WASHINGTON — The Financial Industry Regulatory Authority has fined three firms $32,500 and expelled another from FINRA membership for violations of municipal securities rules governing pricing, transaction reporting, recordkeeping, and supervision.
FINRA announced the penalties in its November monthly disciplinary reports, which the authority released Monday.
All four firms cited for muni violations: New York City-based Reuven Enterprises Securities Division LLC and Barclays Capital, Inc., Kentucky-based Lexington Investment Company Inc. and Connecticut-based Timber Hill LLC., accepted their sanctions without admitting or denying FINRA's findings. None of the firms responded to requests for comment, or they could not be reached.
The now defunct Reuven consented to be expelled from FINRA membership for violating Municipal Securities Rulemaking Board fair pricing, fair dealing, and supervision rules when it executed 46 pairs of customer transactions at unfair prices between July 1, 2009 and Sept. 30, 2010. Data provided by FINRA showed the firm was charging markups of more than 4% on trades executed nearly immediately following one another. The firm had inadequate written supervisory procedures, FINRA found.
The disciplinary report noted that Reuven had previously had its FINRA membership terminated in March 2013 for failure to pay member fees. Yaron "Ron" Reuven, who was the firm's president and chief executive officer, continues to head Reuven Capital Investments LP, but he is no longer a registered broker, according to FINRA documents.
Barclays violated time of trade reporting rules in 356 muni transactions between Oct. 1, 2012 and Dec. 31, 2012, FINRA found. In 41 cases, the firm failed to report the correct time of trade. In 315 other instances, Barclays did not report the trades to a real-time-trade reporting system within 15 minutes as required. The firm agreed to be censured and pay a $15,000 fine to settle the charges.
Lexington agreed to a censure and $10,000 fine for reporting, supervision, and recordkeeping rule violations. Between June 2011 and August 2011, FINRA found, the firm failed to report the correct time of trade on 58 of a total of 78 muni transactions. Between June and September 2012, the firm failed to do so for all 21 of its muni trades. Lexington did not maintain accurate records of order tickets as required by MSRB rules, and failed to enforce its written supervisory procedures during those time periods.
Timber Hill failed to report 131 transactions to the RTRS within 15 minutes of execution between April 1, 2012 and June 30, 2012, FINRA investigators concluded. The firm agreed to be censured and to pay $7,500 for muni rules violations, as well as $15,000 for other violations.
