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Enforcement & Fines by Loffa Interactive Group

Jeffrey Matthews' $35K FINRA Fine: A Reg BI Section with No Procedures in It

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Updated October 2026. First published August 2024.

On July 19, 2024, FINRA accepted a settlement from The Jeffrey Matthews Financial Group, LLC (JMFG), a Florham Park, New Jersey broker-dealer with nine branch offices and about 40 registered representatives that mostly does municipal securities business (AWC No. 2023077092001). JMFG was censured and fined $35,000, of which $17,500 relates to MSRB Rule G-27. It neither admitted nor denied the findings.

The order doesn't allege a single unsuitable recommendation or any customer harm, and it orders no restitution. It's about paper. From June 30, 2020, when Regulation Best Interest took effect, until March 2023, JMFG's written supervisory procedures had a section titled Reg BI with no policies or procedures in it. Its Reg BI training for representatives focused on suitability instead of Reg BI. And its procedures for Form CRS said the firm had to deliver one to every retail customer but didn't say how to prepare, file, or update it.

The $35,000 is the smaller consequence. FINRA found the Reg BI violation willful, and under Article III, Section 4 of FINRA's By-Laws that makes JMFG subject to a statutory disqualification.

Why a Heading Isn't a Procedure

Reg BI's Compliance Obligation, Exchange Act Rule 15l-1(a)(2)(iv), requires a broker-dealer to establish, maintain, and enforce written policies and procedures reasonably designed to achieve compliance with the regulation. The SEC's adopting release says a firm should design them to prevent violations, detect the ones that happen, and correct them promptly. A heading with nothing under it does none of those things.

The other obligations tell you what the procedures have to cover. Rule 15l-1(a)(2) has four parts:

  1. Disclosure: before or at the time of a recommendation, written disclosure of the capacity the firm is acting in, material fees and costs, the scope of services, and material conflicts.
  2. Care: reasonable diligence, care, and skill to understand a recommendation's risks, rewards, and costs, a reasonable basis to believe it's in this customer's best interest, and the same for a series of recommendations taken together.
  3. Conflict of interest: written policies to identify and at least disclose, or eliminate, conflicts; to mitigate conflicts that give a representative an incentive to put their interest or the firm's first; to handle material limits on what can be recommended; and to eliminate sales contests, quotas, bonuses, and non-cash compensation tied to selling specific securities within a limited period.
  4. Compliance: written policies and procedures to achieve compliance with all of it.

Each of those needs an owner, a review, a record, and a way to escalate. That's what the JMFG section was missing.

Form CRS Needs Its Own Steps

Form CRS had the same compliance date as Reg BI, June 30, 2020. Exchange Act Rule 17a-14 sets the steps a firm's procedures have to cover:

  • File the current Form CRS through Web CRD, and file amendments as the form's instructions require.
  • Deliver it to a new retail investor before or at the earliest of a recommendation, an order, or opening an account.
  • Tell existing retail investors about changes within 60 days after the amendment was required.
  • Post it prominently on the firm's public website, if it has one.
  • Deliver it within 30 days when a retail investor asks.

JMFG's procedures covered the delivery duty in general terms and nothing else. FINRA charged that as a supervision failure under MSRB Rule G-27 and FINRA Rules 3110 and 2010.

The Second JMFG Case

A week later, on July 26, 2024, FINRA accepted a separate AWC from the same firm over pricing (AWC No. 2021070602901). Between April 2020 and June 2023, JMFG charged unfair prices in 12 corporate bond and 86 municipal bond transactions, and its supervisory system for fair pricing wasn't reasonably designed. It was fined $125,000, of which $110,000 relates to MSRB rules, and ordered to pay $112,932.02 in restitution plus interest.

The two cases came from different reviews. The Reg BI case started with a FINRA examination of the firm, and the pricing case with a review by FINRA's Market Investigations team.

What to Check in Your Own WSPs

  • Open your Reg BI section and look for verbs. Who reviews which recommendations, using what data, how often, and what do they write down?
  • Find the conflict inventory. List each conflict your firm has identified, whether you disclose, mitigate, or eliminate it, and where that's written.
  • Check your sales incentives for anything tied to selling specific securities in a limited period. Reg BI requires those to be eliminated.
  • Read your training materials. If they teach FINRA Rule 2111 suitability and call it Reg BI, rewrite them.
  • Walk through Form CRS from filing to delivery to amendment, and name who does each step.
  • If you're a municipal securities dealer, check that the same procedures cover MSRB Rule G-27. FINRA split JMFG's fine between the two.

For the other end of a Reg BI case, where weak procedures met a risky product and customers lost money, see our post on FINRA's GWG L Bond cases.

This post is for informational purposes only and does not constitute legal advice. For guidance on specific regulatory obligations, consult your counsel or compliance advisor.

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