FINRA Fines Oppenheimer & Co., Trader for Overcharging on Muni Trades

Sirianni purchased municipal securities from a broker-dealer on Oppenheimer’s behalf, held the bonds in inventory for at least overnight, and then made the bonds available for resale at an unfair price to the firm’s customers, according to FINRA. Sirianni was responsible for determining the prices paid by customers in the 89 transactions.

“Oppenheimer failed to detect the unfair prices charged. Oppenheimer’s supervisory system was deficient because supervisory personnel relied solely on a surveillance report that only captured intraday transactions to review the fairness of markups/markdowns in municipal securities transactions,” FINRA said. “From at least 2005 through June 30, 2009, if an Oppenheimer trader purchased municipal securities and held those securities in inventory for a day or longer, the subsequent sales to customers would not populate the firm’s surveillance report or be subjected to a fair pricing review.”

The firm responded in a statement: “Oppenheimer is pleased that this matter, which relates to a very limited number of municipal bond trades in 2008 and 2009, has been resolved. Oppenheimer has reviewed, and where necessary, enhanced its procedures and processes to assure that clients receive fair pricing on municipal bond transactions. Oppenheimer reviewed the transactions in question, which occurred at the height of the financial crisis, and observes that they were purchased at distressed prices in open-market transactions.”

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