The Financial Industry Regulatory Authority fined four firms and one broker a total of $376,500 for municipal securities and other violations in disciplinary actions released yesterday.
Most of the violations were not muni-related and the few that were revolved around late trade reporting and the failure to have supervisory procedures.
The fines included $242,500 for Merrill Lynch & Co. in New York, only $7,500 of which were muni-related; $65,000 for Sloan Securities Corp. in Fort Lee, N.J., for all violations; $24,000 for Wedbush Morgan Securities Inc. in Los Angeles, only $5,000 of which were muni-related; and $10,000 for Prager, Sealy & Co. in San Francisco for not reporting muni trades on a timely basis. Merrill also was ordered to pay almost $11,359 plus interest in restitution for customers for non-muni rule violations.
FINRA also imposed a $35,000 fine on James Curtis Ackerman, a broker and principal with Sloan Securities, suspended him from the financial markets for 10 days, and suspended him from serving as a principal for three months. In addition, it required Ackerman to retake the Series 24 broker test before serving as a principal again.
The firms and Ackerman neither admitted nor denied FINRA's findings.
FINRA charged Merrill, Wedbush Morgan, and Prager Sealy with failing to report timely information on municipal securities trades to the Municipal Securities Rulemaking Board under its Real-Time Transaction Reporting System. The MSRB's Rule G-14 requires most municipal bond trades be reported within 15 minutes of execution under the RTRS.
Merrill Lynch failed to report 381 purchase and sale transactions on a timely basis between January and March 2006, in violation of Rule G-14, according to FINRA. Merrill also mislabeled 79 additional transactions as interdealer trades during the same time frame, FINRA said.
Mark Herr, a spokesman for Merrill, said: "No customers were disadvantaged or harmed by these transactions."
FINRA charged that Wedbush Morgan, from January through March 2007, failed to report 90 purchase and sale transactions in the time frame required by Rule G-14. A Wedbush spokesperson could not be reached for comment.
Prager Sealy, the only firm whose violations were all muni-related, failed to report 51 purchase and sale transactions in the 15-minute timeframe required by Rule G-14 between January and March 2007, FINRA said. A Prager spokesperson could not be reached for comment.
FINRA charged that Sloan Securities, acting through Ackerman, allowed an individual to act as an unregistered principal for about three years and violated several supervisory provisions of the National Association of Securities Dealers, MSRB, and other rules. In the muni area, FINRA said a sample of 35 municipal trades executed by Sloan in February, May, and July of 2005, showed the firm to report the time of order receipt and execution for 23 trades and failed to maintain order tickets for 12 trades, violating Rule G-8 on books and records. A Sloan spokesperson could not be reached for comment.
