← Broker database 2025-01-23
Berkshire Global Advisors Fined $100,000 for Outside Brokerage Account Supervision Failures
According to FINRA, Berkshire Global Advisors LP has been censured, fined $100,000, and required to certify remediation for failing to establish and maintain supervisory systems for outside brokerage accounts.
The firm's procedures failed to identify steps for verifying receipt and review of duplicate statements for disclosed outside accounts. The procedures also failed to provide guidance on detecting and investigating potential securities-related violations.
In practice, the firm had no reasonably designed process to ensure up-to-date records of associated persons' outside accounts or that it received duplicate statements. While the firm required annual certifications disclosing outside accounts, it had no system to confirm it received all required certifications.
The firm maintained a list of outside accounts but did not regularly reconcile it against received statements. There was no system to notify anyone when statements were missing and no procedures for following up.
The firm's manual review of hundreds of monthly statements by a single individual was unreasonable given the volume. This review did not facilitate identifying patterns over time or across accounts. Multiple instances of associated persons trading watch list securities in outside accounts went undetected.
Monitoring outside accounts helps detect potential insider trading or other misconduct. When firms fail to implement effective oversight, violations may go undetected, potentially harming investors.