WASHINGTON — Seven firms have been ordered to pay a total of $68,500 in fines and $16,088 in restitution for municipal trade, disclosure, pricing and supervisory violations, according to the Financial Industry Regulatory Authority's monthly disciplinary actions released Tuesday.
The largest fine was $15,000 for New York-based Lazard Capital Markets, LLC, followed by a $13,500 fine for Boca Raton, Fla.-based FMSbonds, Inc. and an order for the firm to pay $7,427 in restitution to customers, as well as a $10,000 fine for St. Louis, Mo.-based Wells Fargo Advisors, LLC and an order for it to pay $8,661 in restitution to customers.
FINRA also fined New York-based Barclays Capital, Inc. $10,000, West Conshohocken, Pa.-based Boenning & Scattergood, Inc. $7,500, Chicago-based Melvin Securities, LLC $7,500 and New York-based Deutsche Bank Securities, Inc. $5,000.
The firms neither admitted nor denied FINRA's findings but consented to the sanctions.
In addition, the self-regulator's enforcement staff filed a complaint against Gabriel N. Smith, a Tennesseean formerly associated with MML Investors Services, LLC, for soliciting and accepting checks totaling about $200 from one of the firm's customers to invest in munis and then depositing the checks into a personal bank account for his own use. The enforcement staff filed the complaint against Smith before FINRA's Office of Hearing Officers after he failed to respond to a series of their requests for information.
FINRA said Lazard Capital Markets, from April 2011 through October 2012 reported 197 muni trades to the Municipal Securities Rulemaking Board's Real-Time Transaction Reporting System (RTRS) that had already been reported to the RTRS on behalf of a registered investment advisor, for which LCM provided clearing services. The problem was due to a coding change in electronic data, of which the firm was unaware, the self-regulator said.
FINRA said the firm violated MSRB Rules G-14 on trade reporting and G-27 on supervision because its supervisory system did not provide an automatic look-back review that would have likely uncovered the duplicative trade reports.
FINRA said FMSbonds, on Oct. 15, 2009, bought Golden State TOB Securitization Corp., Calif., TOB Settlement Revenue bonds from a broker-dealer and then sold them to two customers at prices that were not fair and reasonable, taking into account all relevant factors, including markups of 6.835% for each. The firm violated MSRB Rules G-17 on fair dealing and G-30 on prices and commissions, the self-regulator said.
Wells Fargo Advisors was charged with violating the same two rules between Jan. 1, 2009 through March 31, 2009, after selling six munis to customers, and buying munis from one customer at prices that were unfair and unreasonable.
Barclays was fined for late filings of 56 official statements, an amendment and nine advance refunding documents with the MSRB's EMMA system between June 2009 and June 2012, FINRA said. Some of the OS' were inaccurately filed, it said. The delays violated MSRB Rule G-32 on primary offering disclosures, which requires, among other things, that an underwriter send the OS to EMMA within one day after receipt from the issuer and no later than the closing date of the offering. The ARDs were filed between one and 136 days late.
The Boenning firm was sanctioned for violating G-14 by inaccurately reporting a special condition indicator with regard to 604, or 10.49% of its total, trades during 2010.
FINRA charged Melvin Securities with violating G-32 and G-27 from 2010 through 2011 after it was unable to provide certain documentation for five muni offerings as required under its written supervisory procedures (WSPs). The self-regulator also said the WSPs were deficient because they failed to adequately address the firm's required submissions to EMMA and its G-32 report card monitoring. Between February 2010 and June 2011, the firm filed three OS' to EMMA that were one to 24 days late, FINRA said.
Deutsche Bank Securities was fined for violating G-14 and G-8 on books and records with regard to trades executed between April 1, 2011 through June 30, 2011. FINRA said the firm failed to report the correct time of trade in 25 reports, did not report trade data on time within 15 minutes of the time of trade as required for 14 trades, and did not document the correct time of execution in memoranda for 19 trades.
