According to FINRA, Cabrera Capital Markets, LLC was censured and fined $50,000 for failing to disclose required information on customer trade confirmations and for failing to reasonably supervise for compliance with trade confirmation rules.

The firm was found in violation of Section 10(b) of the Exchange Act, Rule 10b-10 thereunder, and FINRA Rule 2232. Specifically, Cabrera failed to disclose to institutional customers certain information on written trade confirmations as required by regulations. The firm failed to disclose markups and markdowns on principal transactions in preferred securities at or before completion of the transactions. Additionally, the firm incorrectly identified single executions as average price or block transactions on customer trade confirmations.

Furthermore, the firm failed to reasonably supervise for compliance with trade confirmation rules. Cabrera lacked written supervisory procedures regarding customer trade confirmations and failed to enforce a supervisory system reasonably designed to achieve compliance with applicable rules. Trade confirmations are important disclosure documents that provide customers with essential information about their securities transactions, including the capacity in which the firm acted (principal or agent), the price, any markups or markdowns, and commissions charged.

Rule 10b-10 requires broker-dealers to provide customers with written confirmation at or before completion of each transaction, disclosing specific information. Proper disclosure of markups and markdowns is particularly important because it allows customers to understand the full cost of their transactions and assess whether they received fair pricing. When firms act as principals, buying securities for their own account and selling to customers (or vice versa), they must disclose any markups or markdowns. Investors should carefully review trade confirmations to ensure they understand all costs associated with their transactions. This case underscores the importance of firms maintaining adequate written procedures and supervisory systems to ensure compliance with trade confirmation requirements.