FINRA has censured and fined RBC Capital Markets $125,000 for allegedly settling a dispute with two customers on the condition that they would not oppose efforts to expunge the details of the dispute from the Central Registration Depository system.
In doing so, it defied Rule 2081, a rule that went into effect in July 2014 prohibiting such settlement arrangements, FINRA said.
The firm purportedly settled the dispute in October 2014.
The regulator also reprimanded RBC for failing to establish and maintain a supervisory system to ensure compliance with the rule. Specifically, it neglected to communicate the requirements of the rule to staff and to establish procedures addressing its proscriptions until February 2015, seven months after the rule became effective. The firm also failed to designate a supervisor to enforce the rule and establish a supervisory system, FINRA said.
The regulator criticized the firm's updates to its compliance manual, saying they merely restated the text of the new rule. Among other deficiencies, the updates failed to provide a description of the review process and how such reviews would be documented.
In its settlement with FINRA, the firm neither admitted nor denied the findings, but consented to an entry of the regulator's findings.
"We have in place extensive policies and procedures to ensure we are in compliance with industry regulatory requirements," said Nicole Garrison, director of communications for RBC Wealth Management-U.S., a division of RBC Capital Markets. "We are disappointed with FINRA’s determination in this matter as we did not act with any intent to violate a FINRA Rule."
In addition to a $125,000 fine, the firm was ordered to adopt and implement supervisory systems and written procedures reasonably designed to achieve compliance with the requirements of the rule within 90 days.
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