Financial Services Giant Settles with SEC Over Broker Rule Violations

  • First Horizon agrees to pay a $325,000 fine for non-compliance with Regulation Best Interest
  • SEC alleges that First Horizon reviewed transactions after they were executed instead of before
  • The company changed its policy in February 2021 to approve recommendations before executing transactions
  • First Horizon also failed to enforce the regulation for customer accounts acquired from Iberia Financial Services

First Horizon has agreed to pay a $325,000 fine to resolve claims made by the U.S. Securities and Exchange Commission (SEC) that its compliance practices for Regulation Best Interest were inadequate until February 2021. The SEC alleged that from July 2020 to February 2023, First Horizon reviewed structured note transaction recommendations for compliance after the transactions had been executed, rather than beforehand. This violated the regulation’s requirements. The Memphis-based financial services company filed and cleared exception reports for noncompliant transactions but based on its scheduling protocols, many exceptions weren’t cleared until after the transactions were executed. First Horizon changed its policy in February 2021 to approve recommendations before executing transactions. Additionally, the SEC accused the company of failing to enforce Regulation Best Interest for customer accounts it acquired through a merger with Iberia Financial Services in 2020. Without admitting or denying the SEC’s findings, First Horizon resolved the matter by agreeing to pay the civil fine.

Factuality Level: 8
Factuality Justification: The article provides accurate and objective information about First Horizon paying a fine for not properly enforcing Regulation Best Interest standards, details about the time period in question, and how they have since changed their policy. It also explains the purpose of Regulation Best Interest.
Noise Level: 3
Noise Justification: The article provides relevant information about a financial company being fined for noncompliance with regulatory standards and includes details on the specific issue and resolution. However, it lacks in-depth analysis or exploration of broader implications and does not offer actionable insights.
Public Companies: First Horizon (FHN)
Private Companies: Iberia Financial Services
Key People: Dean Seal (Author)

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Financial Relevance: Yes
Financial Markets Impacted: First Horizon
Financial Rating Justification: The article discusses a fine imposed on First Horizon for compliance issues related to Regulation Best Interest, which impacts the financial services company and its adherence to broker standards.
Presence Of Extreme Event: No
Nature Of Extreme Event: No
Impact Rating Of The Extreme Event: No
Extreme Rating Justification: There is no extreme event mentioned in the article.
Move Size: No market move size mentioned.
Sector: Financial Services
Direction: Down
Magnitude: Small
Affected Instruments: Stocks

Reported publicly: www.marketwatch.com