NASD Conduct Rule 2430: Charges for Services PerformedCharges, if any, for services performed, including miscellaneous services such as collection of moneys due for principal, dividends, or interest; exchange or transfer of securities; appraisals, safe-keeping or custody of securities, and other services, shall be reasonable and not unfairly discriminatory between customers.Securities Exchange Act Rule 10b-10: Confirmation of TransactionsPreliminary Note.This section requires broker-dealers to disclose specified information in writing to customers at or before completion of a transaction. The requirements under this section that particular information be disclosed is not determinative of a broker-dealer's obligation under the general antifraud provisions of the federal securities laws to disclose additional information to a customer at the time of the customer's investment decision.Disclosure requirement. It shall be unlawful for any broker or dealer to effect for or with an account of a customer any transaction in, or to induce the purchase or sale by such customer of, any security (other than U.S. Savings Bonds or municipal securities) unless such broker or dealer, at or before completion of such transaction, gives or sends to such customer written notification disclosing:The date and time of the transaction (or the fact that the time of the transaction will be furnished upon written request to such customer) and the identity, price, and number of shares or units (or principal amount) of such security purchased or sold by such customer; andWhether the broker or dealer is acting as agent for such customer, as agent for some other person, as agent for both such customer and some other person, or as principal for its own account; and if the broker or dealer is acting as principal, whether it is a market maker in the security (other than by reason of acting as a block positioner) . . .
[A] substantial portion of the $60.50 charge was not attributable to any specific cost or expense incurred by the Firm or service performed by the Firm in executing each transaction or determined by any formula applicable to all customers. A substantial portion of the charge represented a source of additional transaction based remuneration or revenue to the Firm, and was effectively a minimum commission charge. . .
FINRA Anti-Money Laundering Rule 3310: Anti-Money Laundering Compliance ProgramEach member shall develop and implement a written anti-money laundering program reasonably designed to achieve and monitor the member's compliance with the requirements of the Bank Secrecy Act (31 U.S.C. 5311, et seq.), and the implementing regulations promulgated thereunder by the Department of the Treasury. Each member's anti-money laundering program must be approved, in writing, by a member of senior management. The anti-money laundering programs required by this Rule shall, at a minimum,(a) Establish and implement policies and procedures that can be reasonably expected to detect and cause the reporting of transactions required under 31 U.S.C. 5318(g) and the implementing regulations thereunder;(b) Establish and implement policies, procedures, and internal controls reasonably designed to achieve compliance with the Bank Secrecy Act and the implementing regulations thereunder;(c) Provide for annual (on a calendar-year basis) independent testing for compliance to be conducted by member personnel or by a qualified outside party, unless the member does not execute transactions for customers or otherwise hold customer accounts or act as an introducing broker with respect to customer accounts (e.g., engages solely in proprietary trading or conducts business only with other broker-dealers), in which case such "independent testing" is required every two years (on a calendar-year basis);(d) Designate and identify to FINRA (by name, title, mailing address, e-mail address, telephone number, and facsimile number) an individual or individuals responsible for implementing and monitoring the day-to-day operations and internal controls of the program (such individual or individuals must be an associated person of the member) and provide prompt notification to FINRA regarding any change in such designation(s); and(e) Provide ongoing training for appropriate personnel.Supplementary Material:.01 Independent Testing Requirements(a) All members should undertake more frequent testing than required if circumstances warrant.(b) Independent testing, pursuant to Rule 3310(c), must be conducted by a designated person with a working knowledge of applicable requirements under the Bank Secrecy Act and its implementing regulations.(c) Independent testing may not be conducted by:(1) a person who performs the functions being tested,(2) the designated anti-money laundering compliance person, or(3) a person who reports to a person described in either subparagraphs (1) or (2) above..02 Review of Anti-Money Laundering Compliance Person InformationEach member must identify, review, and, if necessary, update the information regarding its anti-money laundering compliance person designated pursuant to Rule 3310(d) in the manner prescribed by NASD Rule 1160.
[N]ot qualified to perform the test as he did not have a working knowledge of the applicable requirements under the Bank Secrecy Act and its implementing regulations. The AMI. test was not independent because RV reported directly to the Firm's AMI, compliance officer and took instruction from the compliance officer in how to perform the AMI, test and which documents to review. The test was not adequate as RV failed to actually test the adequacy of the Firm's AML compliance systems and instead relied on what he was told by the AMI compliance officer.
Also READ:STATEMENT OF CORRECTIVE ACTIONExamination No. 20110257009THIS CORRECTIVE ACTION STATEMENT IS SUBMITTED BY THE RESPONDENT. IT DOES NOT CONSTITUTE FACTUAL OR LEGAL FINDINGS BY FINRA, NOR DOES IT REFLECT THE VIEWS OF FINRAThis submissions in respectfully transmitted for purposes of identifyihg the various remedial measures undertaken by Blackbook (the "Firm") in furtherance of its ongoing objective to maintain supervisory systems reasonably designed to achieve compliance with respect to the applicable securities laws and regulations and rules of FINRA.1:FINCEN ReportsFINCEN Reports are now transmitted by email on a bi-weekly basis from fincen.gov to Blackbook's President Franklin Ogele's firm issued email address and have been contemporaneously reviewed by him since November 15, 2011.Mr. Ogele's reviews are evidenced by way of the FINCEN system's generation of search self-verification memoranda containing the details of such access including the corresponding date and time.2: Email PreservationAny and all business-related email communications - whether involving the Firm's customers, internal correspondence or otherwise -- are being archived by Global Relay and have been captured as such since September 2011.Global Relay is notably the market leader in compliance archiving and message management.3: AML TestThe Firm has been utilizing the services of reputable third parties with no prior nexus to it (i.e. Quadrant Compliance LLC and VMB Consulting Services, Inc.) for purposes of conducting its annual Independent AML tests for the years 2011, 2012 and 2013.4: Miscellaneous Fee ChargesContemporaneous with Blackbook having been freed of Penson's rather onerous five thousand dollar ($5.000) per month minimum charges in favor of Stern Agee's more reasonable one thousand dollar ($1,000) per month minimum fee structure, the Firm's prior $60.50 minimum ticket charge was initially reduced to $45.00 in May of 2012 and then promptly reduced yet again to $29.99 in July 2012.Moreover, upon approval of the Letter of Acceptance, Waiver and Consent, the Firm will timely implement its undertaking set forth in §B (1), (2) and (3) with respect to any remaining transaction based charge or fee that may be imposed for services performed or costs incurred by the Firm that is not specifically included as part of reported commissions or markup/markdowns.5: ConclusionWe respectfully submit that the above referenced remedial measures undertaken by Blackbook Capital stand testament to the firm's ongoing objective of maintaining supervisory systems reasonably designed to achieve compliance with respect to the applicable securities laws and regulations and rules of FINRA.Thank you for your continued consideration in this matter . . .