FINRA Fines Boston Brokerage $125K Over Willful Form CRS Violation
The Financial Industry Regulatory Authority has censured and fined Moors & Cabot, Inc. $125,000 after finding the Boston-based brokerage failed to maintain an adequate anti-money laundering program for more than four years and failed to deliver required relationship-summary disclosures to thousands of retail customers, according to a letter of acceptance, waiver, and consent, or AWC, the firm signed Aug. 20 and FINRA accepted Aug. 24.
Moors & Cabot has been a FINRA member since 1936. The firm employs 125 registered representatives across 22 branch offices and offers wealth management, financial planning, and investment advisory services.
From at least January 2020 to May 2024, Moors & Cabot’s anti-money laundering program was not reasonably designed to detect and report suspicious transactions, FINRA found, despite the firm processing wire transfers, automated clearinghouse transactions, and other money movements totaling hundreds of millions of dollars annually.
Between January 2020 and January 2023, the firm’s surveillance system did not generate alerts for structuring or for money movements other than outgoing wire transfers, FINRA found. Moors & Cabot added surveillance alerts only after FINRA raised the issue in December 2022. Once alerts were generated, many went unreviewed for more than a month, and most that were reviewed were closed within seconds, without apparent inquiry, according to the AWC. The firm’s own independent AML testing flagged the same deficiencies in multiple reports, but Moors & Cabot did not address them until it revised its AML policies and retrained staff in May 2024.
In one instance, a customer’s transfers from a business account to a trust account at the firm and then to a foreign currency exchange went unreviewed, FINRA found.
Separately, FINRA found that Moors & Cabot failed to deliver Form CRS, the relationship-summary disclosure broker-dealers serving retail investors have been required to provide since June 2020, to 3,264 retail customers between June 2020 and March 2023. Its clearing firm delivered the form to customers whose trades it cleared, but Moors & Cabot had no process to deliver it to customers whose trades were not cleared through that relationship, and conducted no supervisory reviews to confirm compliance, according to the AWC. The firm remediated the gap in March 2023, delivering the form to the affected customers and building a new tracking system.
FINRA determined the Form CRS violation was willful, a finding that under FINRA’s bylaws subjects Moors & Cabot to statutory disqualification, according to the AWC. Neither the AWC nor FINRA’s public disclosure indicates FINRA is pursuing disqualification separately.
Moors & Cabot consented to the censure and fine and waived its right to a disciplinary hearing. The firm accepted FINRA’s findings without admitting or denying them, as is standard in FINRA settlements.
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