FINRA Fines 4 Firms, Including LPL
The Financial Industry Regulatory Authority fined four firms $106,000, and fined as well as suspended an individual, for municipal securities rule violations.
The firms and fines included: LPL Financial LLC with $36,000, Bishop, Rosen & Co., Inc. with $32,500, Regal Securities, Inc. with $25,000, and Landolt Securities, Inc. with $12,500. FINRA also fined former Sloan Securities Corp. trader Keli Bereton $3,750 for muni violations.
In 12 transactions between Jan. 1 and March 31, 2009, FINRA alleged, Boston-based LPL violated the Municipal Securities Rulemaking Board's Rule G-17 on fair dealing and Rule G-30 on prices and commissions by purchasing and selling municipal securities at prices that were not fair and reasonable. The firm agreed to pay the fine but neither admitted nor denied FINRA's findings.
New York-based Bishop, Rosen & Co. also committed pricing violations, according to FINRA. The regulatory authority cited 12 transactions between Jan. 1 and March 31, 2001 and four transactions between Oct. 1 and Dec. 31 2011 in which the firm traded municipal securities at unfair prices in violation of rules G-17 and G-30. In addition to the fines, the firm agreed to pay restitution to customers totaling $7,613. Bishop, Rosen & Co. neither admitted nor denied FINRA's accusations.
FINRA tagged Glenview, Ill.-based Regal Securities for violations of the MSRB's Rule G-27 on supervision and Rule G-32 on disclosure. Between October 2009 and November 2011, Regal Securities "failed to deliver official statements to customers purchasing new issue municipal securities," according to FINRA. "Additionally, during the stated period the firm failed to establish adequate systems and procedures with regard to the delivery of official statements in connection with sales of new issue securities in secondary market transactions."
Under the rules, broker-dealers are required to deliver the issuer's official statement to a customer on or before the settling date of the purchase, and must also adopt and maintain procedures designed to ensure compliance with MSRB rules. FINRA further alleged that Regal failed to disclose material events, including rating downgrades, to customers between February and October 2011.
Regal agreed to pay the fine, but did not admit or deny FINRA's findings.
Oshkosh, Wis.-based Landolt Securities violated MSRB Rule G-8 on books and records, G-14 on time of trade reporting, as well as G-27, FINRA said. Between Jan. 1 and March 31, 2011, FINRA alleged, the firm failed to prepare and maintain records for 57 municipal securities transactions. Between June 23, 2010 and Aug. 9, 2011 Landolt reported inaccurate execution times on "at least 120" muni transactions, the self-regulator said. The firm failed to live up to its supervisory requirements under G-27 between Feb. 26, 2010 and Dec. 1, 2011, FINRA said. For some of that time, the firm had "no supervisory system or procedures, written or otherwise," the self-regulator alleged. Landolt agreed to settle by paying the fine.
Bereton's employment with Sloan, which is based in Englewood Cliffs, N.J., ended in May 2011, but she had been registered as a trader for a year prior to the that, according to FINRA. Between July and August 2010, the authority alleged, Bereton engaged in trades in which she diverted some bonds into a proprietary Sloan account and then purchased the bonds from Sloan through some of her outside accounts and sold them. She would share these profits with the firm, according to FINRA, and also caused other firms to improperly extend her credit for some transactions. These actions constituted violations of G-17, FINRA said.
Though neither admitting nor denying the findings, Bereton agreed to pay the fine and be suspended from association with any FINRA member from May 6 through July 5.