RBC unit fined by FINRA over trade confirmation violations

RBC Capital Markets sent approximately 940,000 inaccurate trade confirmations and failed to provide confirmations to millions of other customers, according to a FINRA order published Monday.

FINRA alleged RBC failed to establish a supervisory system designed to achieve compliance with the self-regulatory organization’s rules.

In a separate matter, the firm also charged commissions, markups, markdowns, and fees on trades without informing customers it could delay payment for up to 90 days, as required by Regulation T of the Securities and Exchange Commission’s (SEC) Exchange Act. Had RBC canceled the trades instead of executing them, the charges would not have occurred, FINRA said.

To settle the alleged violations, the firm agreed to pay a $375,000 fine and pay about $394,000 in restitution to affected customers.

The details: Between 2010 and 2017, RBC sent its customers approximately 570,000 confirmations for fixed income transactions that inaccurately stated the transactions were executed in an agency capacity when they were executed in a principal capacity, FINRA said.

Between 2010 and 2019, RBC sent its institutional customers approximately 370,000 trade confirmations for fixed income transactions, including certain municipal securities transactions, that inaccurately stated some transactions as being solicited that were unsolicited and vice versa, the order said.

Between 2008 and 2019, RBC allegedly failed to deliver approximately 267,000 trade confirmations to 720 customers who requested electronic delivery because of certain configuration problems in accounts.

RBC also failed to deliver millions of trade confirmations to customers participating in a dividend reinvestment program, which was required by a 2006 no-action letter issued by the SEC, FINRA said.

Compliance considerations: The apparent issues came to light from several sources, including a FINRA examination, a probe by an introducing firm for which RBC provided clearing services, and self-reports by the firm in connection with some of the trade confirmation issues.

RBC remediated its alleged violations of Regulation T in 2016 and trade confirmation issues in 2017 and 2019. RBC met the terms of the SEC’s no-action letter in June 2023, FINRA said.

Firm response: In an emailed statement, RBC said it “takes regulatory matters very seriously, and we fully cooperated with FINRA to reach a resolution in this matter. We have paid restitution to the impacted customers and have taken the necessary remedial supervisory action.”