Thursday, January 10, 2008

FINRA Fines 19 Firms a Total of $2.8 Million for Inaccurate Advertised Trade Volume Information

FINRA fined the firms after it compared the firms' advertised trade volume with the firms' executed trade volume found substantial overstatements for each firm in one or more of the securities reviewed.

The firms' overstated trade volumes were made available to market participants by the service providers. The service providers also used the firms' inaccurate advertised trade volumes to compile rankings and reports, including reports that rank the most active broker-dealers by security.

So, these firms misrepresented the volume of their business in their advertisements. In other words, they lied to the investing public. Pretty serious stuff, I wonder why the individuals responsible for these misresentations were not barred from the industry.

Oh wait, the explanation is later on in the press release. Some of the firms involved were CIBC, Lehman, Merrill Lynch, Robert W. Baird & Co., Inc., Thomas Weisel Partners, LLC, UBS, Bear, Stearns, BMO Capital, Cowen, Deutsche Bank, and RBC Capital Markets Corp.). The big boys committing the big violations, and everyone walking away with a small fine.

Oh yeah, FINRA also found that, prior to September 2006, all of the firms lacked an adequate supervisory system and procedures for communicating trade volume to such services. Do they EVER not find inadequate procedures when they fine a firm? Not that I am complaining, since all that does is generate some work for my firm in reviewing and re-writing procedures, but if you were to read FINRA press releases, you would believe that no one has a decent set of supervisory procedures!

Or maybe it is just a way to jack up the fines by adding "another" violation. Hmmmm.
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