The Financial Industry Regulatory Authority has censured and fined four firms a total of $85,000, mostly for municipal securities violations of rules on pricing, trading, political contributions reporting, and employee qualifications.
The fines, which were disclosed in the monthly disciplinary actions released by FINRA yesterday, included $30,000 against Peacock, Hislop, Staley & Given Inc. in Phoenix, $20,000 against Neuberger Berman LLC in New York City, $20,000 against Sisung Securities Corp. in New Orleans, and $15,000 against M&T Securities Inc. in Buffalo, NY.
The firms neither admitted nor denied FINRA's findings, but agreed to the sanctions.
FINRA fined Peacock Hislop for permitting an employee, identified only as "BL" in enforcement documents, to associate with the firm after being statutorily disqualified for pleading guilty to a felony, and to serve as a municipal securities representative even though he was not registered with the self-regulator or the Municipal Securities Rulemaking Board.
BL began working at the firm in 1996 as an assistant in the municipal finance department. He pleaded guilty to a nonfinance-related felony on Nov. 29, 2000, which statutorily disqualified him from such employment. Peacock Hislop was aware of the guilty plea, but nevertheless permitted BL to work at the firm. Fromspring 2002 through December 2006, BL served in a capacity that required him to be registered as a municipal securities representative, but did not obtain a securities license until December 2006. FINRA said these actions violated MSRB Rules G-3 on classifications and G-4 on statutory disqualifications.
In a Statement of Corrective Action submitted to FINRA, Peacock Hislop stated it had adopted additional supervisory procedures to closely monitor BL and that the employee would not act in a supervisory capacity and would not sell any municipal bond investment products to the public or to institutional investors.
FINRA said Neuberger Berman, a wholly owned subsidiary of Lehman Brothers Holdings Inc., filed late trade information for municipal securities and filed inaccurate and late trade data for corporate debt. The firm failed file timely trade information from 619 municipal securities trades from April 1 through June 30, 2005, and from 255 municipal securities trades from July 1 through Sept. 30, 2006, in violation of the MSRB's Rule G-14 on reports of sales or purchases, the self-regulator said. The $20,000 fine consisted of $10,000 for muni reporting violations, $5,000 for corporate trade violations, and $5,000 for supervisory failures.
The fines against Sisung stem from a Securities and Exchange Commission ruling in November that found the firm and its president, Lawrence J. Sisung Jr., failed to record political contributions that companies affiliated with Sisung made to members of the Louisiana State Bond Commission. The failures violated Rule G-37's provisions on record and reporting requirements for political contributions, as well as MSRB Rules G-8 and G-9 on books and records, FINRA said.
The SEC ruling, which threw out FINRA's claim that Sisung and its president solicited and made political contributions in violation of G-37, came after a protracted battle between the firm and FINRA, formerly NASD, dating back to 2003.
FINRA fined M&T Securities, a subsidiary of M&T Bank, for eight pairs of transactions, in which the firm either purchased muni securities from customers for its own account or sold muni securities from its account to customers at prices that were "not fair and reasonable, taking into consideration all relevant factors." The transactions violated MSRB rules G-17 on fair dealing and G-30 on prices and commissions, FINRA said. In a Statement of Corrective Action, the firm said it has taken steps to assure that its pricing of muni bonds complies with the MSRB rules, including strengthening its guidelines for markups and enhancing supervisory procedures.
Representatives of the four firms either declined to comment or could not be reached for comment.