A broker-dealer settled FINRA charges for failing to implement an adequate supervisory system to address short positions in tax-exempt municipal bonds.
As summarized in the Letter of Acceptance, Waiver and Consent ("AWC"), the broker-dealer failed to properly allocate short positions in municipal securities and misrepresented the tax status of interest in 2,853 municipal bond positions on customer accounts and in 950 additional customer account statements. FINRA noted that the broker-dealer did not maintain records for certain customer accounts that addressed the municipal short positions.
To settle the charges, the broker-dealer agreed to (i) a censure, (ii) a fine of $2 million, (iii) monetary sanction payments, and (iv) comply with the undertakings outlined in the AWC.
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