According to FINRA, Santander US Capital Markets LLC was fined $100,000 for failing to establish adequate supervisory systems to prevent misuse of material non-public information (MNPI) and ensure compliance with Section 5 of the Securities Act.

Regarding MNPI controls, the firm conducted investment banking business as an underwriter in debt and equity offerings along with its global affiliates. However, the firm did not have procedures to ensure that supervisors responsible for reviewing emails of employees temporarily granted access to MNPI were themselves approved to access MNPI. The firm also did not have adequate systems to ensure that employees of its affiliates with access to MNPI were appropriately identified for monitoring. Some employees of foreign affiliates had access to MNPI but were not identified for monitoring or were not identified until after they were exposed to MNPI. Additionally, the firm did not have a reasonable system to ensure that when employees gained access to MNPI, the relevant issuers were added in a timely manner to the watch list used to monitor trading, sales, and research activities. Furthermore, the firm's system was not reasonably designed to review securities transactions in employee outside brokerage accounts maintained at foreign broker-dealers.

For Section 5 compliance, the firm failed to obtain Regulation S or qualified institutional buyer certifications from potential investors at the time of transactions in some cases. The firm also failed to contemporaneously document the steps it took to ensure sales pursuant to Regulation S and Rule 144A safe harbors were made to qualified investors, meaning it did not have records demonstrating a reasonable process to confirm compliance.

This case demonstrates the challenges firms face when operating across borders and coordinating compliance across multiple affiliates. Proper information barriers and monitoring systems are essential to prevent insider trading and ensure that securities offerings comply with registration requirements. Investors benefit when firms maintain robust MNPI controls.