The Financial Industry Regulatory Authority (FINRA) has censured and fined Moors & Cabot, Inc. $125,000 after finding deficiencies in the brokerage firm’s anti-money laundering controls and its delivery of required disclosures to retail investors.
According to the settlement, the compliance failures covered several years and involved both the firm’s AML monitoring framework and its obligations under Form CRS requirements.
From at least January 2020 through May 2024, Moors & Cabot failed to maintain an AML compliance program reasonably designed to detect and support the reporting of suspicious transactions.
FINRA found that the firm’s procedures did not adequately monitor certain activity, including transactions involving movements of funds, and did not provide sufficient ongoing surveillance to identify potentially suspicious behavior.
These shortcomings resulted in violations of FINRA Rules 3310(a), 3310(f)(ii), and 2010.
More Than 3,000 Retail Investors Missed Form CRS
FINRA also found separate disclosure and supervisory failures between June 2020 and March 2023.
During that period, Moors & Cabot failed to provide Form CRS to 3,264 retail investors.
Form CRS is designed to give retail investors concise information about a financial firm’s services, fees, conflicts of interest and applicable standards of conduct. Broker-dealers are required to deliver the relationship summary to qualifying retail investors under federal securities rules.
FINRA said the firm also lacked a supervisory system reasonably designed to ensure compliance with its Form CRS delivery obligations.
As a result, Moors & Cabot was found to have willfully violated Section 17(a)(1) of the Securities Exchange Act of 1934 and Exchange Act Rule 17a-14, in addition to violating FINRA Rules 3110 and 2010.
Firm Agrees to Fine and Censure
As part of the settlement, Moors & Cabot agreed to a $125,000 fine and a formal censure.
The action highlights FINRA’s continued focus on AML monitoring and retail investor disclosure requirements, particularly where compliance weaknesses could reduce a firm’s ability to identify suspicious financial activity or provide clients with required information.
Moors & Cabot is headquartered in Boston, Massachusetts, and operates as both a broker-dealer and investment advisory firm. Public regulatory records identify the company under CRD number 594 and confirm its continued registration within the U.S. securities industry.
The latest enforcement action adds to the importance of maintaining effective transaction-monitoring systems, robust supervisory controls and accurate delivery of regulatory disclosures across the brokerage sector.
