FINRA sanctioned Folio for best execution failures spanning nearly a decade of inadequate execution quality reviews, three enforcement actions closed the month's disciplinary calendar, and 13 new broker-dealers registered on the final day of a record-setting February across 131 total events.

FINRA Sanctions Folio for Execution Quality Failures

FINRA issued an Acceptance, Waiver, and Consent against Folio for failing to conduct reasonable, regular, and rigorous reviews of execution quality from at least January 2017 to the present. The firm routed customer orders to two market centers that paid for order flow and, beginning in 2022, directed a substantial portion of orders to an affiliated market center — without comparing execution quality against competing venues.

FINRA found that Folio's price improvement reviews were unreasonable because they did not consider differences in order types or sizes, and the firm failed to evaluate other relevant execution quality factors beyond price improvement alone. The violations of FINRA Rules 5310(a) and 5310 Supplementary Material .09 strike at the heart of a broker-dealer's best execution obligation — the duty to seek the most favorable terms reasonably available for customer orders.

Best execution enforcement has been one of FINRA's most active focus areas, particularly as payment for order flow and affiliated routing arrangements have drawn increasing regulatory and Congressional scrutiny. The Folio case reinforces that firms cannot simply accept payment for order flow without conducting a comprehensive, multi-factor analysis of execution quality.

Two Additional FINRA Actions Close February

Two additional FINRA Office of Hearing Officers decisions were recorded: one against a firm for failing to pay FINRA dues, fees, and other charges, and another against individuals for failing to pay a $100,000 FINRA arbitration award. Non-payment cases — while less dramatic than fraud or supervision failures — reflect FINRA's enforcement of its financial obligations framework and arbitration award collection mechanisms.

First Horizon Advisors: President to CCO — Again

First Horizon Advisors, Inc. (CRD 17117) in Memphis recorded Karen Morton Kruse (CRD 2862059) moving from President back to Chief Compliance Officer — for the third time this month. The repeated oscillation between the CCO and President titles at First Horizon has become one of February's most unusual filing patterns, likely reflecting either ongoing internal restructuring or recurring filing corrections.

13 New Broker-Dealers Close a Record Month

Thirteen new broker-dealer registrations and eight new 120-day RIA filings were recorded, while seven firms closed — producing a net gain of 14 new industry entrants. February's cumulative new BD registrations exceed 80, making it one of the strongest single months for broker-dealer formation in the industry's recent history.

Six RIA Graduations, 18 Disclosures

Six advisory firms completed SEC registration — tying the February single-day record set on February 26. Two firms failed the 120-day process. Eighteen RIA disclosures were recorded — the highest single-day count of the month — reflecting end-of-month processing cycles.

February 2026 in Review: A Record-Setting Month

February 2026 produced 4,155 total events across 28 days. The month's defining stories include the U.S. Bancorp 936-advisor BD-to-RIA migration, the FDIC's approval of Edward Jones Bank, the Federal Reserve's proposal to remove reputation risk from bank supervision, the OCC's PAYO Digital Bank charter, 450+ FOCUS reports including a single-day record of 100, over 80 new broker-dealer registrations, the CFTC's evolving prediction markets stance, and 10 FINRA enforcement actions including a $511,609 individual fine and six industry bars.

Across the Wire

Sixteen personnel changes, 11 registration changes, 10 role changes, 11 executive departures, nine new hires, three address changes, and one disclosure change rounded out the BD vertical. Eight advisor moves were recorded. One NCUA news item was published. One SEC announcement was issued. One firm name change was filed.

All data sourced from FINRA BrokerCheck, SEC EDGAR, NCUA, and the Finleet Terminal as of February 28, 2026. Entity profiles are available at terminal.finleet.com.