Subscribe to our mailing list

* indicates required







We seek to provide information, insights and direction that may enable the Financial Community to effectively and efficiently operate in a regulatory risk-free environment by curating content from all over the web.


Stay Informed with the latest fanancialish news.




Regulatory Sanctions

De Minimis Activity is Never an Excuse for Lacking Adequate Supervision

June 21, 2018

by Howard Haykin


A Baltimore, MD-based firm agreed to pay a $10K fine to settle FINRA charges that it executed municipal securities transactions without having a Municipal Securities Principal at the firm.


FINRA FINDINGS.    In this case, the broker-dealer, a FINRA member since 1991, has 54 registered branch offices and 69 registered persons. According to its CRD records, is the firm is engaged in the business as a Municipal Securities Broker.


Between December 2015 and March 2016, the firm executed 5 municipal securities transactions without having a Municipal Securities Principal (Series 53) at the Firm.


MSRB Rule G-2 (Standards of Professional Qualification) states that no broker, dealer or municipal securities dealer shall effect any municipal securities transaction unless each person associated with such firm is qualified in accordance with the rules of MSRB. MSRB Rule
Rule G-3 (Professional Qualification Requirements) defines a municipal securities principal as a person who is directly engaged in the management, direction or supervision of activities including, but not limited to, trading or sales of municipal securities.


Between January 2014 and March 2016, the firm failed to establish and maintain a supervisory system and written procedures reasonably designed to supervise municipal securities transactions. Responsibility for reviewing municipal securities transactions was instead delegated to a principal who did not hold a Municipal Securities Principal license. In addition, Lombard permitted another principal who also was not a Series 53 Principal to review and approve at least 26 municipal securities transactions.


Rule G-27(b) (Supervision) requires brokers, dealers and municipal securities dealers to establish and maintain a system, including written procedures, to supervise the municipal securities activities of each registered representative, registered principal, and other associated person that is reasonably designed to achieve compliance with MSRB rules.


This case was reported in FINRA Disciplinary Actions for June 2018.

For details on this case, go to ...  FINRA Disciplinary Actions Online, and refer to Case #2016047661702.