Broker-Dealer Fined for Charging Unfair Prices on Bond Transactions
Broker-Dealers
Compliance Operations
May 31, 2024
The Case
FINRA has fined a broker-dealer for charging unfair prices on 62 corporate bond transactions and six municipal bond transactions due to failing to consider the appropriate pricing information to determine the prevailing market price. The firm used inter-dealer bids and offer quotations to determine the prevailing market price when a contemporaneous inter-dealer transaction price was available.
The action also alleges that the firm failed to establish a supervisory system to ensure it was complying with its fair pricing obligations.
Why Does This Matter?
This case reminds us that financial institutions must adhere to fair pricing regulations, observe commercial honor, and develop comprehensive written supervisory policies (WSPs).
InnReg's Experience
As an established outsourced compliance provider since 2013, InnReg has broad experience in assessing, designing, and enhancing WSPs for broker-dealers to enhance compliance and operational efficiency.
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RIAs
The SEC recently brought settled enforcement actions against two registered investment advisers for failing to establish, maintain, and enforce written policies and procedures reasonably designed to prevent the misuse of material nonpublic information (MNPI), in violation of Section 204A of the Investment Advisers Act of 1940 (Advisers Act) and the Compliance Rule.
RIAs
On Sep. 4, 2024, FinCEN published a final rule (Final Rule) adding certain RIAs and ERAs (collectively, Covered Advisers) to the definition of “financial institution” under the regulations implementing the BSA, and imposing on Covered Advisers broad AML and CFT program requirements, as well as other BSA recordkeeping and reporting requirements.
Broker-Dealers
On November 22, the SEC announced (here) that broker-dealers Webull Financial LLC, Lightspeed Financial Services Group LLC, and Paulson Investment Company, LLC agreed to settle charges that they filed with law enforcement SARs that failed to include required information.