← Broker database 2024-07-31
Pershing LLC Fined $1.4 Million for Providing Inaccurate Interest Rate Information
According to FINRA, Pershing LLC was censured and fined $1,400,000 on July 31, 2024, for negligently providing or making available inaccurate interest rate information concerning certain variable rate products in more than one million instances.
The firm's security master system, which contains information it relies on when generating transaction confirmations and customer account statements, contained incorrect information for certain categories of securities with variable interest rate features. The presence of inaccurate interest rates in the firm's system resulted in the firm making available inaccurate information through its online access portals that it provided for customers and registered representatives of the introducing firms that used the firm's clearing services.
The firm failed to establish, maintain, and enforce a system, including written supervisory procedures, reasonably designed to supervise its dissemination of interest rate information about variable rate securities. While the firm performed various technical checks to verify that the interest rate information it received from third-party vendors matched the data in its security master system and on customer-facing documents, the firm did not have a process reasonably designed to compare the information in its security master system to any third-party data source or otherwise confirm its accuracy.
The firm also ignored red flags that it was distributing inaccurate interest rate information. On dozens of occasions, customers notified the firm of inaccurate interest rate information appearing on customer account statements. When that happened, the firm corrected the rates in question but failed to investigate the cause of such inaccuracies or whether they were more widespread. After FINRA's investigation, the firm identified the root causes, communicated updated disclosures to customers, revised its procedures, implemented corrective coding changes, and enhanced its processes for confirming the accuracy of third-party vendor-sourced information.