Jefferies FINRA Fine: What You Need to Know
Jefferies recently faced a $37,200 fine from FINRA due to supervisory failures related to Regulation M compliance from January 2018 to September 2022. This fine was part of a $250,000 settlement that was resolved alongside similar issues.
Regulation M, established under the Securities Exchange Act of 1934, prohibits underwriters and broker-dealers from engaging in certain activities during restricted periods to prevent market manipulation. In Jefferies’ case, FINRA found that the firm did not have sufficient supervisory systems and procedures in place to prevent prohibited trading activity during these restricted periods.
According to FINRA, Jefferies did not conduct thorough supervisory reviews to ensure compliance with Regulation M. The written supervisory procedures outlined by the firm were not adequate in verifying restricted periods or preventing impermissible trading, leading to uncertainty about whether covered securities were purchased during restricted periods.
Although Jefferies did not admit or deny the findings, they have implemented changes to their supervisory systems to address these issues. Despite the fine and censure, the penalty is considered minor given the size of the firm.
