According to FINRA, Third Seven Capital LLC was censured and fined $10,000 on January 3, 2022, for conducting securities business while failing to maintain minimum required net capital.

The firm incurred $16,832.71 in legal fees that caused its net capital to fall below the required minimum, with daily deficiencies ranging between $726 and $29,665. The firm also filed inaccurate notices of net capital deficiency with the SEC and FINRA. Initially, the firm incorrectly stated that its net capital deficiency had ended after receiving funds from a private placement, but had erroneously failed to include certain legal fees in its calculations.

When the firm filed an amended notification stating the deficiencies had not ended, this notification was also inaccurate because the firm had incorrectly recorded certain credits as debits. The firm's net capital remained below the required minimum until the following month. Additionally, the firm failed to maintain accurate books and records concerning its aggregate indebtedness and net capital, and filed an inaccurate FOCUS report.

Net capital requirements exist to ensure broker-dealers maintain sufficient liquid assets to meet their obligations to customers and other creditors. When firms operate below these requirements, it creates potential risks for investors whose securities and funds are held by the firm.

This case demonstrates the importance of accurate financial reporting and proper net capital calculations. Firms must maintain robust accounting systems to ensure they can accurately track their net capital position and remain in compliance with regulatory requirements at all times.