First Southern, LLC has been fined $250,000 by the Financial Industry Regulatory Authority (FINRA) after admitting to multiple regulatory failings.
First Southern Fined $250,000 by FINRA Over Compliance Failures
FINRA revealed in a recent release that the financial services firm was fined for lapses in supervision, inaccurate reporting, and failures under the Regulation Best Interest (Reg BI) framework.
The Puerto Rico-based brokerage, which employs 42 registered representatives across four offices, submitted a Letter of Acceptance, Waiver, and Consent (AWC) agreeing to FINRA’s sanctions without admitting or denying the findings.
FINRA cited the firm’s failure since mid-2020 to implement written supervisory procedures adequate to ensure compliance with Reg BI, a key rule requiring brokers to act in the best interests of retail investors.
The firm’s oversight system was found to be insufficient in both design and enforcement.
Additionally, FINRA said that since January 2020, First Southern miscalculated its net capital, filed at least 29 inaccurate financial reports, and did not properly supervise its financial reporting.
The firm also reportedly failed to accurately and promptly report around 5,000 municipal securities transactions to the Municipal Securities Rulemaking Board (MSRB), with delays averaging over three hours.
As part of the settlement, First Southern was censured and must certify within 180 days that it has corrected the issues and implemented compliant supervisory procedures.
Of the total $250,000 fine, $125,000 relates specifically to violations of MSRB rules.
FINRA stated that the firm has already ceased the problematic reporting practice and transitioned to a manual upload system to ensure greater accuracy.
