Tampa, Florida-based Calton & Associates has agreed to pay $37,500 to settle Financial Industry Regulatory Authority charges that it violated municipal securities rules, including allegedly failing to disclose required mark-up and mark-down information on hundreds of retail customer confirmations.
The $37,500 fine for violating Municipal Securities Rulemaking Board rules was imposed as part of a wider FINRA disciplinary action that saw Calton fined a total of $75,000, a
Calton accepted and consented to FINRA's findings without admitting or denying them.
Between May 14, 2018 and April 2021, the firm issued about 250 confirmations for municipal securities transactions to retail customers that failed to include any of the mark-up or mark-down information required under MSRB Rule G-15, FINRA found.
The document, which referenced a similar alleged issue relating to about 150 confirmations for corporate and agency debt transactions, said the failures "stemmed from inadvertent errors made by certain firm personnel when manually entering the orders into Calton's clearing firm's system."
"Trade confirmations protect investors who buy or sell securities through broker-dealers by, among other things, alerting them to potential conflicts of interest with their broker-dealers and providing them the means to verify the terms of their transactions and evaluate transaction costs and the quality of their broker-dealers' executions," FINRA found.
FINRA also found that between July 2018 and May 2022, the firm violated MSRB Rule G-14 by failing to report the correct time of trade "to the second" when reporting more than 7,800 municipal securities transactions to the MSRB's Real-time Transaction Reporting System.
In addition, Calton violated MSRB Rule G-27 by failing to set up and maintain a supervisory system reasonably equipped to achieve compliance with the applicable disclosure and reporting obligations of MSRB Rules G-14 and G-15, FINRA found.
Calton has reviewed its systems and procedures and has taken steps to further strengthen them to ensure that "none of these inadvertent failures happen again," Saad Rahmouni, the firm's chief compliance officer, said Wednesday.
"There was no identified financial harm to any client," Rahmouni added.
