WASHINGTON – J. P. Turner & Co. and Wedbush Securities, Inc. were hit with a total of $305,000 in fines by the Financial Industry Regulatory Authority for violating municipal bond rules in connection with excessive markups, disclosure failures, and/or falsifying documents.
In addition, Oppenheimer & Co. was fined $15,000 for muni trade reporting errors and two individuals were fined a total of $30,000, one of whom was connected to the Wedbush case, and another who was involved in a separate case and suspended for 45 days.
These cases were part of FINRA’s monthly disciplinary actions released Friday. The firms and individuals neither admitted nor denied the findings but agreed to the sanctions. Representatives of the firms and the individuals either could not be reached for comment or declined to comment.
Atlanta-based J.P. Turner was the focus of two separate FINRA disciplinary actions. In one, it was fined $140,000 and ordered to pay almost $77,000 plus interest in restitution to customers for excessive markups and markdowns in municipal securities during two periods. The first was the fourth quarter of 2012 through the first quarter of 2013, during which FINRA found a 3% markdown and markups ranging from 3.98% to 5.39%. The second period was the third quarter of 2013. FINRA did not provide the markups and markdowns during this period but included a chart in an enforcement document comparing reported prices to best-execution proposed prices.
FINRA said the firm violated Municipal Securities Rulemaking Board Rules G-17 on fair dealing, G-30 on prices, and G-27 on supervision.
In the second case, J.P. Turner was fined $35,000 for failing to provide customers in 70 offerings between July 2013 and April 2014, with official statements or information on how to obtain the documents. The firm also did not enforce its written supervisory procedures on official statements, FINRA said. The self-regulator said this violated G-32 on primary market disclosures and G-27.
Los Angeles-based Wedbush Securities was fined $130,000 for creating and giving FINRA false and misleading documents related to its muni securities trade reporting and also for muni trade reporting errors. FINRA said that in April and September of 2012 Wedbush altered muni trade “report cards” by whiting-out dates and adding supervisory signatures to falsely suggest the firm conducted supervisory reviews of the documents. In addition, between Jan. 1, 2010 and Jan. 31, 2012, the firm failed to report at least 55 trades to the MSRB in a timely manner and did not conduct supervisory reviews of trade report cards.
In addition, between Feb. 1 2012 and March 15, 2013, the firm failed to designate a registered principal to review trade reporting, FINRA said. The firm violated MSRB Rules G-17, G-14 on trade reporting, and G-27 as well as two FINRA rules, the self-regulator said.
FINRA also levied a $20,000 fine on Samantha Arrieta McAfee, Wedbush’s capital markets business conduct officer, and ordered her to requalify as a general securities principal in connection with the falsified documents.
New York City-based Oppenheimer was fined $15,000 for violating the MSRB’s Rule G-15 on confirmation, clearance, settlement and other uniform practice requirements. According to FINRA, from Jan. 1, 2014 through March 31, 2014, the firm failed to disclose in writing to customers: the call date and dollar price in 37 muni trades executed on a yield-to-call basis; the correct next potential call date in four trades executed on that same basis; and the correct lowest effective yield in one trade. The firm also improperly disclosed to customers a yield to call in two trades of munis with variable interest rates, FINRA said. It also charged Oppenheimer with violating G-27.
In other action, Jeffrey Laine Rittberger from Zanesville, Ohio, formerly a broker at The Huntington Investment Co., was fined $10,000 and suspended for 45 days for failing to have a reasonable basis for believing that he made suitable recommendations to customers to buy $198,000 of municipal unit investment trusts. Rittberger did not understand the potential risks of UITs and did not attempt to learn about them, FINRA said. The value of the UITs declined and the firm resolved complaints by either cancelling the customers’ trades or compensating them for losses. He was fired in April 2014, FINRA said.
