NEW YORK Dec 9 A U.S. financial industry
regulator said on Monday that it has fined brokerage firm
Oppenheimer & Co and its head municipal securities trader for
overcharging municipal bond customers.
The Financial Industry Regulatory Authority, or FINRA, an
independent body that oversees brokerage firms, said it would
fine Oppenheimer $675,000 and order restitution to customers of
more than $246,000 for 89 transactions from July 1, 2008,
through June 30, 2009.
FINRA also said it would fine David Sirianni $100,000 and
suspend him for 60 days.
"FINRA has no tolerance for firms or individuals who charge
customers excessive markups. Oppenheimer charged customers
unfair prices in numerous municipal securities transactions and
failed to properly supervise municipal securities transactions
with its customers," said Thomas Gira, FINRA's head of market
Price discovery in the municipal bond market is not as
transparent as in the stock market where live prices are
instantaneously available to all investors. That makes it easier
for municipal bond traders to charge retail investors higher
prices than more sophisticated money managers would get.
FINRA said that Oppenheimer through Sirianni priced the 89
customer transactions from 5.01 percent to 15.57 percent above
the firm's cost and that 54 of the transactions had markups of
over 9.4 percent. Oppenheimer, said FINRA, had failed to detect
Neither Oppenheimer nor Sirianni admitted or denied the
charges but consented to "the entry of FINRA's findings," FINRA
said. Neither Oppenheimer nor Sirianni could immediately be
reached for comment.