FINRA fines Dough LLC for unregistered principal
Dough LLC has agreed to a fine as a part of a settlement with the Financial Industry Regulatory Authority (FINRA).
Dough has been a FINRA member since November 2009 and is located in Chicago, Illinois. The firm has eight registered representatives and provides retail brokerage services to investors.
From July 2019 through June 7, 2021, Dough allowed an individual to operate as a principal despite the firm knowing that the individual was not registered as a principal. As a result, the firm violated FINRA Rules 1220 and 2010.
FINRA Rule 1220 requires every principal engaged in the investment banking or securities business of a member to be registered in the registration category appropriate to his or her function. FINRA Rule 1220(a) defines “principal” as “any person associated with a member . . . who is actively engaged in the management of the member’s investment banking or securities business, such as supervision, solicitation, conduct of business in securities or the training of persons associated with a member for any of these functions. Such persons shall include, among other persons, a member’s chief executive officer and chief financial officer (or equivalent officers).”
A violation of FINRA Rule 1220 also constitutes a violation FINRA Rule 2010.
From July 2019 through June 7, 2021, Dough permitted an individual to operate as a principal despite knowing that the individual was not registered as a principal. During this period, Dough’s president/chief operating officer and chief compliance officers were registered principals.
With Dough’s knowledge, the unregistered individual functioned as a principal by, among other things, identifying as the firm’s chief executive officer, being involved in decisions regarding the employment status and compensation of the firm’s employees, and actively engaging in parts of the firm’s securities business.
Therefore, the company violated FINRA Rules 1220 and 2010.
Under the settlement, the respondent consents to the imposition of the following sanctions:
- a censure and
- a $10,000 fine.