FINRA fines Corinthian for allowing CEO and CCO to supervise their own trading
Corinthian Partners, LLC has agreed to pay a fine of $10,000 as a part of a settlement with the Financial Industry Regulatory Authority (FINRA).
From March 2018 to April 2019, Corinthian failed to establish, maintain, and enforce a supervisory system, including written supervisory procedures (WSPs), reasonably designed to prohibit firm principals from supervising their own trading. As a result, Corinthian allowed the CEO and CCO to supervise their own trading in accounts they jointly managed. By virtue of the forgoing, the firm violated FINRA Rules 3110 and 2010.
From March 2018, through April 2019, tho CEO and CCO jointly managed customer accounts and split commissions equally. The CEO or CCO provided supervisory approval for all trades in the accounts. Firm records reflect that there was a total of 488 trades conducted in those accounts.
For two trades, the CEO both entered and approved the trades. For the remaining 486 trades, firm surveillance could not distinguish who, as between the CEO and CCO, entered the trades, and therefore could not ensure that they were not self-supervising trades that they had entered.
During that period, Corinthian’s WSPs did not identify the individual responsible for trading reviews by name or title and did not assign the CEO’s or CCO’s trades to a different principal so that they were not self-supervising trades that they had entered.
Additionally, the WSPs failed to reflect the firm’s use of automated surveillance and electronic review of trades by a firm principal. Instead, the firm’s WSPs contained outdated references to discontinued manual reviews of trade blotters.
Therefore, Corinthian violated FINRA Rules 3110(a) and (b), and 2010.
On top of the $10,000 fine, the respondent has agreed to a censure.