Finra previously barred CJ in a separate disciplinary action, the regulator said.
Finra also found that from June 2015 through March 2018, Summit failed to reasonably supervise its representatives’ use of “consolidated reports,” customer documents the reps created an used to report all of a customer’s financial holdings, including assets held away from the firm.
Finra has issued a number of regulatory warnings (including http://www.finra.org/industry/notices/10-19) reminding broker-dealers that, if not rigorously supervised, consolidated reports can allow reps “to communicate inaccurate, confusing or misleading information to customers.”
Summit prohibited registered representatives from sending consolidated reports unless they used a template that the firm had reviewed and approved. Finra discovered, however, that the firm did not have a reasonable system to track whether its reps complied.
Although approximately 100 Summit representatives sent customers consolidated reports during this period, only eight of the reps received the required review and approval from Summit.
One consolidated report sent by a Summit broker to a customer “materially misstated the value of the customer’s investment,” Finra said.