WASHINGTON — The Financial Industry Regulatory Authority has fined three firms a total $115,000, and ordered two of them to pay $35,441 in restitution to customers, for violating municipal securities fair pricing, fair dealing and primary offering disclosure rules.
The firms sanctioned for violating fair pricing and fair dealing rules were New York City-based Citigroup Global Markets Inc., which was fined $30,000 and directed to pay more than $15,168 in restitution, and St. Louis-based Stifel, Nicolaus & Co., also fined $30,000 and ordered to pay $20,273 in restitution.
Dallas-based First Southwest was fined for failing to make timely primary offering disclosures.
The sanctions were detailed in FINRA's monthly disciplinary report, released Tuesday.
The firms neither admitted nor denied FINRA's findings but agreed to the sanctions. Officials at Citi and Stifel either declined to comment or could not be reached for comment.
FINRA said Citi, in eight transactions during the first quarter of 2009, either purchased munis from a customer or sold munis to a customer from its own account at an aggregate price (including any markup or markdown) that was not fair and reasonable. The self-regulator said it took into consideration all relevant factors, including that the firm was entitled to a profit, in determining the prices were unfair.
FINRA said the firm violated the Municipal Securities Rulemaking Board's Rules G-17 on fair dealing and G-30 on prices and commissions.
The self-regulator said Stifel, in five transactions from Jan. 1, 2009 through March 31, 2009, either bought munis from customers or sold them to customers from its own account in violation of G-17 and G-30. During the fourth quarter of 2009, Stifel did the same thing in nine muni transactions, FINRA said.
The self-regulator found First Southwest had two separate sets of violations of the MSRB's Rule G-32 on disclosures in connection with primary offerings.
FINRA said the firm, on Sept. 28, 2010, failed to provide customers with official statements before the settlement of three transactions involving $1.63 million of munis.
MSRB Rule G-32(a)(i) requires a broker-dealer to provide a customer with a copy of an OS no later than the settlement of the muni transaction.
From June 2010 to September 2011, First Southwest failed to submit on a timely basis: OS' in two offerings; two remarketing supplements, and five exempt filings from the Securities and Exchange Commission's Rule 15c2-12 on disclosure, FINRA said. The firm also filed an inaccurate OS in one offering, it said. The self-regulator said the filings were between one and 11 days late, violating Rule G-32(b)(i).
Robert Coulter, First Southwest's chief administrative officer, said, "We always strive to have a perfect record when it comes to our regulatory submissions and we understand the importance of these documents both to the regulators and the investing public. Unfortunately, these were a few instances where they were not submitted on time. We have made process improvements to facilitate the filing of these documents going forward and we will continue to look forward for opportunities to improve our processes."
