[ by Howard Haykin ]

Janney Montgomery Scott LLC agreed to settle FINRA charges that, among other things, the firm committed numerous violations relating to its involvement with municipal securities offerings, and Reg SHO violations pertaining to transactions in proprietary accounts. 

Profile of Respondent. Janney Montgomery Scott, a registered broker-dealer and FINRA member since 1936,  is also registered with MSRB and a participant in a registered clearing agency.  The Philadelphia, PA-based firm is a full-service brokerage firm that conducts a general securities business on a self-clearing basis. It operates about 106 active branches and employs around 1,380 registered reps ("RRs").

Case Overview - Part One.   At various times during a 2-year stretch - June 2008 to May 2010 - allegedly violated various MSRB rules pertaining to muni securities offerings, including the following:

• Janney failed to settle the syndicate account for 2 muni securities offerings timely.
• Janney was late in submitting documents to MSRB in 13 instances.
• Janney filed an inaccurate document with the MSRB in 3 instances.
• Janney failed to update promptly its WSPs to reflect guidance issued by the MSRB concerning Variable Rate Demand Obligation ("VRDO") securities.
• Janney failed to enforce its internal WSPs in connection with the receipt of a certificate for a penny stock from a customer.

Such scenarios would reflect violations of MSRB Rules G-l I, G-32, G-36 and G-27, as well as NASD Conduct Rule 3010 and FINRA Rule 2010.

Case Overview - Part Two.   Over a 2-year stretch - from November 2009 to June 2010, then from July 2010 to December 2011 - Janney allegedly committed various rules pertaining to Regulation SHO, including the following:

• From November 2009 to June 2010, Janney allegedly violated Rules 204(a) and 204(b) of Regulation SHO under the Securities Exchange Act of 1934 by failing to comply with the close-out requirements on at least 25 occasions in its proprietary accounts. 

• From July 2010 to December 2011, Janney allegedly violated Reg SHO Rules 204(a) and 204(b) by failing to comply with the close-out requirements on at least 9 occasions in customer accounts.

Such types of violations could be attributed, in part, to deficiencies in a firm's supervisory pols and procedures for short sale close outs in Firm proprietary accounts. 

Agreed Upon FINRA Sanctions. Janney Montgomery agreed to a $52.5K fine- $5K of which pertain to the MSRB violations - to settle the above noted alleged violations and deficiencies. 

For further details on this case or others, go to:   [FINRA Disciplinary Actions for October 2012] and [FINRA AWC #2011028261501].