Regulus Financial Group, LLC, a broker-dealer headquartered in Kentwood, Michigan, has agreed to a $20,000 fine as part of a settlement with the Financial Industry Regulatory Authority (FINRA). The firm failed to disclose its own and its control affiliate’s disciplinary history in its customer relationship summary (Form CRS) from May 22, 2021, to February 6, 2024. This omission constitutes a willful violation of Section 17(a)(1) of the Securities Exchange Act of 1934, Exchange Act Rule 17a-14, and FINRA Rule 2010. ​

Regulus has been a FINRA member since July 2010, operating 65 active branches with 114 registered representatives, primarily servicing retail investors.

Relevance to Prop Trading Firms:

‍While Regulus operates as a traditional broker-dealer, the incident underscores a universal lesson for all financial entities, including proprietary trading firms: the necessity of full transparency and adherence to regulatory requirements in client communications. Prop firms, especially those expanding their services or entering new markets, must ensure that all disclosures, such as those in Form CRS, are complete and up-to-date to maintain trust and comply with regulatory standards.​

Conclusion:

‍This case serves as a reminder of the critical role that accurate and complete disclosures play in the financial industry. Prop trading firms should take this opportunity to review their compliance practices, ensuring that all client-facing documents meet regulatory expectations to avoid similar penalties.