Respondent secretly interposed his own personal accounts between his customers and the prevailing market for municipal bonds, which allowed him to charge his customers unfair, unreasonable, and excessive markups. Respondent did not disclose to his customers either his personal involvement in the transactions or the excessive markups that resulted. These acts were willful
Respondent’s conduct violated MSRB Rule G-17 concerning fair dealing, because the interpositioning itself constituted an unfair practice and, moreover, the failure to disclose constituted a deceptive and dishonest practice. Respondent’s conduct also violated MSRB Rule G-30, which concerns, in particular, fair pricing. None of the prices Respondent charged bore a reasonable relationship to the prevailing market price of the securities at the time of the customer transactions. Finally, as to those transactions where Grey charged his customers particularly high markups (ranging from 8.62% to 19.12%), Respondent committed fraud in violation of Section 10(b) of the Securities Exchange Act of 1934. In those transactions, Grey’s failure to disclose his personal involvement and the resulting excessive markups was intentional deception.
Because the same misconduct was the basis for all three causes of action, Respondent is sanctioned for all violations on a unitary basis. Respondent is suspended from associating with any FINRA member firm in any capacity for two years, fined $30,000, ordered to pay disgorgement in the amount of $16,000, and ordered to pay costs. Because the violations were willful, Respondent is statutorily disqualified.
This decision has been appealed.
|View Decision||(PDF 125 KB)|