First Horizon to Pay SEC Fine Over Broker Rule Compliance

By Dean Seal

First Horizon has agreed to pay regulators a $325,000 fine to resolve claims that its practice for ensuring compliance with brokers' "best interest" standard wasn't up to snuff until last year.

The U.S. Securities and Exchange Commission alleged Wednesday that from July 2020, when the agency started implementing the so-called Regulation Best Interest, until February 2023, First Horizon reviewed structured note transaction recommendations for compliance with the broker rule after those transactions had been executed.

The Memphis-based financial services company filed and cleared exception reports for noncompliant transactions, but based on its scheduling protocols, many exceptions weren't cleared until after the transactions were executed, the SEC said.

First Horizon changed its policy in February of last year and now approves structured note recommendations before transactions are executed, according to the agency.

The SEC further accuses First Horizon of initially failing to enforce Regulation Best Interest for customer accounts that it acquired in a tie-up with Iberia Financial Services in 2020.

Without admitting or denying the SEC's findings, First Horizon agreed to resolve the matter with a civil fine.

The SEC finalized Regulation Best Interest in 2020, hoping to toughen up the fiduciary standard imposed on brokers by requiring them to consider alternatives to the products or strategies they recommend, with the goal of serving the client's best interest.

Write to Dean Seal at dean.seal@wsj.com

(END) Dow Jones Newswires

September 18, 2024 10:15 ET (14:15 GMT)

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