WASHINGTON — The Financial Industry Regulatory Authority has ordered four firms to pay more than $53,000 in fines and restitution to customers for violations of municipal securities fair-dealing, pricing and other rules.
The firms agreed to pay the fines without admitting or denying wrongdoing, according to FINRA’s monthly disciplinary report, which was released Wednesday.
R. Seelaus & Co., based in Summit, N.J., agreed to pay a $15,000 penalty for selling municipal securities at prices that were “not fair and reasonable,” according to FINRA. Seelaus also agreed to pay $5,995 in restitution to customers, plus interest. From October 2008 to February 2009, Seelaus charged markups of between 5.43% and 10.67% on trades of New Jersey Health Care Facilities Financing Authority bonds, New Jersey Economic Development Authority water facility bonds and Tobacco Settlement Financing Corp. asset-backed bonds, violating the Municipal Securities Rulemaking Board’s Rule G-17 on fair dealing and Rule G-30(a) on pricing of principal transactions, FINRA said.
The firm did not respond to a request for comment.
Isaak Bond Investments Inc., of Denver, was ordered to pay $12,500 for violating the board’s Rule G-8 on books and records and Rule G-14 on reports of sales and purchases.
FINRA said that between April and June 2009, the firm failed to report 75 trades within 15 minutes of execution under the MSRB’s Real-Time Transactions Reporting System. Those trades accounted for 12% of the firm’s reported transactions during the period. The firm also did not report the correct time of trade.
The firm’s chairman and president Cal Isaak called the fines “ridiculous.” He said he offered to pay FINRA double the amount if the authority found that an investor was harmed by the late reporting. “In no event has this firm ever tried to delay transaction reporting for the benefit of the firm,” Isaak said. “We have never had any intent to injure an investor.” Isaak said the firm offered FINRA valid explanations for the delays, and said he agreed to pay the fines only because fighting them would have cost twice as much.
FINRA fined Boston-based LPL Financial $10,000 for violating Rule G-14 and $2,500 for violating Rule G-8. Between July and September 2010, LPL failed to report 265 transactions to RTRS within 15 minutes and failed to report the correct trade time, FINRA said. LPL also did not show the correct execution time on trade memorandum for 77 brokerage orders.
LPL agreed in 2009 to pay $10,000 for late reporting and poor supervisory procedures. LPL did not return calls for comment.
FINRA fined WFG Investments Inc., a subsidiary of Dallas-based Williams Financial Group Inc., $10,000 for violations of the MSRB’s Rule G-8 and Rule G-27 on supervision.
FINRA said WFG failed to include the time of receipt in five of 36 order tickets for muni bonds between September and December 2008. WFG also did not maintain copies of subscription agreements in connection with private placement securities, or proof of reviewing the agreements. FINRA said. In addition, WFG failed to enforce written supervisory procedures, did not document checks received from customers and forwarded to an escrow account, did not supervise the escrow account and did not design procedures to ensure compliance, according to FINRA
WFG, which declined to comment, agreed in 2008 to pay more than $10,000 for violating MSRB rules on fair dealing, records, supervision and prices and commission. The same year, the firm and an individual agreed to pay $25,000 for violating Rule G-41 on anti-money laundering compliance programs and NASD rules. In 2009, the WFG agreed to pay $37,500 for violating NASD and MSRB rules.
