NEW YORK Dec 9 A U.S. financial industry
regulator said on Monday 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 head trader 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.
"Oppenheimer is pleased that this matter, which relates to a
very limited number of municipal bond trades in 2008 and 2009,
has been resolved. Oppenheimer has reviewed, and where
necessary, enhanced its procedures and processes to assure that
clients receive fair pricing on municipal bond transactions,"
Oppenheimer said in comments emailed by public relations firm
"Oppenheimer reviewed the transactions in question, which
occurred at the height of the financial crisis, and observes
that they were purchased at distressed prices in open market
transactions," Oppenheimer said.
WALEKpeppercomm said that Sirianni would not be commenting
on the matter.
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