According to FINRA, CIM Securities, LLC was censured and fined $35,000 on January 31, 2022, for failing to establish adequate supervisory systems and written procedures for suitability and email review.

The firm's written supervisory procedures cited the outdated NASD Rule 2310 instead of FINRA Rule 2111, even though Rule 2111 had superseded the old rule and includes additional requirements for obtaining customer investment profiles, including investment time horizon, liquidity needs, and risk tolerance. The firm continued citing the wrong rule despite previous warnings from FINRA.

As a result, the firm failed to obtain critical suitability information from three customers who collectively invested $680,000 in high-risk private placement offerings. The firm did not gather information about these customers' risk tolerance and liquidity needs. Two customers provided information suggesting the private placements might not be suitable for them. Additionally, the firm failed to obtain and maintain principal signatures denoting acceptance of accounts for private placement investors.

The firm also maintained an inadequate supervisory system for email review. Despite previous FINRA warnings, the firm's procedures did not specify required frequency for outgoing email review, sample sizes and parameters, or escalation steps for identified issues. The procedures also lacked information about documenting incoming email review.

Suitability requirements exist to ensure investment recommendations align with customers' financial situations and objectives. When firms fail to gather complete suitability information, they cannot properly evaluate whether investments are appropriate for customers.

This case emphasizes the importance of maintaining current, comprehensive written procedures and actually following them to protect investors from unsuitable investment recommendations.