Broker/Dealer Ordered by FINRA to Pay $11 Million in Restitution

The Financial Industry Regulatory Authority (FINRA) announced in December, 2012, that Pruco Securities, LLC, a New Jersey based registered broker-dealer, was ordered to pay nearly $11 million in restitution and $550,000 in fines for failing to process written mutual fund orders received by mail or fax, to have in place an adequate supervisory system designed to detect and prevent the mispricing of paper mutual fund orders and to have written procedures for handling paper mutual fund orders.

According to reports, Command, a Pruco Securities’ retail brokerage business unit, processed and priced complete paper mutual fund orders received prior to 4:00 p.m. on the day of receipt, on average, within one or two business days, rather than processing and pricing such orders prior to 4:00 p.m. on the date of receipt, resulting in thousands of Pruco Securities’ customers receiving inferior prices for paper mutual fund orders.

FINRA charged Pruco Securities with violating Rule 22c-1 of the Investment Company Act, NASD Rules 3010(a) and 2110 and FINRA Rule 2010, failure to maintain an adequate system to ensure compliance with Rule 22c-1 of the Investment Company Act, and NASD Rules 3010(b) and 2110 and FINRA Rule 2010, failure to establish, maintain and enforce written procedures for pricing paper mutual fund orders.

Pruco Securities accepted and consented to the entry of FINRA’s findings, without admitting or denying the charges.

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