WASHINGTON - Lombard Securities and McDonald Partners have each agreed to be censured and to pay a $10,000 fine to settle Financial Industry Regulatory Authority charges that they violated professional qualification, supervisory, and trade reporting rules.
The two firms each agreed to settle the alleged violations of Municipal Securities Rulemaking Board rules without either admitting or denying FINRA’s findings. Baltimore, Md.-based Lombard signed a settlement agreement last month, and Cleveland, Ohio-based McDonald did so in February.
Neither Lombard nor McDonald responded to requests for comment.
FINRA investigators charged that Lombard conducted five muni transactions between December 2015 and March 2016 without having a municipal securities principal at the firm, in violation of MSRB Rules G-2 on standards of professional qualification and G-3 on professional qualification requirements.
Further, FINRA alleged, between January 2014 and March 2016 Lombard was without an adequate supervisory system in violation of Rule G-27 on supervision. That rule requires that firms have in place a supervisory system “reasonably designed to achieve compliance with applicable securities laws and regulations.”
“The firm's procedures improperly delegated responsibility for reviewing municipal securities transactions to a principal who did not hold a municipal securities principal license,” FINRA investigators found. “In addition, Lombard permitted another principal who also was not a registered municipal securities principal to review and approve at least 26 municipal securities transactions.”
The firm agreed to pay $10,000 to settle FINRA’s charges.
FINRA dinged McDonald for failing to abide by MSRB Rule G-14 on reports of sales or purchases, which requires dealers to report all trades to the MSRB’s Real-Time Trade Reporting System (RTRS) within 15 minutes of execution.
Between September 2013 and February 2015, said FINRA, McDonald failed to report approximately 189 out of 855 municipal securities transactions. All of the transactions were between the firm and its customers, FINRA said.
The firm agreed to pay $10,000 to settle the charges of G-14 violations, which was in addition to a $50,000 the firm agreed to pay in connection with alleged violations of Securities and Exchange Act of 1934 and FINRA rules that occurred in a non-muni transaction.