FINRA Fines Dinosaur Financial $85,000 for Undisclosed Lease Guarantee

Dinosaur Financial Group LLC agreed to a censure and $85,000 fine to settle FINRA charges stemming from an undisclosed guarantee of its parent company’s commercial real estate lease. The firm operated a securities business while net capital deficient for 19 months, failed to notify regulators of the deficiencies, and maintained inaccurate books and records.

FINRA accepted the letter of acceptance, waiver, and consent this week. The New York-based broker-dealer neither admitted nor denied the findings.

The violations trace to April 2022, when Dinosaur Financial guaranteed a 10-year office lease entered into by its parent company. The lease totaled $4,383,225; after accounting for prepayments and 11 months of free rent, the firm and its external auditor valued the guarantee between $2.8 million and $3 million. Dinosaur Financial did not provide FINRA with the prior written notice required by Rule 4150(a) – due at least 10 business days before entering such an arrangement – and did not disclose the guarantee until FINRA initiated a cycle examination in late 2023.

The firm also failed to include the guarantee as a liability in its net capital computations. That omission caused Dinosaur Financial to operate below its minimum net capital requirement – which ranged between $274,200 and $450,000 during the period – for 19 of the 20 months from April 2022 through November 2023. The largest single deficiency reached $2,905,172; the average deficiency was $1,450,162.

The firm did not file the required same-day notification to FINRA and the SEC when it first became net capital deficient in May 2022, and did not disclose the deficiency until March 2024 – several months after becoming aware of it.

The inaccurate net capital calculations also carried into the firm’s regulatory filings. FINRA found that Dinosaur Financial filed 20 inaccurate FOCUS reports during the period, misstating net capital, excess net capital, and aggregate indebtedness. The recordkeeping failures violated Exchange Act Rules 17a-3 and 17a-5, as well as FINRA Rule 4511.

In December 2023, Dinosaur Financial’s parent company terminated the original lease and executed a new lease that included the parent as guarantor. The firm maintained required minimum net capital thereafter, according to the AWC.

Dinosaur Financial has been a FINRA member since March 2001. The firm is headquartered in New York, maintains 17 active branches, and has 44 registered representatives. It primarily derives revenue from serving as agent for an international affiliate and referring brokerage transactions to it.

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