FINRA fines Alabama-based dealer $30,000 for mark-up failure

Birmingham, Alabama-based FNBB Capital Markets has been fined $30,000 by the Financial Industry Regulatory Authority for failing to include certain mark-up and mark-down information on dealer confirmations for 121 municipal securities transactions.

Without admitting or denying the findings, the firm has agreed to the fine and a censure for its role in violating MSRB Rule G-15 on dealer confirmations and Rule G-27 on supervision. The firm has also agreed to certify in writing within 60 days that it has remedied the issues and implemented a supervisory system and written supervisory procedures.

The transactions took place between June 2020 and September 2023, when “FNBB issued 121 non-institutional customer confirmations for municipal transactions,” FINRA said. “The confirmations reported the firm’s mark-up and mark-down as a dollar amount, but failed to include the mark-up or mark-down as a percentage of the prevailing market price because the firm did not select the appropriate fields in its clearing firm’s systems when entering the transactions.”

The firm’s lack of a proper supervisory system required as part of MSRB Rule G-27 predates the municipal securities transactions in question, stretching from September 2019 to the present.

Amendments to FINRA Rule 2232 and MSRB Rule G-15 on dealer confirmations, put into place in 2018, have required firms to include additional transaction-related information to retail clients and a few cases where those rules were enforced have surfaced in recent years.

“Disclosed mark-ups and mark-downs must be expressed as both a total dollar amount for the transaction and a percentage of prevailing market price,” FINRA said. “In addition, for all retail customer trades in corporate, agency and municipal debt securities (other than municipal fund securities), firms must disclose on the confirmation the time execution and a security-specific link to the FINRA or MSRB website where additional information about the transaction is available, along with a brief description of the information available on the website.”

FNBB did not respond to requests for comment.