Finra Fines Northern Trust $600,000 For Supervisory Deficiencies
The Financial Industry Regulatory Authority (FINRA) announced on June 2, 2011 that it had fined Northern Trust Securities, Inc. $600,000 for inadequate supervision in the sale of collateralized mortgage obligations (CMO) and to have systems in place to monitor high volume securities trades. It was determined by FINRA that between October 2006 and October 2009, Northern Trust failed to monitor customer accounts for potentially unsuitable levels of concentration in CMOs, since it used an exception reporting system that did not capture CMOO transactions, some trades of 10,000 shares of stock and some trades of 250 or more of fixed income bonds. From January 2007 to June 2008, some 43% of the firm’s business was excluded from review.
Brad Bennett, with FINRA Enforcement, said that the deficient systems in place “left vulnerable investors exposed to the risk of losing all or a substantial portion of their principal” due to concentration in CMOs.