FINRA In the Matter of Canaccord Genuity LLC

Canaccord Genuity LLC allegedly failed to establish and maintain a supervisory system reasonably designed to supervise its securities transactions, with its trading compliance group purportedly failing to review most of the firm’s surveillance reports for extended periods. It appears that between October 2016 and May 2022, a significant portion of daily trade surveillance reports, covering areas such as market manipulation, best execution, and trading ahead of customer orders, were unreviewed for at least a year, and some for over five years. The firm also allegedly failed to develop and implement a reasonably designed AML compliance program, including not establishing policies and procedures expected to detect and report suspicious transactions, despite its high volume of low-priced trading that presented a high risk. Additionally, the firm purportedly failed to implement a reasonably designed due diligence program for foreign financial institution correspondent accounts and did not reasonably train its trading compliance group on AML. Its AML program also appears to lack appropriate risk-based procedures for customer risk profiles and for maintaining and updating customer information for its institutional customer business. The firm allegedly provided falsified information to FINRA in response to Rule 8210 requests, including a compliance officer placing the electronic signature of a designated principal on regulatory filings while knowing the certifications were false, and later falsifying evidence of trade surveillance report reviews. FINRA also found that the firm did not comply with, or reasonably supervise for compliance with, FINRA’s best execution rule, and published inaccurate quarterly Rule 606 reports. The firm also purportedly did not comply with Rule 611 of Regulation NMS and traded through protected quotations, and effected numerous trades during market halts and circuit breakers. Furthermore, the firm allegedly had no supervisory reviews to determine if it traded ahead of customer orders in grey market securities, and its supervisory system did not sufficiently address trading ahead of modified orders in OTC securities, leading to a failure to identify such instances. The firm also allegedly did not comply with limit order display obligations and lacked a supervisory system reasonably designed to comply with Section 5 of the Securities Act of 1933, facilitating the sale of unregistered securities.

Summary generated from official Financial Industry Regulatory Authority press release