SEC, FINRA, DOL Enforcement Roundup: Investment Advice From the Heavens

Not only must Dell Donne restore funds to the appropriate accounts, as a result of the partial consent and judgment order, he is permanently barred from violating ERISA and removed as a plan trustee upon the appointment of an independent fiduciary, who will collect and pay out the assets in the plan's accounts. Data Breach at Morgan Keegan

Morgan Keegan & Co. was censured and fined $150,000 by FINRA after the agency found that it violated its own policies and procedures about sharing a customer's personal confidential information only with that customer, and that unauthorized access or use of sensitive customer information was to be reported immediately to the firm's compliance department and its privacy officer as well as to appropriate outside sources and to the customer.

The firm neither admitted nor denied findings that that for approximately six months, an account username for a firm customer was erroneously linked to other unrelated customer accounts so that the customer had unapproved online viewing access to personal confidential information for unrelated customer accounts. While the link was removed after about six months, the affected customers were not notified for more than a year.

In addition, another customer at a different branch found that he had unauthorized access to accounts that were not his, and when he reported the problem the firm was unable to determine how it had occurred and once again did not notify affected customers for approximately 10 months. Another breach at the same office resulted in a customer receiving unrelated account statements, and again affected customers were not notified in a timely manner.

Undocumented Trade Times, Transaction Data

Without admitting or denying findings, Neuberger Berman LLC found itself censured and fined $56,000 over findings by FINRA that it had failed to report correct trade times to the Real-Time Transaction Reporting System (RTRS) in municipal securities transaction reports, and also failed to report information about such municipal securities transactions within 15 minutes of trade time to an RTRS Portal. The findings stated that the firm failed to show the correct execution time on the memorandum of transactions and failed to document the execution time on the memorandum of transactions for the firm's account executed with another broker or dealer.

Unfavorable Prices for Customers at Edward Jones

FINRA censured and fined Edward D. Jones & Co. $55,000 and ordered the firm to pay $13,231.52, plus interest, in restitution to customers based on findings that the firm failed to use reasonable diligence to find the best inter-dealer market in corporate fixed income transactions for or with a customer.

The firm neither admitted nor denied findings that also determined that the firm failed to buy or sell in such market so that the resultant price to its customer was as favorable as possible under prevailing market conditions, and that its supervisory system did not provide for supervision reasonably designed for compliance with applicable laws and regulations on best execution of those transactions. In addition, the findings said that the firm purchased municipal securities for its own account from a customer and/or sold municipal securities for its own account to a customer at an aggregate price (including any markdown or markup) that was not fair and reasonable and that the firm submitted incorrect short interest position reports to NASD or FINRA.

Order Execution Issues at Janney Montgomery Scott

Janney Montgomery Scott was censured by FINRA, fined $55,000, ordered to pay $1,599.67, plus interest, in restitution to customers, and to revise its written supervisory procedures. It neither admitted nor denied findings that it failed to execute orders fully and promptly; failed to use reasonable diligence to ascertain the best interdealer market for the customer, and incorrectly marked its ledger as long when its position was short; failed to maintain customer confirmations; failed to document accurate opening and closing proprietary positions; failed to show the correct entry time on brokerage order memoranda; and failed to provide order memoranda for brokerage orders.

In addition, findings stated that the firm incorrectly reported the second leg of riskless principal transactions as agent to the FINRA/NASDAQ Trade Reporting Facility (FNTRF) and transmitted reports to OATS that contained inaccurate timestamps, and omitted or contained inaccurate account type codes; executed short-sale transactions and failed to report each of the deals to the FNTRF with a short-sale modifier, and executed short-sale orders and failed to properly mark the orders as short.

The firm's supervisory system was also found by FINRA not to achieve compliance in a number of areas, and to have failed to produce and enforce written policies and procedures adequate to prevent trade-throughs of protected quotations in NMS stocks that do not fall within any applicable exception, and if relying on an exception, were reasonably designed to assure compliance with the terms of the exception.

Proscribed Short Sales Sanctioned at Piper Jaffray

FINRA censured and fined Piper Jaffray & Co. $30,000 over findings that it engaged in numerous short sales of a common stock when an Emergency Order of the SEC prohibited short sales in that security. According to the findings, which the company neither admitted nor denied, the firm had created a spreadsheet to track companies covered by an Emergency Order. When the order was amended and the NYSE changed the list of stocks, the firm updated its spreadsheet and in so doing incorrectly removed an Included Financial Firm from the list, subsequently entering and executing short sale orders for that company's securities over several trading days and through multiple executions.