The Financial Industry Regulatory Authority has censured and fined New York-based Citigroup Global Markets Inc. $400,000 for violations of securities rules involving municipal and corporate bonds.
The violations include buying and selling municipal securities at unfair or unreasonable prices in 2006 and 2007, though they comprise a small portion of the overall fine. In addition, Citi was required to pay $10,099.99 in restitution to customers, some of which was tied to muni violations.
In monthly disciplinary actions released Wednesday, FINRA announced that it had also censured and fined New York-based Oppenheimer & Co. $57,500 and ordered it to pay $17,879.51, plus interest, in restitution to customers, in part for buying or selling municipal securities at an aggregate price that was not fair and reasonable.
FINRA also censured the firm for inaccuracies in its written notifications to customers.
Meanwhile, the self-regulator said it had censured and fined Donnelly Penman & Partners as well as Charles Haggarty, a principal at the Grosse Pointe, Mich.-based firm, $10,000 jointly and severally and that it had fined the firm an additional $10,000, for several rules violations. They include failure to have its chief executive officer certify that the firm is in compliance with Municipal Securities Rulemaking Board and FINRA rules, as well as deficiencies in its anti-money laundering program.
Finally, FINRA said it had censured and fined Everett Bryant Ellis of Gulf Breeze, Fla., $5,000, barred him from associating with any FINRA members for 15 business days, and ordered him to pay $9,334.85 plus interest in restitution to a customer.
Ellis, who is currently employed by BBVA Compass Investment Solutions of Crestview, Fla., encouraged a 78-year-old customer to surrender a portion of an annuity he had sold her so that she could invest the proceeds in a municipal bond fund. But the self-regulator found his recommendations were unsuitable in light of the customer's age, and the costs associated with the surrender and sales charges. Though the proceeds totaled just $104,000, he charged her $5,684.13 to surrender the portion of the annuity and sales charges of $3,650.72, FINRA found.
Of the $400,000 fine against Citi, just $18,000 was tied to its unreasonable prices for munis, and only a portion of the $10,000 in restitution was tied to the muni transactions.
In eight transactions between April 1 and June 30, 2006, the firm bought or sold munis at prices that were not fair and reasonable, FINRA found, in violation of the MSRB's Rule G-17 on fair dealing and G-30 on prices and commissions.
FINRA found similar issues with five muni transactions from July 1 to Sept. 30, 2007.
The self-regulator also found that the firm failed to timely report trades of corporate securities to FINRA and failed to show the correct time of trades or the correct execution time on brokerage order memoranda, among other violations.
Citi spokesman Alex Samuelson said in a statement: "We're pleased to have resolved these matters, and the trading systems issues have been addressed in all cases."
None of the firms admitted or denied FINRA's finding, but agreed to the censures and fines. Spokesmen for Oppenheimer, Donnelly Penman, and BBVA Compass either could not be reached or declined to comment.