The National Association of Securities Dealers announced today that it has fined USAllianz Securities US$5 million for widespread deficiencies in its supervisory system and for record-keeping violations.

As part of the settlement, USAllianz Securities may not open a new office for 30 calendar days, and may not hire new registered representatives for seven days. In settling with NASD, the firm neither admitted nor denied the findings, but consented to the NASD’s findings.

USAllianz was also ordered to retain an independent consultant to verify that it has fully implemented recommended modifications and additions to its supervisory system and procedures.

The NASD found that for almost five years, USAllianz failed to establish and maintain a reasonable supervisory system and written procedures designed to oversee the firm’s registered representatives and their activities.

“The severity of the sanctions in this case reflects the magnitude of USAllianz’s supervisory failures,” said James Shorris, NASD executive vice president and head of enforcement. “Firms must ensure that they have adequate systems in place, and well-trained and qualified supervisors, to conduct meaningful supervision of their sales staff. The failures of supervision at USAllianz’s individual offices were compounded by its wholly inadequate internal inspection program.”