Fidelity Brokerage Services LLC has agreed to pay a fine of $600,000 as a part of a settlement with the Financial Industry Regulatory Authority (FINRA).
Fidelity, through an affiliate, provides recordkeeping services to companies (plan sponsors) for their equity compensation plans through stock plan services (SPS) accounts for the companies’ domestic and international employees (plan participants).
From December 2012 to October 2020, the firm’s supervisory system, including its written supervisory procedures, was not reasonably designed to supervise associated persons’ access to SPS account data or the transmittal of funds from international SPS accounts. As a result, the firm failed to detect that, for nearly eight years, an associated person responsible for supporting the maintenance of SPS account data converted approximately $750,000 from 37 international plan participants.
Therefore, Fidelity violated FINRA Rules 3110 and 2010 and NASD Rules 3010 and 3012.
On top of the $600,000 fine, the firm has agreed to a censure.
