FINRA Fines Moors & Cabot $125,000 Over AML and Form CRS Failures | LeapRate
The Financial Industry Regulatory Authority (FINRA) has censured and fined Moors & Cabot, Inc. $125,000 after finding the Boston-based brokerage failed to maintain an adequate anti-money laundering (AML) program and did not deliver required disclosure forms to thousands of retail clients.
According to a Letter of Acceptance, Waiver, and Consent (AWC) published by FINRA, Moors & Cabot, a member firm since 1936 with 125 registered representatives across 22 branch offices, violated FINRA Rules 3310(a), 3310(f)(ii), and 2010 between January 2020 and May 2024.
Regulators found that the firm’s AML surveillance system was not properly tailored to the risks posed by frequent customer money movements, lacking alerts or structuring or transactions beyond outgoing wire transfers. FINRA also noted that many AML alerts went unreviewed for over a month, and most reviewed alerts were closed within seconds without meaningful inquiry.
Separately, FINRA found that from June 2020 to March 2023, Moors & Cabot failed to deliver Form CRS, a disclosure document outlining services, fees, and conflicts of interest, to 3,264 retail investors whose accounts were not cleared through its clearing firm.
The firm also lacked a supervisory system to ensure compliance with this obligation. These failures constituted willful violations of Section 17(a)(1) of the Securities Exchange Act of 1934 and Exchange Act Rule 17a-14, as well as FINRA Rules 3110 and 2010.
Moors & Cabot neither admitted nor denied the findings but consented to the sanctions. The firm has since revised its AML procedures, added surveillance alerts, and implemented a new Form CRS delivery tracking system.
