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WWW: Head Trader Gets 18 Months for Undisclosed Markups
[Photo: DullHunk (Duncan Hull) / Flickr]
Alejandro Falla of Miami, FL, agreed to a $60K fine and an 18-month suspension to settle FINRA charges that he charged his customers undisclosed markups and markdowns in certain separate fixed income transactions.
ABOUT THE RESPONDENT. Falla first became registered in the securities industry in November 2005. From 2006 to 2012 he was associated with Ultralat Capital Markets. Falla then worked for BAC Florida Investments from August 2013 to June 2014. While there, he served as CEO and head trader at BAC Florida Investments.
Fall was U5’d by BAC Florida on 10/2/14; the U5 was amended on 6/1/15 to disclose that Falla may have engaged in conduct actionable under applicable statute, rule or regulation.
FINRA’S SPECIFIC FINDINGS. The undisclosed markups and markdowns took place from August 2013 through June 2014. Prior to the transactions, BAC Florida had agreed with GAI, an investment advisor acting for the BAC Florida customers, that the markups and markdowns on the transactions would be no more than 15 basis points. Falla did not honor that agreement and instead entered into a series of undisclosed, pre-arranged transactions with another broker-dealer, TC, to create the appearance that Falla and BAC Florida were honoring the 15 basis points agreement.
Falla did not provide a price to customers that was as favorable as possible under prevailing market conditions. In effecting the customer transactions, Falla failed to disclose:
- to the investment advisor or the customers the true acquisition costs and sales proceeds of the bonds he had purchased from and/or sold to the customers;
- to the customers his pre-arranged trades with the other broker-dealer; and,
- that he had charged markups/markdowns that exceeded 15 basis points on each transaction.
All of the pre-arranged trades resulted in the publication and circulation of communications and reports of non-bona-fide purchases and sales of the subject bonds. As a result of Falla’s misconduct, his firm charged additional markups and markdowns totaling nearly $100,000, which were not disclosed to the investment advisor or the customers.
This case was reported in FINRA Disciplinary Actions for February 2017.
For details on this case, go to … FINRA Disciplinary Actions Online, and refer to Case #2016050092301.