Katalyst Securities to pay $15,000 fine for failure to maintain minimum required net capital
Katalyst Securities LLC has agreed to pay a $15,000 fine as a part of a settlement with the Financial Industry Regulatory Authority (FINRA). The settlement stems from Katalyst’s failure to maintain the minimum required net capital for several days in 2020.
Between May 5 and June 18, 2020, Katalyst’s required minimum net capital ranged between $7,303 and $24,253. During that period, Katalyst failed to record its financial entries in a timely manner, monitor the firm’s net capital position on a day to day basis, and set aside adequate funds should the need arise to make an immediate capital contribution.
For example, the firm failed to timely and accurately account for payments of unusually large invoices, as well as amounts due to representatives derived from private offering sales, when evaluating its net capital status. These failures caused the firm’s net capital to fall below the required minimum, with daily deficiencies ranging between $4,280 and $100,999.
Katalyst conducted a securities business on six days between May 5 and June 18, 2020.
Therefore, Respondent violated Exchange Act§ 15(c) and Exchange Act Rule 15c3-1, and FINRA Rules 411 0(b) and 2010.
In addition to the fine, the firm has agreed to a censure.