X. Sales Practices [Version up to February 28, 2019]

• Borrowing From or Lending to Customers—Failure to Comply With Rule Requirements

• Churning or Excessive Trading

• Communications With the Public—Late Filing; Failing to File; Failing to Comply With Rule Standards or Use of Misleading Communications

• Customer Account Transfer Contracts—Failure to Comply With Rule Requirements

• Day-Trading Accounts—Failure to Comply With Risk Disclosure Requirements; Failure Appropriately to Approve an Account for Day Trading; Failure to Preserve Required Day—Trading Records

• Discretion—Exercise of Discretion Without Customer's Written Authority

• Guaranteeing a Customer Against Loss

• Institutional Sales Material—Failing to Establish and Maintain Written Procedures in Compliance With Rule Standards; Failing to Comply With Rule Standards Regarding Recordkeeping

• Fraud, Misrepresentations or Material Omissions of Fact

• Penny Stock Rules—Failure to Comply With Rule Requirements

• Pricing—Excessive Markups/Markdowns and Excessive Commissions

• Research Analysts and Research Reports—Failing to Comply With Rule Requirements Regarding (1) Relationships Between Research Department and Investment Banking Department; (2) Compensation for Research Analysts; and (3) Relationships Between Research Analysts and Subject Companies

• Suitability—Unsuitable Recommendations

• Telemarketing—Failing to Comply With Time-of-Day Restrictions and Do-Not-Call Lists; Failing to Establish and Maintain Procedures to Comply With Rule 2212(a)

• Trading Ahead of Research Reports

• Unauthorized Transactions and Failures to Execute Buy and/or Sell Orders

Borrowing From or Lending to Customers— Failure to Comply With Rule Requirements

FINRA Rules 2010 and 3240

Principal Considerations in Determining Sanctions	Monetary Sanction	Suspension, Bar or Other Sanctions
*See Principal Considerations in Introductory Section* 1. The purpose of the loan. 2. The number of loans at issue. 3. The number of customers involved in the respondent's borrowing or lending arrangements. 4. Whether the loan was documented through a loan agreement or other written instrument. 5. The dollar amount, duration, interest rate, repayment schedule, and other terms of the loan and whether they are reasonable. 6. Whether the respondent made payments in conformance with the loan agreement and has repaid, or attempted to repay, the loan. 7. The age, financial condition, and financial sophistication of the customer. 8. Whether the respondent made any misrepresentations to the customer. 9. Whether the respondent misled his or her employer member firm about the existence of the loan or otherwise concealed the activity from the firm.	Fine of $2,500 to $73,000.	Consider suspending the respondent for a period of 10 business days to three months. Where aggravating factors predominate, consider a longer suspension (of up to two years) or a bar.

Churning or Excessive Trading

FINRA Rules 2010² and 2111

Principal Considerations in Determining Sanctions	Monetary Sanction	Suspension, Bar or Other Sanctions
*See Principal Considerations in Introductory Section*	Fine of $5,000 to $110,000³	*Individual* Consider suspending an individual respondent in any or all capacities for a period of one month to two years. Where aggravating factors predominate, consider a longer suspension (of up to two years) or a bar. Strongly consider barring an individual for reckless or intentional misconduct (e.g., churning). *Firm* Consider suspending a firm with respect to a limited set of activities or functions for up to three months. Where aggravating factors predominate, consider suspending a firm with respect to any or all relevant activities or functions for longer than three months, or consider ordering expulsion of the firm.

^1. This guideline also is appropriate for annuity and mutual fund-related violations, including switching.

^2. This guideline also is appropriate for violations of MSRB Rule G-17.

^3. As set forth in General Principle No. 6, Adjudicators should also order disgorgement.

Communications With the Public—Late Filing; Failing to File¹; Failing to Comply With Rule Standards or Use of Misleading Communications²

FINRA Rules 2010, 2210 et. seg. and 2200

Principal Considerations in Determining Sanctions	Monetary Sanction	Suspension, Bar or Other Sanctions
*See Principal Considerations in Introductory Section Failure to File* 1. Whether failure to file was inadvertent. 2. Whether communications with the public were circulated widely without having been filed with the Advertising Regulation Department. 3. Whether an individual respondent failed to notify a supervisor of a communication with the public. *Late Filing* 1. Whether late filing was inadvertent. 2. Whether communications with the public were circulated widely before having been filed with the Advertising Regulation Department. 3. Number of days late.	*Failure to File* Fine of $1,000 to $22,000. *Late Filing* Fine of $1,000 to $15,000.	*Failure to File* In egregious cases, consider imposing, for a definite period, a "pre-use" filing requirement to obtain an FINRA Regulation staff "no objection" letter on proposed communications with the public. Also consider suspending the responsible individual in any or all capacities for up to five business days. *Late Filing* In egregious cases, consider imposing, for a definite period, a "pre-use" filing requirement to obtain an FINRA Regulation staff "no objection" letter on proposed communications with the public. Also consider suspending the responsible individual in any or all capacities for up to 10 business days.

^1. Failing to file includes instances in which a respondent files with FINRA Regulation staff a communication with the public in response to a notice from FINRA Regulation staff that a necessary filing had not been made.

^2. This guideline is appropriate for disciplinary actions that name as respondents member firms that have violated FINRA rules or associated persons who have circumvented the firm's procedures or violated FINRA rules.

^3. This guideline also is appropriate for violations of MSRB Rule G-21.

Communications With the Public—Late Filing; Failing to File; Failing to Comply With Rule Standards or Use of Misleading Communications—continued

FINRA Rules 2010, 2210 et. seq., and 2220

Principal Considerations in Determining Sanctions	Monetary Sanction	Suspension, Bar or Other Sanctions
*See Principal Considerations in Introductory Section* *Failure to Comply with Rule Standards/ Misleading* 1. Whether violative communications with the public were circulated widely.	*Failure to Comply/Misleading* *Failure to Comply with Rule Standards or Inadvertent Use of Misleading Communications* Fine of $1,000 to $29,000.	*Failure to Comply/Misleading* *Failure to Comply with Rule Standards* In cases involving inadvertent use of misleading communications, consider suspending firm with respect to any or all activities or functions for up to six months and thereafter imposing, for a definite period, a "pre-use" filing requirement to obtain a FINRA Regulation staff "no objection" letter on proposed communications with the public. In egregious cases, consider suspending the firm with respect to any or all activities or functions for up to one year and thereafter imposing, for a definite period, a "pre-use" filing requirement to obtain FINRA Regulation staff "no objection" letter on proposed communications with the public. Also consider suspending the responsible person in any or all capacities for up to 60 days.

Communications With the Public—Late Filing; Failing to File; Failing to Comply With Rule Standards or Use of Misleading Communications—continued

FINRA Rules 2010, 2210 et. seq., and 2220

Principal Considerations in Determining Sanctions	Monetary Sanction	Suspension, Bar or Other Sanctions
*See Principal Considerations in Introductory Section*	*Intentional or Reckless Use of Misleading Communications* Fine of $10,000 to $146,000.	*Use of Misleading Communications with the Public* In cases involving intentional or reckless use of misleading communications with the public, consider suspending the firm with respect to any or all activities or functions for up to two years. Also consider suspending the responsible person in any or all capacities for up to two years.¹ In cases involving numerous acts of intentional or reckless misconduct over an extended period of time, consider suspending the firm with respect to any or all activities or functions for up to two years, suspending the responsible person in any or all capacities for up to two years, expelling the firm, and/or barring the responsible individual.

^1. If an Adjudicator is considering suspending a firm's ability to execute transactions in the securities referenced in the violative communications, the Adjudicator should consider the potential ramifications to public investors of such a suspension.

Customer Account Transfer Contracts—Failure to Comply With Rule Requirements

FINRA Rule 11870¹

Principal Considerations in Determining Sanctions	Monetary Sanction	Suspension, Bar or Other Sanctions
*See Principal Considerations in Introductory Section* 1. Consider the nature of the violation-consider the respondent's transfer pattern, the number of days late, and whether respondent was late with delivery or validation.	Fine of $1,000 to $15,000. In egregious cases, consider a higher fine of up to $73,000.	*Individual* Consider suspending the responsible individual in any or all capacities for up to 30 business days. In egregious cases, consider a lengthier suspension of up to two years. *Firm* In egregious cases, consider suspending the firm with respect to any or all activities or functions for a period of up to two years.

¹ This guideline also is appropriate for violations of MSRB G-26.

Day-Trading Accounts—Failure to Comply With Risk Disclosure Requirements; Failure Appropriately to Approve an Account for Day Trading; Failure to Preserve Required Day-Trading Records

FINRA Rules 2130 and 2270

Principal Considerations in Determining Sanctions	Monetary Sanction	Suspension, Bar or Other Sanctions
*See Principal Considerations in Introductory Section Failure to Comply with Risk Disclosure Requirements* 1. Whether the firm failed to provide customer(s) with a risk disclosure statement. 2. Whether the firm provided its customer(s) with an inadequate risk disclosure statement, or furnished the risk disclosure statement to its customer(s) in an untimely manner or a manner not designed to provide actual notice. 3. Whether the firm failed to obtain FINRA approval of an alternative disclosure statement or failed timely to seek FINRA approval. 4. In all cases, consider the nature, quality, and timing of the risk disclosure actually provided to the customer(s). 5. Whether day trading was appropriate for the affected customer(s). 6. The number of affected customers.	*Failure to Comply with Risk Disclosure Requirements* Fine of $5,000 to $146,000.	*Failure to Comply with Risk Disclosure Requirements* Consider suspending the responsible individual in any or all capacities for a period of 10 business days to one year. In egregious cases, particularly cases involving numerous customers, consider suspending for a longer period (of up to two years) or barring the responsible individual and suspending the firm with respect to any or all activities or functions for a period of up to two years.

Day-Trading Accounts—Failure to Comply With Risk Disclosure Requirements; Failure Appropriately to Approve an Account For Day Trading; Failure to Preserve Required Day-Trading Records—continued

FINRA Rules 2130 and 2270

Principal Considerations in Determining Sanctions	Monetary Sanction	Suspension, Bar or Other Sanctions
*See Principal Considerations in Introductory Section* *Failure Appropriately to Approve an Account for Day Trading* 1. Whether the firm permitted the customer(s) to engage in a day-trading strategy without the approval required by the rule. 2. Whether the firm failed to conduct a meaningful review before approving the customer account(s) for a day-trading strategy. 3. Whether the firm's approval of the customer account(s) for a day-trading strategy was inappropriate based on the facts it knew or should have known. 4. The timeliness of the approval of the customer account(s) for a day-trading strategy. 5. Whether engaging in a day-trading strategy was appropriate for the affected customer(s). 6. The number of affected customers.	*Failure Appropriately to Approve an Account for Day Trading* Fine of $5,000 to $146,000.¹	*Failure Appropriately to Approve an Account for Day Trading* Suspend responsible individual in any or all capacities for a period of 10 business days to one year. Consider suspending member firm with respect to any or all activities or functions for up to one year. In egregious cases, particularly cases involving numerous customers, consider suspending the responsible individual for a longer period (up to two years) or barring the individual. Also consider suspending the member firm for a longer period (of up to two years).

^1. As set forth in General Principle No. 6, Adjudicators should also order disgorgement.

Day-Trading Accounts—Failure to Comply With Risk Disclosure Requirements; Failure Appropriately to Approve an Account For Day Trading; Failure to Preserve Required Day-Trading Records—continued

FINRA Rules 2130 and 2270

Principal Considerations in Determining Sanctions	Monetary Sanction	Suspension, Bar or Other Sanctions
See Principal Considerations in Introductory Section Failure to Preserve Required Day-Trading Records 1. Whether the firm failed adequately to record its approval of the customer account(s) for day trading. 2. Whether the firm failed adequately to preserve the written customer agreement(s) to refrain from engaging in a day-trading strategy. 3. Whether the failure enabled problematic practices to occur and/or to escape detection.	*Failure to Preserve Required Day-Trading Records* Fine of $1,000 to $37,000.	*Failure to Preserve Required Day-Trading Records* In egregious cases, consider suspending the responsible individual in any or all capacities for up to 30 business days and suspending the firm in any or all activities or functions for up to 15 business days.

Discretion—Exercise of Discretion Without Customer's Written Authority

FINRA Rules 2010 and NASD Rule 2510¹

Principal Considerations in Determining Sanctions	Monetary Sanction	Suspension, Bar or Other Sanctions
*See Principal Considerations in Introductory Section* 1. Whether customer's grant of discretion was express or implied. 2. Whether firm's policies or procedures prohibited discretionary trading. 3. Whether the firm prohibited the respondent from exercising discretion in customer accounts. 4. Whether the respondent's exercise of discretion went beyond time and price discretion.	Fine of $2,500 to $15,000.²	Where aggravating factors predominate, suspend an individual respondent in any or all capacities for at least 10 to 30 business days.

^1. This guideline also is appropriate for violations of MSRB Rules G-8(a)(xi)(I) and G-17.

^2. As set forth in General Principle No. 6, Adjudicators may also order disgorgement.

Guaranteeing a Customer Against Loss

FINRA Rules 2010 and 2150¹

Principal Considerations in Determining Sanctions	Monetary Sanction	Suspension, Bar or Other Sanctions
*See Principal Considerations in Introductory Section* 1. Purpose and timing of the guarantee. 2. Whether respondent received a financial benefit from the guaranteed transactions.	Fine of $2,500 to $37,000.²	Consider suspending individual respondent in any or all capacities for up to 30 business days. In egregious cases, consider a longer suspension (of up to two years) or a bar. Consider suspending member firm with respect to any or all activities or functions for up to 30 business days. In egregious cases, consider a longer suspension (of up to two years) or expulsion.

^1. This guideline also is appropriate for violations of MSRB Rule G-25.

^2. As set forth in General Principle No. 6, Adjudicators may also order disgorgement.

Institutional Communications—Failing to Establish and Maintain Written Procedures in Compliance With Rule Standards; Failing to Comply With Rule Standards Regarding Recordkeeping

FINRA Rule 2210

Principal Considerations in Determining Sanctions	Monetary Sanction	Suspension, Bar or Other Sanctions
*See Principal Considerations In Introductory Section.* *Failure to Establish and Maintain Written Procedures in Compliance with Rule 2210(b)* 1. Whether deficiencies enabled violations to occur and escape detection. 2. Nature, extent, and character of underlying misconduct, if any. *Failure to Comply with Record-Keeping Requirements of Rule 2210(b)* 1. Nature and materiality of inaccurate or missing information.	*Failure to Establish and Maintain Written Procedures in Compliance with Rule 2210(b)* Fine of $5,000 to $29,000. *Failure to Comply with Record-Keeping Requirements of Rule 2210(b)* Fine of $1,000 to $29,000. In egregious cases, consider a higher fine.	*Failure to Establish and Maintain Written Procedures in Compliance with Rule 2210(b)* In egregious cases, consider suspending the responsible individual(s) in any or all capacities for up to one year. In egregious cases, also consider imposing a pre-use filing requirement for institutional sales material and suspending the firm with respect to any or all activities or functions for up to 30 business days or until the firm's written procedures are amended to conform to the requirements of Rule 2211(b). *Failure to Comply with Record-Keeping Requirements of Rule 2210(b)* In egregious cases, consider suspending the responsible individual for up to two years and consider suspending the firm in any or all activities or functions for up to 30 days.

Fraud, Misrepresentations or Material Omissions of Fact

FINRA Rules 2010 and 2020¹

Principal Considerations in Determining Sanctions	Monetary Sanction²	Suspension, Bar or Other Sanctions
*See Principal Considerations in Introductory Section*	*Negligent Misconduct* Fine of $2,500 to $73,000. *Intentional or Reckless Misconduct* Fine of $10,000 to $146,000.	*Negligent Misconduct³ Suspend individual in any or all capacities for 31 calendar days to two years. Consider suspending a firm with respect to a limited set of activities for up to 90 days. Intentional or Reckless Misconduct* Strongly consider barring an individual. Where mitigating factors predominate, however, consider suspending an individual in any or all capacities for a period of six months to two years. Consider applicable Principal Considerations in determining the duration of a suspension or whether to impose a bar. Consider suspending a firm with respect to any or all activities for up to two years. Where aggravating factors predominate, strongly consider expelling the firm.

^1. This guideline also is appropriate for violations of Sections 10(b) and 15(c)(1) of the Securities Exchange Act of 1934, the applicable rules and regulations thereunder, and MSRB Rules G-17 and G-47.

^2. In cases involving misrepresentations and/or omissions as to two or more customers, the Adjudicator may impose a set fine amount per investor rather than in the aggregate. As set forth in General Principle No. 6, Adjudicators may also order disgorgement.

^3. This guideline should be applied in cases alleging only a violation of FINRA Rule 2010 or MSRB Rule G-17 if the cause of action in the complaint is based on negligent misrepresentations or negligent material omissions of fact.

Penny Stock Rules—Failure to Comply With Rule Requirements

FINRA Rule 2010 and SEC Rules 15g-l through 15g-9

Principal Considerations in Determining Sanctions	Monetary Sanction¹	Suspension, Bar or Other Sanctions
*See Principal Considerations in Introductory Section*	*Negligent Misconduct* Fine of $5,000 to $146,000. *Willful Misconduct* Fine of the greater of $146,000 or $5,000 per violative transaction. For egregious misconduct, require firm to offer rescission of violative trades to each customer.	*Negligent Misconduct* Consider suspending the firm with respect to any or all activities or functions and/or suspending the responsible individual in any or all capacities for up to two years. *Willful Misconduct* Consider suspending the firm with respect to any or all activities or functions and/or suspending the responsible individual in any or all capacities for up to two years. In egregious cases, bar the responsible individual and/or expel the firm.

^1. As set forth in General Principle No. 6, Adjudicators should also order disgorgement.

Pricing—Excessive Markups/Markdowns and Excessive Commissions

FINRA Rule 2121, 2121.01, 2121.02, and 2010¹

Principal Considerations in Determining Sanctions	Monetary Sanction	Suspension, Bar or Other Sanctions
*See Principal Considerations in Introductory Section* 1. Whether respondent dominated and controlled the market in the subject security or securities. 2. Whether respondent (registered representative) had discretion as to the amount of markups, markdowns or commissions on each trade. 3. The number of harmed customers and the quantified customer harm.	First Action Fine of $5,000 to $73,000 plus (if restitution is not ordered) the gross amount of the excessive markups, markdowns, or commissions. Second Action Fine of $10,000 to $146,000 plus (if restitution is not ordered) the gross amount of the excessive markups, markdowns, or commissions. Subsequent Actions Fine of $25,000 to $292,000 plus (if restitution is not ordered) the gross amount of the excessive markups, markdowns, or commissions.	*Negligent Misconduct* Consider suspending individual respondent in any or all capacities for a period of 10 to 30 business days and requiring demonstrated corrective action with respect to the firm's markup/markdown policy or commission policy. *Intentional or Reckless Misconduct* Consider suspending individual respondent in any or all capacities, or the firm with respect to any or all relevant activities or functions, for a period of 10 business days to two years. Where aggravating factors predominate, consider barring the individual or expelling the firm.

^1. This guideline also is appropriate for violations of MSRB Rule G-30.

^2. In cases in which the violations: (1) involve a pattern or patterns of misconduct; (2) can be quantified by number or percentage; or (3) can be compared to the standard maintained by industry peers, Adjudicators may consider deviating from the fine structure recommended in this guideline. Imposition of monetary sanctions greater than those recommended in this guideline may be particularly appropriate in cases involving violations that occurred during two or more examination or review periods or violations that occurred over an extended period of time. Similarly, in cases in which the respondent acted intentionally or recklessly, and in cases in which the respondent's compliance rate is significantly lower than that of its peers, Adjudicators may impose a monetary sanction in excess of the recommended range. In cases involving violations that arose from intentional or reckless misconduct, Adjudicators may consider imposing a set fine amount per violation rather than in the aggregate.

^3. Adjudicators should consider actions concerning violative events that occurred within the three years prior to the misconduct at issue. Events that are more recent in time, however, should be given more weight than less recent events.

^4. If the respondent's second or subsequent action involves a violation that is less serious than a prior violation, includes conduct that demonstrates that respondent is improving its compliance rate, or involves mitigation that did not exist in a prior action, Adjudicators may consider imposing a fine that is less than the fine imposed in the prior action.

Research Analysts and Research Reports—Failing to Comply With Rule Requirements Regarding (l) Relationships Between Research Department and Investment Banking Department; (2) Compensation for Research Analysts; and (3) Relationships Between Research Analysts and Subject Companies

FINRA Rule 2241

Principal Considerations in Determining Sanctions	Monetary Sanction	Suspension, Bar or Other Sanctions
*See Principal Considerations in Introductory Section.* 1. Whether misconduct resulted from negligence or intentional/ reckless behavior. 2. Whether misconduct also resulted in publication of research reports that omitted material information or contained misleading information. 3. Whether evidence suggested systemic problems or widespread abuse in the firm.	*Negligent Misconduct* Fine of $5,000 to $146,000. *Intentional/Reckless Misconduct* Fine of $10,000 to $292,000. In egregious cases, consider a larger fine.	*Negligent Misconduct* Consider suspending the responsible individual(s) in any or all capacities for up to 30 business days. *Intentional/Reckless Misconduct* Responsible Individual— Suspend responsible individual(s) in any or all capacities for a period of 60 business days to two years. In egregious cases, suspend individual(s) for a longer period or bar individual(s). Firm— Consider suspending firm's research activities for a period of one month to two years. Consider requiring firm to retain an independent consultant to review and make recommendations regarding the adequacy of the firm's supervisory procedures regarding research activities. In cases involving violative relationships between a firm's research department and investment banking department, consider suspending the firm's investment banking activities for a period of three months to two years. In egregious cases, suspend firm in any or all activities or functions for up to two years or expel the firm.

Research Analysts and Research Reports—Failing to Comply With Rule Requirements Regarding (1) Restrictions on Publishing Research Reports and Public Appearances of Research Analysts; (2) Restrictions on Personal Trading of Research Analysts; and (3) Disclosure Requirements for Research Reports and Public Appearances of Research Analysts¹

FINRA Rule 2241

Principal Considerations in Determining Sanctions	Monetary Sanction	Suspension, Bar or Other Sanctions
*For All Violations* *See Principal Considerations in Introductory Section* 1. Whether misconduct resulted from negligence or intentional/ reckless behavior. 2. Whether misconduct also resulted in publication of research reports that omitted material information or contained misleading information. 3. Whether evidence suggested systemic problems or widespread abuse in the firm.	*Failure to Comply With Restrictions on Personal Trading of Research Analysts (Rule 2241(b))* Fine of $5,000 to $73,000.² In egregious cases, consider a higher fine.	*Failure to Comply With Restrictions on Personal Trading of Research Analysts (Rule 2241(b))* Suspend individual in any or all capacities for a period of 10 business days to one year. In egregious cases, consider a longer suspension or a bar.

^1. As set forth in General Principle No. 6, Adjudicators may also order disgorgement.

Research Analysts and Research Reports—Failing to Comply With Rule Requirements Regarding (1) Restrictions on Publishing Research Reports and Public Appearances of Research Analysts; (2) Restrictions on Personal Trading of Research Analysts; and (3) Disclosure Requirements for Research Reports and Public Appearances of Research Analysts¹

FINRA Rule 2241

Principal Considerations in Determining	Monetary Sanction	Suspension, Bar or Other Sanctions
Sanctions	Failure to Comply With Restrictions on Publishing Research Reports, Restrictions on Public Appearances of Research Analysts and Disclosure Requirements for Research Reports and Public Appearances (Rule 2241 (c) and (d)(f)) *Negligent Misconduct* Fine of $5,000 to $146,000. *Intentional/Reckless Misconduct* Fine of $10,000 to $292,000. In egregious cases, consider a larger fine.	Failure to Comply With Restrictions on Publishing Research Reports, Restrictions on Public Appearances of Research Analysts and Disclosure Requirements for Research Reports and Public Appearances (Rule 2241 (c) and (d)(f)) *Negligent Misconduct* Responsible Individual— Consider suspending responsible individual(s) in any or all capacities for up to 60 business days. *Intentional/Reckless Misconduct* Responsible Individual— Suspend responsible individual(s) in any or all capacities for a period of 60 business days to two years. In egregious cases, suspend individual(s) for a longer period or bar individual(s). Firm— Consider suspending firm's research activities for a period of one month to two years. Consider requiring firm to retain an independent consultant to review and make recommendations regarding the adequacy of the firm's supervisory procedures regarding research activities. Consider requiring firm, for a period of six months to two years, to certify monthly that a general securities principal has conducted a pre-distribution review of all research reports. In egregious cases, suspend firm in any or all activities or functions for up to two years or expel the firm.

Suitability—Unsuitable Recommendations

FINRA Rule 2111¹

Principal Considerations in Determining Sanctions	Monetary Sanction	Suspension, Bar or Other Sanctions
*See Principal Considerations in Introductory Section*	Fine of $2,500 to $110,000.²	Suspend individual respondent in any or all capacities for a period of 10 business days to two years. Where aggravating factors predominate, strongly consider a bar for an individual respondent. Consider suspending a firm with respect to a limited set of activities for up to 90 days. In egregious cases, strongly consider suspending a firm for any or all activities for longer than 90 days or ordering expulsion.

^1. As set forth in General Principle No. 6, Adjudicators should also order disgorgement.

^2. This guideline also is appropriate for violations of MSRB Rule G-19 and FINRA Rule 2114.

Telemarketing—Failing to Comply With Time-of-Day Restrictions and Do-Not-Call Lists; Failing to Establish and Maintain Procedures to Comply With Rule 3230(a)

FINRA Rule 3230

Principal Considerations in Determining Sanctions	Monetary Sanction	Suspension, Bar or Other Sanctions
*See Principal Considerations In Introductory Section.* *Failure to Comply with Time-of-Day Restrictions or Do-Not-Call Lists* 1. Whether violations were widespread within the firm. 2. Number of calls that violated restrictions. 3. Whether there are patterns of abuses relating to when telephone calls are placed or to the repeated contacting of persons who have previously requested to be placed on a do-not-call list. 4. Whether firm made reasonable efforts to establish an effective call-blocking system for any members of the public requesting to be placed on a do-not-call list.	*Failure to Comply with Time-of-Day Restrictions or Do-Not-Call Lists* Fine of $5,000 to $37,000.	*Failure to Comply with Time-of-Day Restrictions or Do-Not-Call Lists* Consider suspending responsible individual for up to 30 business days. In egregious cases, consider suspending the responsible individual in any or all capacities for up to two years. Also, consider suspending the firm with respect to any or all activities or functions, including telemarketing activities, for up to one year.

Telemarketing—Failing to Comply With Time-of-Day Restrictions and Do-Not-Call Lists; Failing to Establish and Maintain Procedures to Comply With Rule 3230(a)—continued

FINRA Rule 3230

Principal Considerations in Determining Sanctions	Monetary Sanction	Sanction Suspension, Bar or Other Sanctions
*Failure to Establish and Maintain Procedures to Comply With Rule 2212(a)* 1. Nature and extent of underlying misconduct that resulted from the deficient procedures, if any. 2. Whether firm made reasonable efforts to establish an effective a higher fine. office or department for up to 30 business days. call-blocking system for any members of the public requesting to be placed on a do-not-call list. In egregious cases, consider suspending the responsible individual for up to two years. In 3. Whether there are patterns of abuses relating to when telephone calls are placed or to the repeated contacting of persons who have previously requested to be placed on a do-not-call list.	*Failure to Establish and Maintain Procedures to Comply with Rule 3230(a)* Fine of $5,000 to $73,000. In egregious cases, consider a higher fine	*Failure to Establish and Maintain Procedures to Comply with Rule 3230(a)* Consider suspending responsible individual in any or all capacities for up to 30 business days. Consider limiting activities of appropriate branch office or department for up to 30 business days. In egregious cases, consider suspending the responsible individual for up to two years. In egregious cases, also consider limiting activities of appropriate branch office or department for more than 30 days or suspending the firm in any or all activities or functions, including telemarketing activities, for up to one year.

Trading Ahead of Research Reports

FINRA Rules 2010 and 5280

Principal Considerations in Determining Sanctions	Monetary Sanction	Suspension, Bar or Other Sanctions
*See Principal Considerations in Introductory Section* 1. Whether the respondent member firm had developed procedures to prevent the trading department from utilizing advance knowledge of the content and issuance of research reports in making trading decisions.	Fine of $5,000 to $146,000.¹	*Firm* Consider suspending the firm with respect to any or all activities or functions and/or suspending the responsible individual for up to two years. In egregious cases, consider expelling the firm and/or barring the responsible individual. *Individual* Consider suspending the individual respondent in any or all capacities for up to two years. In egregious cases, consider barring the individual.

^1. As set forth in General Principle No. 6, Adjudicators may also order disgorgement.

Unauthorized Transactions and Failures to Execute Buy or Sell Orders

FINRA Rule 2111 and 2010¹

Principal Considerations in Determining Sanctions	Monetary Sanction	Suspension, Bar or Other Sanctions
*See Principal Considerations in Introductory Section* 1. Whether the respondent reasonably misunderstood his or her authority or the terms of the customer's orders. 2. Whether the respondent acted in bad faith—i.e., whether the respondent knew he or she was acting without authorization or was acting as a result of a reasonable misunderstanding. 3. The number of customers affected and the magnitude of the customers' losses, if any. 4. The number and dollar value of unauthorized transactions or failures to execute buy or sell orders. 5. Whether the respondent attempted to conceal the trading or to evade regulatory investigative efforts. 6. Whether the unauthorized transactions were made in furtherance of or in connection with another violation (e.g., conversion, improper use of funds, churning, etc.).	Fine of $5,000 to $110,000.²	*Individual* For failures to execute orders, consider suspending individual respondent in any or all capacities for a period of 10 business days to one year. For unauthorized transactions, consider suspending an individual respondent for a period of one month to two years. Where aggravating factors predominate, strongly consider barring an individual respondent. *Firm* Also consider suspending respondent member firm with respect to any or all relevant activities or functions for up to two years.

^1. This guideline also is appropriate for violations of MSRB Rules G-17 and G-19.

^2. As set forth in General Principle No. 6, Adjudicators should also order disgorgement.