On July 11, 2011, the Securities and Exchange Commission (“SEC”) brought and settled charges that Janney Montgomery Scott (“Janney”), a dually-registered broker dealer and investment advisor, failed to establish and enforce policies and procedures, as required by the Securities and Exchange Act of 1934, to protect material nonpublic information from misuse.
The SEC’s order instituting proceedings alleges that from at least January 2005 through July 2009, Janney’s policies for its Equity Capital Markets division (“ECM”) were insufficient and lacking. The SEC’s order found that in some instances that Janney failed to: (1) monitor contacts between investment bankers and research analysts; (2) monitor trading in securities of firms on the ECM Compliance watch list; (3) failed to require its investment bankers to receive clearance prior to making personal trades; enforce its policy that required its employees to receive approval to have brokerage accounts at other firms.
In anticipation of the institution of proceedings by the SEC, Janney proposed an offer of settlement, which the SEC accepted. Janney did not deny or admit to any findings of the SEC, but agreed to be censured and pay an $850,000 penalty. Janney also agreed to cease and desist from committing or causing any violations of Section 15(g) of the Securities Exchange Act of 1934.
The SEC’s order can be found at: https://www.sec.gov/litigation/admin/2011/34-64855.pdf
The SEC’s press release in regards to this matter can be found at: https://www.sec.gov/news/press/2011/2011-144.htm