July 11, 2011
SEC & Janney Settle Charges Over Policies to Prevent Insider Trading
The SEC settled charges that Janney Montgomery Scott LLC failed to establish and enforce policies and procedures to prevent the misuse of material, nonpublic information, as required by law. Janney, without admitting or denying the findings, agreed to be censured and to pay an $850,000 penalty to settle the SEC’s administrative proceeding. It also agreed to cease and desist from committing or causing any violations of Section 15(g) of the Securities Exchange Act of 1934, which seeks to prevent the misuse of material, nonpublic information.
According to the Commission’s order instituting proceedings, from at least January 2005 through July 2009, Janney’s policies and procedures for its Equity Capital Markets division, which encompassed its equity sales, trading, syndicate and research departments, were deficient in a number of ways. In some instances, Janney did not enforce its policies and procedures and in others, it failed to follow them as written, creating the risk that material, nonpublic information could be used for insider trading.
In addition to the censure, penalty and cease-and-desist order, Janney agreed to hire an independent compliance consultant to conduct a comprehensive review and make recommendations regarding its policies, practices and procedures relating to Section 15(g) of the Exchange Act, including the prevention of the misuse of material, nonpublic information. The independent consultant also will prepare written reports and certify in writing that Janney has established and continues to maintain policies, practices and procedures pursuant to Section 15(g) of the Exchange Act that are consistent with the findings of the Order.
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