BofA Securities, Inc has agreed to pay a fine of $90,080 as a part of a settlement with the Financial Industry Regulatory Authority (FINRA).
Between August 2019 and August 2022, BofA Securities violated FINRA Rules 5190 and 2010 in 195 instances by filing untimely or inaccurate notifications with FINRA in connection with its participation in 112 security distributions subject to Regulation M under the Securities Exchange Act of 1934.
In addition, between August 2019 and March 2024, BofAS violated FINRA Rules 3110(a), 3110(b), and 2010 by failing to establish and maintain a supervisory system, including written supervisory procedures (WSPs), reasonably designed to achieve compliance with FINRA Rule 5190.
Regulation M is the SEC’s principal anti-manipulation provision that applies to distributions of covered securities and is intended to address manipulative conduct by preventing persons with an interest in the outcome of a distribution from influencing the pricing of those distributions and conditioning the market in order to facilitate a distribution.
Rule 101 of Regulation M makes it unlawful for underwriters, broker- dealers, issuers, and other distribution participants to directly or indirectly “bid for, purchase, or attempt to induce any person to bid for or purchase, a covered security during the applicable restricted period.”
Depending on the security, the restricted period begins either one or five business days prior to the determination of the offering price or, if the restricted period has already commenced, at such time a firm becomes a distribution participant.
During the relevant period, BofA Securities acted as a manager in distributions of securities subject to Regulation M. As such, the firm was required to submit notifications pursuant to FINRA Rule 5190 in connection with 112 distributions subject to Regulation M. Between August 2019 and August 2022, BofAS submitted untimely or inaccurate restricted period and trading notifications with FINRA in 195 instances.
On top of the fine, the company has agreed to a censure.
