Principal Securities Inc., headquartered in Des Moines, Iowa, has been censured and fined $125,000.00 by Financial Industry Regulatory Authority (FINRA) based upon consenting to findings that the firm failed to create and implement adequate supervision systems pertaining to consolidated reports. Letter of Acceptance, Waiver and Consent, No. 2015043589501 (Dec. 21, 2016).
According to the AWC, from July of 2013 to February of 2015, Principal Securities’ registered representatives were permitted to utilize four programs to prepare consolidated reports for customers. In the process, manual entries were made by registered representatives concerning customers’ assets held within Principal Securities as well as outside the firm. Apparently, the firm’s policies did not require that the reports be reviewed by a supervisor prior to distribution to customers. Consequently, no review had occurred by supervisors for data which was manually entered by registered representatives. FINRA found that the firm’s conduct here was violative of FINRA Rules 2010, 3110, and NASD Rule 3010.
In addition, Principal Securities Inc. was cited for failing to retain documents concerning customer records, documents pertaining to investment advice provided by the firm, and copies of the customers’ financial plans that had been created by the firm’s staff. Apparently, two of Principal Securities’ registered representatives never retained the reports. Consequently, FINRA found that Principal Securities’ supervisory failures were violative of FINRA Rules 2010, 3110(b), and NASD Rule 3010(b). Further, FINRA found that the firm’s failures pertaining to consolidated report retention was violative of FINRA Rules 2010, 4511, and SEC Rule 17a-4.
FINRA Public Disclosure reveals that since Principal Securities Inc.’s establishment in May 1, 1968, the firm has been named in six regulatory events, three customer initiated investment related arbitration claims, and two civil events concerning allegations of the firm’s misconduct.
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