The Financial Industry Regulatory Authority fined three firms and one individual a total of $87,500 for violating pricing, trade reporting and other muni violations, with Tradition Asiel Securities accounting for $80,000 of that.
Besides New-York-based Tradition, Atlanta, Ga.-based JP Turner & Company was fined $5,000, and Oakland, Calif.-based Ni Advisors $2,500. FINRA also singled out Ni Advisors president and chief executive officer Sui-Hock Goy to be fined jointly with his firm.
The firms neither admitted nor denied the violations.
FINRA alleged that during several quarters in 2011 and 2012, Tradition violated Municipal Securities Rulemaking Board Rules G-8 on books and records, G-14 on reports of sales or purchases, and G-27 on supervision. During the first quarter of 2011, FINRA found, the firm failed to report 160 transactions within 15 minutes as required by G-14. FINRA found 58 such instances in the second quarter of 2011, including 57 occurrences in which Tradition failed to report the correct time of trade. In that same time frame, the firm failed to show the correct time of execution on 57 brokerage orders, as required by G-8. The firm had 195 failures to report purchases and sales in the fourth quarter of 2011, and 106 in the first quarter of 2012, FINRA found. The 2012 violations included failures to report the correct time of trades as well.
FINRA also concluded that from 2011 to 2012, Tradition violated the supervisory requirements of G-27 by failing to have written supervisory procedures laying out how responsible individuals at the firm should ensure compliance with the securities laws. Tradition’s fine included $65,000 for the trade reporting and record keeping violations, and $15,000 for the supervisory infraction. Tradition declined to comment on FINRA’s findings.
FINRA found that in seven instances from July 1 2010 through Sept. 30 2010, J.P. Turner purchased munis for its own account or sold munis to customers at unfair at unreasonable prices. Those actions were violations of MSRB’s Rule G-17 on fair dealing, as well as G-30 on prices and commissions, FINRA said. Ed Woll, chief compliance officer at J.P. Turner, said he considers the FINRA actions to be a “net positive.”
“FINRA really worked very closely with us,” Woll said. “I feel I got my money’s worth in terms of guidance.”
FINRA flagged Ni Advisors for selling eleven Section 529 college savings plans between Oct. 5 2009 and Aug. 19 2010, without registering the firm with the MSRB as required. These are state-run, tax-advantaged savings plans for college costs under Section 529 of the Internal Revenue Code that are marketed by dealers.
FINRA singled out Goy for also allowing an employee to sell a 529 plan without being properly registered to do so. This conduct represented violations of MSRB Rules G-3 on classification of principals and representatives, as well as A-12 on initial fees. Ni Advisors did not respond to a request to comment on the FINRA actions.