SEC Hits Wisconsin BD With Reg BI Fine
These written policies and procedures “failed to adequately address Hennig’s Conflict of Interest Obligation because, among other things, they did not provide any guidance or procedures for how the firm was to achieve those goals,” the SEC said.
In January 2021, after an examination by the Financial Industry Regulatory Authority, FINRA requested that Hennig take action to update and correct its written policies and procedures related to Reg BI.
When the SEC’s Division of Examinations examined Hennig in June 2021, “Hennig had not yet taken action sufficient to bring its written policies and procedures” into compliance with Reg BI, the order states.
As a result, in May 2022, the SEC issued a deficiency letter to Hennig noting that Hennig’s written policies and procedures still failed to comply with Reg BI.
In January 2023, Hennig adopted new written policies and procedures related to Reg BI, including written policies and procedures related to its conflict of interest obligation, disclosure obligation, and care bligation.
Form CRS Failures
From their adoption in June 2020 through January 2023, Hennig’s written policies and procedures related to its Disclosure Obligation stated that Hennig’s Form CRS would “address all available services Hennig offers through its brokerage accounts and advisory platforms and the fees associated with both.”
The order states that Hennig further disclosed in its Form CRS that the “primary fees” paid by the customers for brokerage services are “transaction-based fees … typically called commissions, sales charges, loads, selling concessions, or trails.”
However, “Hennig’s written policies and procedures were not reasonably designed to provide additional information beyond that discussed in its Form CRS to its customers,” the SEC said.
