SG Americas Penalized for Fingerprinting Failures & Compliance Lapses

SG Americas Securities, LLC, a New York-based member of the Financial Industry Regulatory Authority (FINRA), has found itself in hot water for failing to comply with essential fingerprinting requirements. FINRA announced a $950,000 fine, a formal censure, and strict remediation obligations following SG Americas’ acknowledgment of violations dating back to 2016.

Since at least 2016, SG Americas neglected to fingerprint more than 2,000 non-registered employees—individuals working for its affiliates but not registered representatives under FINRA's purview. These fingerprints are critical for background checks, as they help firms identify whether an individual is subject to statutory disqualification due to prior criminal or regulatory misconduct.

While SG Americas had background checks in place, they did not include the legally required fingerprinting process for employees of affiliates in the U.S., Canada, and India. FINRA also found that the firm had failed to maintain proper fingerprint records, leaving it unable to determine whether some employees should have been disqualified.

In a rare move, the firm began remediation in 2022—after FINRA initiated its investigation. However, for approximately 990 former employees, the damage was irreversible. Without fingerprints, there was no way to assess whether these individuals should have been barred from their roles.

Supervisory Lapses

Beyond the fingerprinting failures, SG Americas was called out for broader supervisory shortcomings. FINRA discovered the firm had no effective system or written procedures in place to enforce fingerprinting compliance, particularly for employees of its affiliates outside the United States. It wasn’t until January 2023 that SG Americas fully implemented measures to correct these deficiencies—a delay of nearly seven years.

SG Americas has agreed to the following penalties as part of a settlement:

1. A $950,000 fine: A monetary sanction reflecting the scope of the violations.
2. A formal censure: Public acknowledgment of its failures.
3. A senior management certification: Within six months, SG Americas must submit evidence that it has reviewed, updated, and fully implemented a system to ensure fingerprinting compliance going forward.

This certification will include a breakdown of the firm’s efforts, such as the number of individuals fingerprinted, any identified disqualifications, and unresolved cases involving missing records.

SG Americas has taken steps to address its shortcomings, including updating its systems and beginning to fingerprint employees at its Canadian and Indian affiliates. But this case serves as a reminder of the vital role that compliance plays in maintaining trust and integrity within the financial sector.

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