Public records provided by the Financial Industry Regulatory Authority (FINRA) and accessed on November 29, 2018 indicate that New York-based brokerage firm JVB Financial has been sanctioned by FINRA in connection to alleged risk management and supervisory failures. Fitapelli Kurta is interested in hearing from investors who have complaints regarding JVB Financial (CRD# 149758).
According to a letter of Acceptance, Waiver and Consent (No. 2015047526601) released by FINRA, JVB Financial failed between July 3012 and December 2015 to “establish, document, and maintain a system of risk management controls and supervisory procedures reasonably designed to manage the financial, regulatory, and other risks associated with market access,” allegedly violating securities laws and rules.
FINRA’s findings note that Exchange Act Rule 15c3-5 requires broker-dealer firms with market access—that is, which give customers or anyone else access to a securities exchange or alternate system of trading securities—to establish and maintain a documented system of risk management controls and supervisory protocols. These controls and protocols should be designed to limited the broker or dealer’s financial exposure and to ensure compliance with relevant regulatory requirements.
Furthermore, FINRA notes, Exchange Act Rule 15c3-5(c)(1) requires that firms reasonably design these controls and procedures to “prevent the entry of” orders that surpass “appropriate pre-set credit or capital thresholds in the aggregate for each customer and the broker or dealer,” and orders issued in error. 15c3-5(e)(1), moreover, requires that firms with market access similarly establish and maintain a system for reviewing the efficacy of those rules and procedures.
According to FINRA’s findings, JVB Financial made use of “multiple alternative trading systems” in connection to fixed income transactions, and while it had some controls and procedures in place to satisfy the aforementioned requirements, “it failed to establish, document and maintain controls and supervisory procedures reasonably designed to prevent orders that exceeded pre- set capital thresholds,” in consequence exceeding its capital limits on as few as four instances. The firm also allegedly failed to implement “hard blocks for its capital limits” across all relevant systems in April 2015, and from April 2015 to December 2015 failed to maintain pre-trade controls that would prevent the execution of orders that exceeded capital limits for certain transactions.
FINRA also found that between July 2013 and April 2015, the firm “failed to establish, document and maintain pre-trade controls,” instead depending on its traders’ manual identification of duplicative orders; when it shifted to a reliance on automated alerts in April 2015, according to FINRA, it failed to maintain controls that were reasonably designed to prevent such orders “for two asset classes until April 2016.”
In connection to these and other findings, FINRA censured JVB Financial and issued it a fine totaling $50,000.
If you or someone you know has lost money investing with JVB Financial, call Fitapelli Kurta at 877-238-4175 for a free consultation. You may be eligible to recoup your losses. Fitapelli Kurta accepts all cases on a contingency basis: we only get paid if and when you collect money. Time to file your claim may be limited, so we encourage you to avoid delay. Call 877-238-4175 now to speak to an attorney for free.