Dealing with customer complaints can be tricky: sometimes, personnel fails to identify certain communication as a complaint. A delay in the reporting of a $30,000 settlement of a customer’s claim against one of its associated persons for sales practice violations is among the problems that have resulted in a $125,000 fine for National Securities Corporation.

The firm has agreed to pay the fine as a part of a settlement with the United States Financial Industry Regulatory Authority (FINRA). The settlement concerns violations of rules that treat the filings of reports about customer complaints.

Between May 2015 and November 2018, National Securities filed four late amendments to Forms U4 and eight late amendments to Forms U5 relating to reportable customer complaints and an unsatisfied judgment. The firm knew about each of these events but was between one month and two years late in disclosing them, with an average delay of more than 13 months, and often did not disclose them until after FINRA inquiry.

The firm also failed to file five Form U4 amendments relating to reportable customer complaints during this period.

Furthermore, between May 2015 and November 2018, National Securities failed to comply with its reporting obligations under FINRA Rule 4530. The firm reported a $30,000 settlement of a customer’s claim for damages against one of its associated persons for sales practice violations a year late.

The firm also failed to report, or failed to report timely, statistical and summary information to FINRA regarding 19 written customer complaints. In addition, the firm submitted 34 inaccurate or incomplete filings required by FINRA Rule 4530(d).

Between May 2015 and November 2018, National Securities had written procedures in place regarding the firm’s obligations to collect and report information to FINRA on Forms U4 and U5 and as required by FINRA Rule 4530. However, the firm failed to enforce these procedures to ensure the timely and accurate filing of required information.

The failure to enforce the firm’s procedures occurred for various reasons. In some instances, firm personnel failed to identify the communication at issue as a complaint or incorrectly determined that a customer complaint was not a reportable event. In other instances, firm personnel failed to timely review and process customer complaints in accordance with firm procedures. On certain other occasions, the firm’s registration group entered the wrong problem code or failed to identify the subject security in a FINRA Rule 4530 filing.

In addition to the fine, the firm has consented to the imposition of a censure.