Statement Summary
The SEC, in collaboration with NASD Regulation Inc. and the OCC, announced enforcement actions against 21 securities firms and a bank division for violating Rule G-36 of the MSRB. This rule mandates firms to submit official statements of municipal securities offerings within one day of receipt and no later than ten days post-purchase agreement. These fines, ranging from $10,000 to $25,000, highlight widespread lapses among various underwriters, underscoring the importance of compliance to ensure transparency and integrity in the municipal securities market. SEC Chairman Arthur Levitt emphasized that these actions serve as a wake-up call for underwriters regarding their responsibilities under MSRB rules.
Original Statement
The Securities and Exchange Commission announced today that NASD Regulation Inc. censured and fined 21 securities firms for violations of Rule G-36 of the Municipal Securities Rulemaking Board. At the same time, the Comptroller of the Currency sanctioned a division of a bank for similar violations. These proceedings resulted from a coordinated effort by the SEC, NASD Regulation, Inc. and the OCC.
Rule G-36 requires firms underwriting municipal securities offerings to send the official statements from those offerings to the MSRB within one day of receiving the information from the issuer, and in no case later than 10 days from the date of the agreement to purchase the securities. The official statement is then placed in the Board’s Municipal Securities Information Library, and is available to the public.
Chairman Arthur Levitt said, “Today’s enforcement actions are a wake-up call to municipal securities underwriters. The lapses here are particularly unfortunate because they are so widespread, involving every category of municipal underwriter, from national and regional securities firms to a bank. Rule G-36 is an important investor protection rule. The requirements of the rule enhance the quality of disclosure, and improve the overall integrity and efficiency of the municipal securities market. I hope that today’s actions will remind market participants that the information is important and that firms need to have procedures in place to comply with the MSRB rules.”
The SEC, NASD Regulation Inc., the OCC, the Federal Reserve Board and the Federal Deposit Insurance Corporation share responsibility for enforcing the MSRB rules.
Firms Sanctioned by NASD Regulation, Inc.
| Firm | Amount |
|---|---|
| Bear, Stearns & Co. Inc. | $25,000 |
| First of America Securities, Inc. | $10,000 |
| First Southwest Company | $10,000 |
| First Union Capital Markets Corp. | $10,000 |
| Goldman, Sachs & Co. | $25,000 |
| J.P. Morgan Securities Inc. | $25,000 |
| Merrill Lynch, Pierce, Fenner & Smith Inc. | $10,000 |
| Miller, Johnson & Kuehn, Inc. | $10,000 |
| Morgan, Keegan & Co., Inc. | $10,000 |
| Morgan Stanley & Co., Incorporated | $10,000 |
| Oppenheimer & Co., Inc. | $10,000 |
| PaineWebber Incorporated. | $25,000 |
| Piper Jaffray Inc. | $10,000 |
| PNC Capital Markets, Inc. | $10,000 |
| Prudential Securities Incorporated | $25,000 |
| Raymond James and Associates | $10,000 |
| Seattle-Northwest Securities Corp. | $10,000 |
| Smith Barney Inc. | $25,000 |
| Stone & Youngberg, LLC. | $10,000 |
| SunTrust Capital Markets, Inc. | $10,000 |
| Sutro & Co. Inc. | $25,000 |
Bank Sanctioned by OCC
| Bank | Amount |
|---|---|
| Commerce Capital, a Division of Commerce Bank, N.A. | $10,000 |
