FINRA Penalizes GMS Group Over Alleged Regulation Best Interest Lapses

GMS Group, LLC has agreed to pay a $35,000 fine and accept a formal censure as part of a settlement with the Financial Industry Regulatory Authority (FINRA), according to a recent regulatory notice.

FINRA stated that between 30 June 2020 and October 2023, the firm failed to establish, maintain, and enforce written policies and procedures reasonably designed to comply with Rule 15l-1(a)(1) of the Securities Exchange Act of 1934, commonly referred to as Regulation Best Interest (Reg BI). The alleged shortcomings were cited as violations of Reg BI, Municipal Securities Rulemaking Board (MSRB) Rule G-27, and FINRA Rules 3110 and 2010.

During the same period, regulators also found that GMS Group did not maintain written supervisory procedures reasonably designed to ensure compliance with Exchange Act Rule 17a-14, which governs Form CRS disclosure requirements. FINRA said this constituted additional violations of MSRB Rule G-27 and FINRA Rules 3110 and 2010.

In addition to the monetary penalty, the firm agreed to be censured. The settlement resolves the matter without further disciplinary proceedings.

GMS Group has been a FINRA member and an MSRB registrant since 1979. Headquartered in East Hanover, New Jersey, the firm operates as a full-service broker-dealer, with a primary focus on municipal securities. It employs 65 registered representatives across eight branch offices.