According to FINRA, Arque Capital, Ltd. was censured and fined $50,000, while broker Michael Cheng Ning was suspended for seven months in all capacities and assessed a deferred fine of $15,000.

The firm violated Section 15(c) of the Securities Exchange Act by conducting business while failing to maintain required minimum net capital. Net capital deficiencies ranged from $24,726 to $46,582, occurring because the firm understated debt relating to commissions payable and overstated allowable assets from commissions receivable. The firm failed to timely notify FINRA and the SEC of these deficiencies for three periods, and provided one notification containing material inaccuracies.

FINRA found the firm maintained inaccurate books and records, including balance sheets, trial balances, general ledgers, and net capital computations. The firm also filed inaccurate and untimely FOCUS reports that misstated financial information including liabilities, expenses, ownership equity, revenue, assets, net capital, and minimum net capital requirements.

Additionally, Ning willfully failed to timely amend his Form U4 to disclose two IRS tax liens totaling over $298,000. The firm and Ning also failed to remit approximately $125,000 in withheld employee payroll taxes to the U.S. Treasury, using those funds instead for other business expenses, though these have since been paid.

This case demonstrates the critical importance of accurate financial recordkeeping and regulatory compliance for broker-dealers. Net capital requirements exist to protect investors by ensuring firms maintain adequate financial resources. Investors should verify their broker-dealer's financial stability and regulatory compliance through FINRA BrokerCheck.