FINRA Penalizes Firm and Trader for Unfair Prices in Municipal and Supervisory Violations

FINRA has announced charges against a firm for charging unfair prices in municipal securities transactions and for failing to have an adequate supervisory system. FINRA found that Oppenheimer Co ("Oppenheimer") and its head municipal securities trader had priced 89 customer transactions at 5.01 to 15.57 percent above the firm's "contemporaneous" cost. FINRA also found that David Sirianni, the head trader of Oppenheimer's municipal securities, purchased municipal securities from a broker-dealer on Oppenheimer's behalf, held the bonds in inventory for at least one night, and then made the bonds available for resale to the firm's customers at an unfair price.

Additionally, FINRA found that Oppenheimer failed to detect the unfair prices charged, leading FINRA to conclude that Oppenheimer's supervisory system was deficient because supervisory personnel relied solely on a surveillance report that only captured intra-day transactions to review the fairness of markups/markdowns in municipal securities transactions.

See: Oppenheimer Action; David Sirianni Action; FINRA Press Release.
Related news: SEC Charges Former Oppenheimer Private Equity Fund Manager with Misleading Investors about Valuation and Performance (with Lofchie Comment) (August 20, 2013); FINRA Fines Broker-Dealer for Penny Stock and Related AML Violations (August 5, 2013).