Paulson Investment Company LLC has agreed to pay a fine of $40,000 as a part of a settlement with the Financial Industry Regulatory Authority (FINRA).
From December 2020 to November 2021, Paulson failed to establish, maintain, and enforce a supervisory system, including written supervisory procedures (WSPs), reasonably designed to achieve compliance with rules governing registered persons’ proposed outside business activities.
During this period, Paulson knew that one of the firm’s registered representatives was engaged in outside business activities that involved managing an investment fund that provided loans to early-stage companies.
However, the firm failed to evaluate the activities as required by FINRA Rule 3270.01, including by failing to determine whether they constituted outside securities activities. As a result, Paulson violated FINRA Rules 3110, 3270.01, and 2010.
On top of the $40,000 fine, the firm has agreed to a censure.
