Dallas broker/dealer Southwest Securities has agreed to pay $10 million for allegedly failing to prevent its registered reps from submitting market-timing and late-trading mutual fund trades. Three managers and two brokers were also named in the suit, filed jointly by the New York Stock Exchange and the Securities and Exchange Commission.
Of the $10 million fine, $8 million is a civil penalty and $2 million is in disgorgement. The company has also agreed to undertake a number of measures to prevent future misconduct. The three managers, meanwhile, have been banned from acting as supervisors at any broker/dealer or investment advisor for a year. The firm's former president and CEO, Daniel R. Leland, is paying $1 million in disgorgement and a civil penalty of $200,000. Kerry M. Rigdon, formerly SVP and director of the private client group, is paying $1 in disgorgement and a civil penalty of $50,000. The third manager, Kevin J. Marsh, a former VP and branch manager of the downtown Dallas office, is also paying $1 in disgorgement along with a civil penalty of $25,000. The two brokers named in the case are Scott B. Gann and George B. Fasciano.