ADMINISTRATIVE PROCEEDING
File No. 3-21699

September 22, 2023 - The Securities and Exchange Commission today announced settled charges against Wisconsin broker-dealer Carl M. Hennig, Inc. (Hennig) for violating Regulation Best Interest (Regulation BI).

According to the SEC’s order, between June 30, 2020 and January 2023, Hennig failed to comply with Regulation BI’s Compliance Obligation, which requires broker-dealer firms to establish, maintain, and enforce written policies and procedures reasonably designed to achieve compliance with Regulation BI, and Regulation BI’s Conflict of Interest Obligation, which requires broker-dealer firms to establish, maintain, and enforce reasonably designed written policies and procedures identifying and addressing conflicts of interest. As described in the order, between June 30, 2020 and January 2023, Hennig’s written policies and procedures were not reasonably designed to achieve compliance with Regulation BI. According to the order, among other things, Hennig’s written policies and procedures did not explain what factors or criteria should be considered and weighed when making recommendations or determining whether a particular recommendation is in the customer’s best interest; provide sufficient information regarding the information provided to customers, including the fees associated with Hennig’s retail brokerage services; or address how and when Hennig would update and provide written disclosures to its customers. In addition, Hennig’s written policies and procedures did not explain how to identify conflicts of interest or how to disclose, mitigate, or eliminate them.

The SEC’s order finds that Hennig willfully violated Rule 15l-1(a)(1) of the Exchange Act. Without admitting or denying the SEC's findings, Hennig has agreed to a cease-and-desist order, a censure and a civil money penalty of $50,000.

The SEC’s investigation was conducted by Ashley Dalmau-Holmes under the supervision of Anne C. McKinley of the SEC’s Chicago Regional Office. The examination that led to the investigation was conducted by Kristyn Biscocho, Craig Carlson, Stephanie Fischer Bennett, Thomas Meier, Emily Rothblatt, and Joseph Tholl of the SEC’s Division of Examinations.