Broker-Dealer Settles FINRA Charges for Best Execution and Markup Violations on Municipal Securities
A broker-dealer settled FINRA charges for best execution failures and "unfair and unreasonable" markups on municipal securities transactions.
According to the Letter of Acceptance, Waiver and Consent, the broker-dealer settled charges for violating MSRB Rule G-17 ("Conduct of Municipal Securities and Municipal Advisory Activities"), MSRB Rule G-18 ("Best Execution"), MSRB Rule G-30 ("Prices and Commissions") and MSRB Rule G-27 ("Supervision") regarding 11 transactions involving municipal securities between October 1, 2016 and December 31, 2016. Allegedly, the broker-dealer:
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failed to ensure that the customer price was "as favorable as possible under prevailing market conditions";
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charged "unfair and unreasonable" markups ranging from 3.7 to 6.4 percent above the prevailing market price, with 8 of the 11 markups exceeding 5 percent; and
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did not implement sufficient written supervisory policies and procedures regarding compliance with its best execution obligations.
To settle the charges, the broker-dealer agreed to (i) a censure, (ii) a fine of $20,000 for violating MSRB Rules G-17, G-18, and G-30, (iii) a fine of $15,000 for violating MSRB Rule G-27 and (v) revise its written supervisory policies and procedures to address the identified deficiencies.