FINRA has issued its first disciplinary action related to Reg BI. The regulatory authority levied a $5,000 fine and a six-month suspension on a broker for allegedly causing their client to pay tens of thousands in commissions on an account of less than $30,000. It is the first time FINRA has taken action against a broker for alleged violations of the SEC's Reg-BI fiduciary rule. Charles V. Malico, who worked for Network 1 Financial Securities at the time of the violation, accepted and consented to the agency’s findings without admission or denial. According to findings, between July 2020 and November 2021, Malico violated Reg BI when he recommended a series of trades in the account of a retail client that was considered excessive based on the customer’s investment profile. Therefore, his actions were not in the client’s best interest. Making matters worse, Malico allegedly recommended that his client buy and sell a security, only to repurchase the same security days or weeks later. FINRA was made aware of the broker’s conduct through a review of a customer-initiated arbitration. The arbitration, which is still pending, stemmed from a Dec. 6, 2021 customer complaint that alleged negligence, breach of fiduciary duty, and negligent supervision. 

Finsum: In its first disciplinary action related to Reg BI, FINRA levied a $5,000 fine and a six-month suspension on a broker for not acting in the best interests of his client.