Research Fraud and Non-Disclosure FINRA Arbitration and Litigation Lawyer, Russell L. Forkey, Esq.

November, 2011:

BGB Securities, Inc. (CRD #36716, Arlington, Virginia) submitted a Letter of Acceptance, Waiver and Consent in which the firm was censured and fined $25,000. Without admitting or denying the findings, the firm consented to the described sanctions and to the entry of findings that the firm, acting through a research analyst, published research reports on subject companies that failed to disclose that the research analyst or a member of his household had a financial interest in the securities of the subject companies. The findings stated that the firm published a research report in which it failed to disclose that it had received trading commissions from the subject company in the past 12 months. The findings also stated that the firm failed to detect and prevent personal trading by a research analyst associated with the firm, and failed to disclose ownership and material conflicts of interest in research reports; the firm failed to adopt and implement WSPs and failed to establish and maintain a supervisory system, and establish, maintain and enforce WSPs reasonably designed to achieve compliance with applicable rules and regulations regarding its research reports and the supervision of its research analysts. The findings also included that the firm failed to prepare accurate order tickets for any of its corporate bond transactions and the order tickets, which were prepared after the transactions were executed, reflected execution times that were later than the actual execution time. FINRA found that the firm failed to accurately report transactions to the Trade Reporting and Compliance EngineTM (TRACETM), double-reported transactions and reported transactions with execution times that were later than the actual execution time. (FINRA Case #2010021055301).