A Wisconsin-based broker-dealer agreed to pay a $50,000 fine to settle allegations by the Securities and Exchange Commission (SEC) it failed to comply with Regulation Best Interest (Reg BI).
Carl M. Hennig agreed to cease and desist from further violations and to be censured, the SEC announced in an administrative proceeding Friday. The agency alleged Hennig failed to comply with the compliance, conflict of interest, and care obligations of Reg BI.
The details: Between June 2020 and January, Hennig’s written policies and procedures were not reasonably designed to achieve compliance with Reg BI, the SEC alleged in its order.
Specific deficiencies cited by the agency included:
- Not explaining what factors should be considered when determining a customer’s best interest;
- Providing insufficient information to customers related to its retail brokerage services; and
- Failing to address how and when to update and provide written disclosures to customers.
In addition, Hennig’s written policies and procedures did not explain how to identify conflicts of interest or disclose, mitigate, or eliminate them, the SEC alleged.
Hennig did not respond to a request for comment. The firm agreed to the settlement without admitting or denying the SEC’s findings.