21 Brokerage Firms and a Bank Fined $325,000 for Violating MSRB Rules
Nancy A. Condon - (202) 728-8379
Comptroller of the Currency
Robert M. Garsson - (202) 874-5770
Washington, D.C.--NASD Regulation, Inc. and the Office of the Comptroller of the Currency (OCC) today announced that, as the result of coordinated investigations with the Securities and Exchange Commission (SEC), 21 brokerage firms and a division of a national bank have been fined a total of $325,000 and censured for violating Municipal Securities Rulemaking Board (MSRB) rules that require disclosure to investors in municipal securities. NASD Regulation sanctioned the 21 brokerage firms and the OCC sanctioned the bank.
All 21 brokerage firms and the bank, which neither admitted nor denied the allegations, were sanctioned for violating MSRB Rule G-36 by filing municipal securities underwriting documents late. Without the filings mandated by Rule G-36, investors lack easy access to key information about the issuer, including its ability to repay bonds and, in the case of an advance refunding, information about an escrow account that has been established.
Rule G-36 requires that the sole or managing underwriter of a municipal securities offering send the MSRB two copies of the final official statement within one business day of receiving the information from the issuer. In no case can the information be sent later than 10 business days after the final agreement to purchase, offer, or sell the securities. In the case of an advance refunding, the documents must be sent within five business days of the delivery of the securities. Investors can gain access to this important information about municipal securities through the MSRB’s Municipal Securities Information Library.â
Eight of the 21 firms were also sanctioned, in certain instances, for failing to file required documents at all; and a separate group of eight of the 21 firms were also sanctioned for not properly mailing the documents to MSRB – both of which are mandated by Rule G-36.
Eleven of the 21 firms and the bank were also sanctioned for not keeping records showing when they received required documents from the issuer, or when they sent those documents to the MSRB, as required by MSRB Rule G-8.
"Every investor has the right to the information Rule G-36 provides. Not supplying that critical disclosure, or making it available well after the fact, does not serve investors well. As a result, it’s very important that every municipal securities firm lives up to its responsibilities to keep investors informed," said Mary L. Schapiro, NASD Regulation President.
"It is important that banks and securities firms alike provide the information required under municipal securities Rule G-36," said Comptroller of the Currency Eugene A. Ludwig. "The OCC intends to make sure that every national bank that sells municipal securities provides the information that individual investors need to make informed decisions."
NASD Regulation and the OCC thanked the SEC’s Office of Compliance Inspections and Examinations for its assistance in bringing these cases.
Firms Sanctioned by NASD Regulation, Inc.
|1. Bear, Stearns & Co. Inc.||$25,000|
|2. First of America Securities, Inc.||$10,000|
|3. First Southwest Company||$10,000|
|4. First Union Capital Markets Corp.||$10,000|
|5. Goldman, Sachs & Co.||$25,000|
|6. J. P. Morgan Securities Inc||$25,000|
|7. Merrill Lynch, Pierce, Fenner & Smith Inc.||$10,000|
|8. Miller, Johnson & Kuehn, Inc.||$10,000|
|9. Morgan, Keegan & Co., Inc.||$10,000|
|10. Morgan Stanley & Co., Incorporated||$10,000|
|11. Oppenheimer & Co., Inc.||$10,000|
|12. PaineWebber Incorporated||$25,000|
|13. Piper Jaffray Inc.||$10,000|
|14. PNC Capital Markets, Inc.||$10,000|
|15. Prudential Securities Incorporated||$25,000|
|16. Raymond James and Associates||$10,000|
|17. Seattle-Northwest Securities Corp.||$10,000|
|18. Smith Barney Inc.||$25,000|
|19. Stone & Youngberg, LLC.||$10,000|
|20. SunTrust Capital Markets, Inc.||$10,000|
|21. Sutro & Co. Inc.||$25,000|
Bank Division Sanctioned by OCC
|1. Commerce Capital, a division of Commerce Bank, N.A.||$10,000|
NASD Regulation oversees all U.S. stockbrokers and brokerage firms. NASD Regulation, and The Nasdaq Stock Market, Inc., are subsidiaries of the National Association of Securities Dealers, Inc. (NASDÒ), the largest securities-industry self-regulatory organization in the United States.
The OCC charters, regulates, and supervises more than 2,600 national banks and 66 federal branches and agencies of foreign banks in the United States, accounting for 56 percent of the nation’s banking assets. Its mission is to ensure a safe, sound and competitive national banking system that supports the citizens, communities and economy of the United States.