WASHINGTON — The Financial Industry Regulatory Authority has ordered seven firms to pay more than $260,000 in fines and restitution to customers for violations of trade reporting and other municipal securities rules.
The firms agreed to pay penalties without admitting or denying wrongdoing, according to FINRA’s monthly disciplinary report, released Monday.
New York City-based Citigroup Global Markets Inc., agreed to pay $150,000 in fines and $17,255 in restitution for violating the Municipal Securities Rulemaking Board’s Rules G-14 on reports of sales and purchases, G-17 on fair dealing and G-30 on prices and commissions.
Between April and June 2008, FINRA said the firm bought or sold municipal securities in five transactions at prices that were not fair and reasonable, based on market conditions and other factors. FINRA did not report the amount of markups.
The firm also failed to report information regarding 30,000 inter-dealer transactions to the MSRB’s Real-Time Transaction Reporting System between June 2009 and June 2010, and failed to report correct information in 5,000 reports, FINRA said.
Citigroup vice president of public affairs Scott Helfman said in an email, “We are pleased to resolve this matter and look forward to putting this behind us.”
No other firms named in the report responded to a request for comment.
Morgan Keegan & Co. Inc., a Memphis, Tenn.-based subsidiary of Raymond James Financial Inc., was fined $35,000 for violations of Rules G-27 on supervision, G-15 on confirmation requirements and G-8 on books and records.
The firm failed to report 933 muni bond transactions within 15 minutes of the time of trade to RTRS between October and December 2008, FINRA said.
FINRA said that in 2009 Morgan Keegan failed to report 73 trades to RTRS within 15 minutes, did not report the correct time of trade or the correct yield in more than 100 trade reports, and did not report the correct time of trade on trade memoranda.
Also in 2009, the firm did not disclose to customers the lowest yield-to-call on muni transactions and did not accurately disclose commissions to customers, according to the self regulator.
Westlake Village Calif.-based Financial West Investment Group Inc., agreed to pay fines of $15,000 and $4,518 in restitution for violating Rules G-17 and G-30.
FINRA said that between October and December 2008 the firm purchased municipal securities for its own account in five transactions at prices that were not fair and reasonable.
FINRA fined TD Securities (USA) LLC, based in New York, $15,000 for G-14 and G-8 violations. Between July and September 2010, the firm did not report 73 muni bond transactions to RTRS within 15 minutes and failed to report the correct trade information to RTRS and in trade memoranda.
Fortune Financial Services Inc., based in New Brighton, Pa., agreed to pay $10,000 in fines for violating MSRB Rules G-2 on professional qualifications, G-3 on classification of principals, and G-27.
FINRA said that from October 2009 to January 2010, Fortune Financial executed transactions in connection with 529 college savings plans without being qualified to do so. The firm also did not have adequate supervisory procedures.
Siebert, Brandford, Shank & Co. LLC, based in Oakland, Calif., agreed to pay $10,000 for violations of the MSRB’s Rules G-14 and G-8 during the first and fourth quarter of 2010. During those periods the firm failed to report 70 muni trades to RTRS within 15 minutes and failed to report the correct time of trade on 79 reports, FINRA said.
The firm also did not report the correct time of trade on memoranda for 18 muni transactions.
Janney Montgomery Scott LLC, based in Philadelphia, agreed to pay $5,000 for violating MSRB rules between June 2008 and May 2010.
FINRA said the firm violated Rule G-32 on primary offering disclosures for filing forms with incorrect dates and for submitting 10 official statements between two and 150 business days late. The firm also violated Rule G-11 on primary offering practices for failing to send timely final settlement letters to syndicate account members, resulting in late settlements of accounts.
Janney also filed amended official statements for three municipal securities offerings one day late, a violation of the MSRB’s Rule G-36, which had required dealers to submit amended official statements within one day after receiving the amendments.
In addition, Janney violated Rule G-27 for executing trades of variable-rate demand obligations without having written supervisory procedures that properly addressed disclosure of material information.
