FINRA Fines GlobaLink Securities $200K for Unfair Pricing, Best Execution Failures

GlobaLink Securities Inc., a broker-dealer based in Pasadena, California, has agreed to pay a $200,000 fine and make restitution of nearly $400,000 to customers to settle charges by the Financial Industry Regulatory Authority (FINRA) related to unfair pricing and best execution practices.

According to the Letter of Acceptance, Waiver and Consent (AWC) released by FINRA, from April 2020 through the present, GlobaLink charged excessive markups and markdowns ranging from 2.3% to 9.34% on 137 corporate bond transactions, resulting in $397,862 in unfair pricing for customers.

FINRA found that GlobaLink did not incur the costs of executing the bond trades itself, as its clearing firm handled the actual trading. However, GlobaLink tacked on its own markups and markdowns on top of those charged by the clearing firm, which FINRA deemed excessive given GlobaLink's limited role.

The self-regulatory organization also alleged that GlobaLink failed to use reasonable diligence to obtain best execution for customer bond trades. Despite routing all corporate bond orders to its clearing firm for handling, GlobaLink made no efforts to analyze or review the execution quality provided by the clearing firm, violating its duty of best execution.

Beyond the monetary penalties, GlobaLink must retain an independent consultant to review its supervisory systems around corporate bond pricing, best execution, and compliance with FINRA rules. The consultant will make recommendations for enhancements, which GlobaLink must adopt and implement.

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