being the operative words.....
Chardan Capital Markets, LLC has agreed to pay a fine of $100,000 as a part of asettlement with the United States Financial Industry Regulatory Authority (FINRA).
From March 5, 2013 through August 31, 2016 (the “Review Period”), Chardan violated certain research report disclosure requirements, and failed to establish and maintain a supervisory system and written supervisory procedures reasonably designed to achieve compliance with disclosure rules.
Specifically, Chardan improperly published at least 103 research reports that contained 123 disclosure deficiencies, including failing to accurately disclose investment banking relationships, in violation of F1NRA Rules 2241(c) and 2010, and NASD Rule 2711(h).
The firm’s disclosure failures were the result of Chardan’s failure to establish and maintain a supervisory system and written supervisory procedures reasonably designed to achieve compliance with the disclosure requirements of the Research Rules. By this conduct, the Firm violated FINRA Rules 3110(a), 3110(b)(1) and 2010, and NASD Rules 2711(i), 3010(a) and 3010(b)(1).
Chardan violated Research Rules that require firms to manage conflicts of interest between research analysts and those engaged in investment banking services. These failures involved the supervision of the Special Equities Group (SEG), which was a subgroup of the firm’s investment banking department during the Review Period. Chardan’s supervisory failure created the risk that research analysts could be inappropriately influenced by the Firm’s interest in attracting and maintaining investment banking business.
During the Review Period, the firm’s investment banking department consisted of 16 employees, seven of whom were members of SEG. However, Chardan failed to enforce its policies and procedures to block direct email communications between the SEG investment banking personnel and research personnel or ensure that compliance acted as an intermediary for communications between the SEG investment banking personnel and research personnel.
There were a number of direct email communications between SEG personnel and research personnel without compliance as an intermediary or any other institutional safeguards or supervisory review. Further, some direct email communications between SEG personnel and research personnel included improper suggestions by SEG investment bankers that research personnel should help solicit investment banking clients.’ For example:
- In an email dated February 24, 2015, sent by a SEG employee to other SEG employees and two research analysts, the SEG employee proposed establishing weekly meetings between research and investment banking, and stated that the investment banking department would use research staff“as the first introduction to new companies to bait them in”and get investment banking’s“foot in the door.”
- An email dated November 19, 2015, sent by the head of SEG to a research analyst, asked whether the head of SEG should have the head of research“show some love”to a prospective investment banking customer.
By failing to enforce (i) policies and procedures reasonably designed to achieve compliance with the Research Rules cited above; and (ii) information barriers or other institutional safeguards reasonably designed to ensure that research analysts are insulated from the review or potential pressure by persons engaged in investment banking services activities, Chardan violated FINRA Rule 3110(b)(1) (for conduct on and after December 1, 2014), Rules 2241(b)(1), 2241(b)(2)(G) and 2241(b)(2)(M)(i) (for conduct on and after December 24, 2015) and 2010, and NASD Rules 3010(b)(1) (for conduct before December 1, 2014) and 2711(i) (for conduct on and before September 24, 2015).
In addition to the fine, the respondent agrees to a censure.
“Show some love” - failure to manage conflicts of interest triggers fine for Chardan Capital Markets - FinanceFeeds
ALSO more recently:
Chardan Capital Markets, LLC has a History of Regulatory Actions
In addition to the findings of FINRA’s Department of Enforcement, (above)reveals it has a history of regulatory actions being brought against it, including but not necessarily limited to the following:
- On December 20, 2018, Chardan entered into an AWC with FINRA. Chardan consented to the entry of findings that it was a distribution participant in an offering of a company’s common stock, shares of which it purchased during the restricted period. It failed to timely file a restricted period notification with FINRA. As a result, it agreed to the sanctions of censure and a $75,000.00 fine.
- On December 19, 2018, Chardan entered into a resolution with the NYSE and ARCA, Inc. Chardan consented to the entry of findings that it failed to comply with NYSE ARCA requirements by failing to timely file a restricted period notification, failing to timely file two trading notifications and by failing to implement and maintain a supervisory system reasonably designed to ensure compliance with NYSE ARCA equities rules. As a result, it agreed to the sanctions of censure and a fine in the amount of $18,500.00.
- On July 2, 2018, Chardan entered into an AWC with NASDAQ Stock Market. Chardan consented to the entry of findings that it failed to maintain a two-sides trading interest during regular market hours at prices within certain percentages away from the national best bid. As a result, it agreed to the sanctions of censure and a fine in the amount of $30,000.00.
- On May 16, 2018, Chardan entered into resolution with the SEC. Chardan consented to the entry of findings that it failed to file suspicious activity reports when it knew, suspected, or had reason to suspect certain transactions were unlawful. As a result, it agreed to the sanctions of censure and a fine in the amount of $1,000,000.00.
Obviously an absolute pillar of society, and in no way would they ever write incorrect reports without checking and double checking ALL pertinant information relative to upcoming events!!
(20min delay)