Monday, March 7, 2011
FINRA has fined Southwest Securities, Inc. of Dallas $500,000 for using paid consultants to solicit municipal securities business and for violations of other Municipal Securities Rulemaking Board (MSRB) rules. FINRA found that during the period from October 2006 through April 2009, Southwest paid five individuals, including three former Texas municipal issuer officials, to solicit municipal securities business on its behalf. The consultants assisted Southwest in obtaining a total of 24 municipal securities underwritings and two roles as financial advisor to Texas municipalities. Southwest paid the consultants more than $200,000 for their services. In addition to the formal consulting arrangements, Southwest also made one-time payments totaling more than $26,000 to three other individuals in connection with their roles in obtaining municipal securities business for the firm.
FINRA also found that during the period from October 2006 through February 2009, Southwest had inadequate systems and procedures to supervise certain aspects of its municipal securities business.
As part of the settlement, Southwest is required to have an officer of the firm confirm to FINRA that Southwest has reviewed its compliance systems and procedures in accordance with all applicable MSRB rules and certify that its systems and procedures are reasonably designed to achieve compliance with the rules. In concluding this settlement, Southwest neither admitted nor denied the charges, but consented to the entry of FINRA's findings.