In the dynamic world of financial regulation, staying compliant with evolving rules is paramount for any securities firm. Murray Securities, Inc.’s recent sanctions by the Financial Industry Regulatory Authority (FINRA) underscore the importance of adhering to regulatory standards, particularly concerning Regulation Best Interest (Reg BI) and Form CRS. At Bakhtiari & Harrison, our experienced securities attorneys are dedicated to helping firms navigate these complexities, ensuring they remain compliant and avoid costly penalties.
Murray Securities, Inc. Sanctioned by FINRA
On April 8, 2024, Murray Securities, Inc. (CRD #142783, Tyler, Texas) faced significant sanctions from FINRA. The firm was censured, fined $35,000, and required to certify that it had reviewed and remediated deficiencies in its customer relationship summary (Form CRS). Additionally, the firm had to file, deliver, and post online a compliant Form CRS, and implement a supervisory system, including written supervisory procedures (WSPs) and training designed to achieve compliance with Reg BI and Form CRS requirements.
Without admitting or denying the findings, Murray Securities consented to the sanctions and acknowledged several compliance failures. The firm willfully violated Rule 15l-1(a)(1) of the Exchange Act by failing to establish written policies and procedures, and a supervisory system, reasonably designed to achieve compliance with Reg BI. Specifically, the firm’s written policies and procedures contained no provisions related to Reg BI until over a year after the rule’s implementation date. The updated policies, which remain in effect, discuss Reg BI in general terms without addressing its Conflict of Interest Obligation or establishing detailed procedures for compliance with Reg BI’s Care Obligation.
Furthermore, Murray Securities failed to detail the supervisory steps and reviews required to ensure compliance with Reg BI. The firm’s WSPs did not specify the frequency of these reviews, how they should be documented, or whether any exception reports or automated systems should be used.
Deficiencies in Form CRS Compliance
Murray Securities also willfully violated Exchange Act Rule 17(a)(1) and Rule 17a-14 by omitting required information from its Form CRS and failing to establish a supervisory system designed to achieve compliance with Form CRS obligations. For an extended period, the firm’s WSPs did not reference Form CRS. Although the updated WSPs now address Form CRS, they still lack procedures for supervising the review of Form CRS to determine necessary updates and for maintaining records of its delivery to retail investors.
The Role of Securities Attorneys in Ensuring Compliance
The case of Murray Securities highlights the critical role that securities attorneys play in ensuring firms adhere to regulatory standards. At Bakhtiari & Harrison, our team of expert securities attorneys provides comprehensive legal support to help firms develop and implement effective compliance programs. Our services include:
- Developing Comprehensive Policies and Procedures: We help firms create detailed policies and procedures that address all aspects of Reg BI and Form CRS, ensuring that they meet regulatory requirements.
- Implementing Robust Supervisory Systems: Our attorneys assist in establishing supervisory systems that include clear guidelines for review and documentation processes, ensuring ongoing compliance.
- Providing Targeted Training: We design and deliver training programs tailored to the specific needs of our clients, ensuring that all personnel understand and adhere to regulatory obligations.
- Conducting Compliance Audits: Our team conducts thorough audits to identify potential compliance gaps and recommend corrective actions, helping firms stay ahead of regulatory changes.
Contact Bakhtiari & Harrison Today
For expert legal advice and support in securities law, including compliance with Reg BI and Form CRS, contact Bakhtiari & Harrison. Our team of experienced securities attorneys is here to provide the guidance and support you need to navigate regulatory challenges and maintain compliance. Visit our website or call us today to learn more about our services.