Four Broker-Dealers Fined $67,500 For Muni Trade Violations

WASHINGTON - Four broker-dealer firms have been ordered by the Financial Industry Regulatory Authority to pay a total of $67,500 for municipal trade reporting and related violations.

The violations and sanctions were disclosed in FINRA's latest disciplinary report.

Atlanta-based J. P. Turner & Co. was fined $22,500, Dallas-based Estrada Hinojosa & Co. was directed to pay $17,500, Little Rock, Ark.-based Crews & Associates, Inc. had to pay $15,000 and New Woodstock, N.Y.-based Ridgeway & Conger, Inc. was fined $12,500 for violating muni rules.

Executives or compliance officers at the four firms either declined to comment or could not be reached for comment.

FINRA found that J. P. Turner, during the fourth quarter of 2013, failed to report data on 26, or 2.29% of 1,117, matched interdealer trades to the MSRB's Real-time Transactions Reporting system (RTRS) within 15 minutes of execution as is required under the MSRB's Rule G-14 pm trade reporting. The firm also failed, during the second half of the year, to accurately report the correct time of trade in 90, or 7.07% of 1,273, customer transactions and also did not report data from these trades in a timely fashion, the self-regulator said. FINRA said the firm violated MSRB Rule G-14 on trade reporting.

Estrada Hinojosa violated both G-14 and G-27 on supervision, according to FINRA. These violations were discovered in sweeps conducted by the self-regulator's municipal bonds team and Department of Market Regulation from July 1, 2012 through Sept. 30, 2012. During one sweep, FINRA found the firm failed to report the correct time of trade in 54, or 25%, of interdealer trades. It also failed to timely report information from 38, or 17%, of interdealer trades within the required 15 minutes from execution. In the other review, the firm failed to timely report 19, or 6% of trades, in a timely fashion.

In addition in the first review, FINRA said the firm's supervisory system was not reasonably designed to achieve compliance with MSRB rules and applicable securities laws. The system, among other things, did not identify the persons responsible for supervision or the steps those persons should take in their roles, the self-regulator said.

Crews violated Rules G-14, G-15 on confirmation, clearance and settlement and G-27, according to FINRA. The firm failed to use a special condition indicator required for 197 list offering price/takedown trades it reported within 15 minutes of execution, FINRA said. These trades do not have to be reported within the 15 minute timeframe and can instead be reported by the end of the day, but must have an appropriate special condition indicator.

The self-regulator also found that Crews incorrectly stated its capacity as "broker only" when it was "principal" on 50 customer confirmations between Oct. 1, 2013 and Dec. 31, 2013, in violation of G-15. In addition, the firm failed to supervise its customer confirmation process, FINRA said.

In another recent similar case, Crews was fined $5,000 in April 2012 for earlier trade reporting and related books and records violations.

FINRA found Ridgeway & Conger failed to report 56, or 3.30%, of trades within 15 minutes of execution as required in the first quarter of 2013. The self-regulator also found the firm's supervisory system was not reasonably designed to achieve compliance with MSRB rules and securities laws.

In a similar past case, the firm was fined $5,000 on March 12, 2013 for reporting 36 trades in an untimely and inaccurate manner during the first quarter of 2011.

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