The Financial Industry Regulatory Authority has fined Kane, McKenna Capital Inc. and Wulff, Hansen & Co. a total of $27,500 for municipal transaction disclosure and trade rule violations.
Chicago-based Kane McKenna was ordered to pay $17,500 for the failure to file Rule G-37 forms at all, or on a timely basis, with the Municipal Securities Rulemaking Board for 16 financial advisory services agreements it entered with issuers between March 26, 2007, and June 14, 2009.
Kane McKenna is a financial advisory firm, but currently is registered with the MSRB and FINRA as a broker-dealer.
Phillip McKenna, the firm’s president, declined to comment on the case other than to say that regulators years ago said the firm had to register as a broker-dealer because it sometimes negotiated private placements of muni bonds with banks.
According to FINRA, the firm entered into 19 financial advisory services agreements with municipalities during the 27 months ending in June 2009. However, the firm failed to file a Form G-37 to report 13 of the agreements and failed to file a timely Form G-37 for three other agreements, the self regulatory said.
As a result, the firm violated G-37, the MSRB’s rule on political contributions that requires firms to disclose political contributions and negotiated transactions.
Between March 1, 2007, and June 14, 2009, the firm used electronic storage media without disclosing this to FINRA and did not use a third party to retrieve the information from its server. It wrote over backup tapes without storing duplicate copies. These failures violated SEC, NASD, and FINRA rules, FINRA said. Kane McKenna’s written supervisory procedures did not cover some of these requirements and, as a result, it violated the MSRB’s Rule G-27 on supervision.
The regulator said Kane McKenna was sanctioned for similar violations in June 2008 and April 1997.
FINRA fined San Francisco-based Wulff Hansen $10,000 for trade reporting violations. It said that between July 1 and Sept. 30, 2009, the firm failed to report the correct time of trade for 39, or 6%, of its muni transactions in reports sent to the MSRB and in memorandums.
It also failed to file information about 37 trades within 15 minutes of their execution. As a result, the firm was fined $10,000 for violations of Rule G-14 on trade reporting and Rule G-8 on books and records.
Chris Charles, Wulff’s president, could not be reached for comment. But in a statement of corrective action, the firm said it has made substantial improvements in its trade execution and reporting activities.