The firms, all headquartered in
The firms neither admitted nor denied the charges, but consented to the entry of FINRA's findings.
"Issuers are entitled to know what they are paying for and why," said
FINRA's probe began in January of last year, after several CalPSA member-firms reported receiving letters from the self-regulator seeking information about their CalPSA payment and reimbursement practices.
Soon after that,
In its probe, FINRA found that between
According to FINRA, from about
As a result, for a
"This practice was unfair as CalPSA's activities did not adequately disclose the relationship to those bond offerings and were not underwriting expenses," FINRA said. "Also the firms did not adequately disclose the nature of the fees to issuers and failed to establish reasonable procedures in this area. In fact, the need for adequate policies and procedures in this area was heightened in light of the nature of CalPSA's political activities."
FINRA said the reimbursements violated the Municipal Securities Rulemaking Board's Rule G-17 on fair dealing and Rule G-27 on supervision because the firms failed to have adequate systems and written supervisory procedures in place.
The restitution amounts, in four of the five cases, equal the firms' assessments to CalPSAs minus the fees refunded to issuers through Lockyer. But FINRA indicated firms may still be refunding fees to Lockyer. Spokespersons for all of the firms, except
CalPSA officials could not be reached for comment.
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