Joseph Gunnar & Co. LLC has agreed to pay a fine of $100,000 as a part of a settlement with the Financial Industry Regulatory Authority (FINRA).

Between at least February 2023 and April 2024, Gunnar’s written policies and procedures were not reasonably designed to achieve compliance with Reg BI, as it relates to excessive trading. Although the firm used an “active account report” that showed turnover rate and cost-to-equity ratio in certain accounts, the firm failed to provide its supervisors with any guideposts or indicators to identify potentially excessive trading, such as benchmarks for high turnover rates and high cost-to-equity ratios.

Similarly, although the firm’s procedures indicated that the active account report would be used to evaluate commission restrictions and when to send a customer a letter listing the trading activity in the customer’s accounts, the procedures did not explain when or under what circumstances the firm would impose commission restrictions or what steps it would take after sending a trading activity letter to a customer.

As a result of these supervisory failures, the firm did not detect and address red flags of excessive trading in three customer accounts during the relevant period. Each of these accounts appeared on the firm’s monthly active account reports, which reflected the accounts turnover rates and cost-to-equity ratios.

Other than sending trading activity letters to the three customers, the firm took no further steps to address the trading in the three accounts until the firm restricted the charging of commissions in the three accounts in August 2024.

ln April 2024, the firm updated its policies and procedures to include information about the firm’s active account report and the use of activity letters and commission restrictions.

By failing to establish, maintain, and enforce a reasonable supervisory system, including written policies and procedures, to achieve compliance with Reg BI’s Care Obligation, as that rule relates to excessive trading, Gunnar violated Exchange Act Rule I 51-1 (a)(1), FINRA Rule 3110, and FINRA Rule 2010.

The firm has agreed to a censure in addition to the $100,000 fine.

Gunnar has been a member of FINRA since March 1990. It is a full-service brokerage firm headquartered in Uniondale, New York. The firm has 43 registered representatives in two branch offices.