Whether respondent eventually filed report, albeit late.
4. Whether violation involved failing to report political contributions or failing to report participation in an underwriting.
5. Extent to which violative conduct deprived the investing public or other market participants of information regarding the issuer.
6. With respect to false or misleading reports, whether misconduct was intentional or reckless.
Late Filing

Fine of $5,000 to $10,000. Consider imposing a fine on a per violation basis.

Failure to File

Fine of $5,000 to $20,000. Consider imposing a fine on a per violation basis.

Filing False or Misleading Reports

Fine of $10,000 to $100,000 per violation.
Late Filing

In egregious cases, consider suspending the firm from engaging in all municipal underwriting activities for up to 30 business days. Also consider suspending the responsible individual in any or all capacities for up to 30 business days.

Failure to File

In egregious cases, consider suspending the firm from engaging in all municipal underwriting activities for up to 30 business days and thereafter until the firm files accurate reports, as required by the rules. Also consider suspending the responsible individual in any or all capacities for up to 60 business days.

Filing False or Misleading Reports

Consider suspending the firm from engaging in all municipal underwriting activities for up to two years. Also consider suspending the responsible individual in any or all capacities for up to two years or barring the individual.

Regulation M Reports—Late Filing; Failing to File; False or Misleading Filing

FINRA Rules 2010, 5110, 5190, 6275, 6470 and 6540

Principal Considerations in Determining Sanctions Monetary Sanction Suspension, Bar or Other Sanctions
See Principal Considerations in Introductory Section
1. Number of days that report is late.
2. Whether report contains a significant number of material inaccuracies.
Late Filing

First Action1
Fine of $1,000 to $2,000.

Second Action
Fine of $2,000 to $5,000.

Subsequent Actions
Fine of $3,000 to $10,000.

Failure to File, or False or Misleading Filing

First Action
Fine of $1,000 to $10,000.

Subsequent Actions
Fine of $10,000 to $100,000.
Late Filing; Failure to File; False or Misleading Filing

In egregious cases, consider suspending the responsible individual in any or all capacities for up to two years or barring the individual. Also consider suspending the firm with respect to any or all corporate financing and/or market- making activities for up to 15 days and thereafter until the firm accurately files the required reports.

1 Adjudicators should consider actions concerning violative events that occurred within the three years prior to the misconduct at issue. Events that are more recent in time, however, should be given more weight than less recent events.


Reportable Events Under NASD Rule 3070—Late Reporting; Failing to Report; Filing False, Inaccurate or Misleading Reports

FINRA Rule 2010 and NASD Rule 3070

Principal Considerations in Determining Sanctions Monetary Sanction Suspension, Bar or Other Sanctions
See Principal Considerations in Introductory Section

Late Reporting
1. Number and type of incidents not reported.
2. Whether events reported in late reports established a pattern of potential misconduct.

Failure to Report or Filing False, Misleading, or Inaccurate Reports

1. Whether events not reported or reported inaccurately would have established a pattern of potential misconduct.
2. In cases involving the failure to file or inaccurate filing of a quarterly report, the number and type of incidents not reported or reported inaccurately.
Late Reporting

Fine of $5,000 to $50,000.

Failure to Report or Filing False, Misleading, or Inaccurate Reports1

Fine of $5,000 to $100,000.
Late Reporting

In egregious cases, consider suspending the responsible principal in any or all capacities for up to two years or barring the responsible principal in all supervisory capacities.

Failure to Report or Filing False, Misleading or Inaccurate Reports

Consider suspending responsible principal in all supervisory capacities for 10 to 30 business days.

In egregious cases, consider suspending the responsible principal in any or all capacities for up to two years or barring the responsible principal in all supervisory capacities. Also consider suspending the firm with respect to any or all activities or functions until the firm corrects the deficiency.

1 As set forth in General Principle No. 6, Adjudicators may increase the recommended fine amount by adding the amount of a respondent's financial benefit.


Request for Automated Submission of Trading Data—Failure to Respond in a Timely and Accurate Manner

FINRA Rules 2010, 8211 and 82131

Principal Considerations in Determining Sanctions Monetary Sanction Suspension, Bar or Other Sanctions
See Principal Considerations in Introductory Section 10 to 15 Days Late
Fine of $100 per day.

16 to 30 Days Late
Fine of $500 per day.
 

1 Any automated submission submitted by a member firm more than 30 calendar days late generally is alleged to constitute a violation of Rule 8210. A firm with a history of more than four violations of Rules 8211 and 8213 may be alleged to have violated Rule 8210. The filing of incomplete or inaccurate automated submissions or the filing of manual submissions without prior exemptions may be alleged to constitute a violation of Rule 8210.


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