WASHINGTON - The Financial Industry Regulatory Authority fined two firms a total of $28,500 for violations of municipal securities rules, including excessive markups and trade reporting failures.
The sanctions were disclosed in the October monthly disciplinary actions that FINRA released Wednesday.
Wichita-based Riedl First Securities Company of Kansas agreed to pay $16,000 to settle charges that it sold munis at prices that were not fair and reasonable in 37 instances between Oct. 1, 2012 and Dec. 31, 2012. The prices violated the Municipal Securities Rulemaking Board's Rule G-17 on fair dealing and its Rule G-30 on prices and commissions. Riedl, which had no previous FINRA disciplinary history, agreed to pay the fine without either admitting or denying the authority's findings.
The firm also provided a statement of corrective action signed by president and chief executive officer Gerald Riedl affirming that the firm made restitution to all clients affected by the alleged misconduct.
All trades are now being examined for price change on the date and time of trade," Riedl wrote. "We have made changes to our written supervisory procedures reflecting this change."
New York City-based Murphy & Durieu agreed to pay $12,500 for violations of both muni trade reporting and supervisory rules, in addition to other fines FINRA levied for non-muni conduct.
FINRA examiners found that between April 1, 2012 and June 30, 2012, the firm made 29 reports to the MSRB's Real-Time Trade Reporting System that it should not have made. The firm improperly reported "purchase and sale transactions effected in municipal securities" when those trades were actually "step outs," in which different brokerages execute different portions of a trade at the same price.
Those 29 reports were therefore not inter-dealer trades reportable to the RTRS, and in violation of MSRB Rule G-14 on reports of sales or purchases, FINRA said.
FINRA also found that during the review period, Murphy & Durieu's supervisory system was deficient. Under the MSRB's rule G-27 on supervision, broker-dealers are required to have written policies and procedures reasonably designed to ensure compliance with MSRB rules and federal securities laws.
"The firm's supervisory system did not include written supervisory procedures providing for a sufficient statement of the supervisory step(s) to be taken by the identified person(s)," FINRA reported.
Without admitting or denying the findings, the firm agreed to pay the fine, revise its written supervisory procedures, and submit a written statement verifying its action within 30 days of the settlement.
A call to Riedl for comment was not returned, and Murphy & Durieu could not be reached.
