FINRA Fines Firm for Failing to Buy-in Fails on Munis

FINRA fined a muni dealer for MSRB Rule violations including (i) failing to timely cancel or close out inter-dealer municipal securities transactions after settlement; (ii) failing "to take prompt steps to obtain physical possession or control of 247 short positions resulting from failed inter-dealer municipal securities transactions" and (iii) related supervisory violations.

In the Letter of Acceptance, Waiver and Consent, FINRA said the firm failed to cancel or close out failed inter-dealer municipal securities transactions within 20 calendar days after settlement and failed to establish and maintain a supervisory system, including written supervisory procedures (WSPs), reasonably designed to achieve compliance.

As a result, FINRA found that the firm violated MSRB Rule G-12(h) ("Uniform Practice"), MSRB Rule G-27 ("Supervision"), SEA Section 15(c)(3)("Risk management controls for brokers or dealers with market access."), Exchange Act Rule 15c3- 3(d)(2) ("Customer protection-reserves and custody of securities.") and FINRA Rule 2010 ("Standards of Commercial Honor and Principles of Trade").

The firm agreed to (i) a censure and (ii) a $1,600,000 fine.

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