FINRA said deficiencies on part of Santander Securities also include unsuitable sales of reverse convertible securities to retail customers, inadequate supervision of sales of structured products, inadequate supervision of accounts funded with loans from its affiliated bank, and other violations related to the offering and sale of structured products.
In addition to paying the fine, the firm is required to review its training, supervision and written procedures in the relevant areas.
Santander Securities has reimbursed more than $7m to its customers for losses that resulted from reverse convertible securities.
FINRA executive vice president and chief of enforcement Brad Bennett said Santander Securities failed its customers through significant deficiencies in its systems and procedures, which allowed unsuitable recommendations of concentrated positions in risky reverse convertibles — sometimes using funds that the firm helped customers borrow — to proceed without detection or review.
In concluding this settlement, Santander Securities neither admitted nor denied the charges, but consented to the entry of FINRA’s findings.
