← Broker database 2026-04-08
MCAP LLC Fined $125,000 for Electronic Communications and OTC Business Supervision Failures
According to FINRA, MCAP LLC was censured and fined $125,000 following an April 8, 2026 AWC.
This case involved two major categories of supervisory failure spanning several years. First, the firm failed to establish a system for supervising the electronic communications of its designated principals. The firm's written procedures did not identify who was responsible for reviewing principal communications, and in some cases, principals were permitted to conduct supervisory reviews of their own communications—a fundamental conflict of interest that renders such reviews meaningless. As a result, thousands of electronic communications went unreviewed over approximately seven years.
Second, the firm failed to adequately supervise its OTC sponsorship and market making businesses for compliance with Exchange Act Rule 15c2-11 and FINRA Rule 6432. From at least October 2017 through April 2019, no one at the firm supervised a former principal who ran the OTC sponsorship business, and the firm had no WSPs for that business line. When the firm eventually identified concerns about this principal's conduct—including that he had been using another principal's login credentials to submit Forms 211 to FINRA, creating the false impression that the other principal was responsible for over 75 filings—the firm still failed to assign proper supervision for years afterward. The principal was found to have submitted six false and misleading responses to FINRA and made material misrepresentations in at least 27 emails with issuers.
Separately, FINRA notified the firm in December 2019 that it was not adequately supervising its OTC market making business. Despite this direct notice, the firm did not implement relevant WSPs until June 2021, and even those WSPs were inadequate. The firm did not remediate its OTC market making supervision until November 2025.
For investors and market participants, OTC markets depend on accurate Forms 211 to ensure that securities traded in those markets meet minimum information standards. When those standards are compromised through false filings, investors may be trading on misleading information. This case illustrates why robust supervisory oversight—including of senior personnel—is essential to maintaining market integrity.