FINRA In the Matter of Arcadia Securities, LLC

Arcadia Securities, LLC allegedly failed to maintain its required minimum net capital of $100,000 on three days in connection with three firm commitment underwritings. According to FINRA, the firm entered into backstop agreements that, due to miscommunications with backstop providers and incorrect internal calculations, provided backstop coverage for only a portion of the firm's total underwriting commitments, leaving portions uncovered. The firm appears to have lacked sufficient excess capital to absorb the open contractual commitment charges, resulting in net capital deficiencies ranging from $157,246 to $9,087,151. The firm also purportedly failed to establish, maintain, and enforce a supervisory system, including WSPs, reasonably designed to achieve compliance with net capital requirements. FINRA states that the firm's WSPs did not specify how to perform net capital computations in connection with firm commitment underwritings and did not maintain WSPs explaining how to structure backstop agreements to achieve compliance with net capital requirements. Additionally, the firm did not supervise the preparation of backstop agreements to ensure sufficient coverage.

Summary generated from official Financial Industry Regulatory Authority press release