NASD Regulation Fines and Censures First Albany in First Case Against ARMACON
Washington, D.C.--NASD Regulation today announced it fined First Albany Corporation $10,000 for record-keeping violations arising from payments made to Armacon Securities, Inc. NASD Regulation also announced it censured a principal of the firm for the same violations. Both disciplinary actions were taken pursuant to an offer of settlement in which the respondents neither admitted nor denied the allegations.
NASD Regulation found that First Albany made two $10,000 payments to Armacon in return for advice--from a principal of Armacon--primarily about how to become designated as an eligible bond underwriter by the New Jersey Health Care Financing Facilities Authority. NASD Regulation discovered, however, that First Albany recorded the payments as expenses of two specific offerings of municipal securities conducted by the firm, though Armacon had not provided any services in connection with either offering. First Albany did not charge the expenses to the issuers involved or to other parties.
NASD Regulation also found that First Albany failed to create or maintain any records that recorded the services actually provided by Armacon.
In recording the payments in this fashion, NASD Regulation found that First Albany violated Section 17(a) of the Securities Exchange Act of 1934 and Rule 17a-3 thereunder and Municipal Securities Rulemaking Board Rule G-8.
A copy of the settlement--the Letter of Acceptance, Waiver, and Consent--is available.