FINRA Fines Two Firms $7,500

WASHINGTON — The Financial Industry Regulatory Authority has fined two firms a total of $7,500 for violations of Municipal Securities Rulemaking Board rules, FINRA said in its monthly disciplinary report on Monday.

Both firms agreed to pay the fines without either admitting or denying FINRA's findings.

Richmond, Va.-based BB&T Securities agreed to be censured and pay $5,000 for violations of MSRB rules stemming from an excessive markup on a muni bond transaction in February 2011. FINRA examiners found that the firm violated MSRB's Rule G-17 on fair dealing as well as its G-30 on prices and commissions by charging that markup. They also said the firm violated Rule G-27 on supervision by failing to properly implement or enforce its written policies and procedures. The firm was penalized for markups on other bonds, but they were corporate.

BB&T instructed its brokers that markups had to be "calculated from the prevailing market price" of the security, a practice that FINRA found the firm was not consistently following.

"Contrary to the [written supervisory procedures]," FINRA said in its report, the firm did not calculate markups and markdowns based upon the prevailing market price. Instead, for example, in ten of the thirteen transactions, the firm purportedly calculated its markups and markdowns from a "blended average cost," a practice supported by neither governing rules nor BB&T's own WSPs."

"Nor did the firm follow its stated procedures for reviewing and approving excessive markups (which should have included, for example, compliance department review of traders' written justifications)," FINRA concluded.

The firm agreed to pay more than $7,000 of restitution for violations regarding all of the markups and markdowns, including $848.95 for the muni bond transaction.

West Conshohocken, Pa.- based CV Brokerage, Inc. agreed to pay $2,500 to settle charges that, between June 2013 and August 2013, it failed to properly report 33 customer-side transactions to the Real-time Transaction Reporting System as required by the MSRB's Rule G-14 on reports of sales or purchases.

In an Oct. 14 2014 letter to a FINRA lawyer, CV president Brenda Smith said the clearing firm involved was reporting only dealer-side transactions.

"With regard to the reporting for customer side transactions to the Real-time Transaction Reporting System in the manner prescribed by MSRB, the transactions were immediately reported and have been reported appropriately since determination that tile clearing firm was only reporting the dealer-side transactions," Smith wrote.

Neither CV Brokerage nor a representative for BB&T responded to requests for comment.

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