Finra fines Oppenheimer $675,000 for unfair municipal security prices

By Toni Weeks

San Luis Obispo, Calif., Dec. 9 - The Financial Industry Regulatory Authority fined Oppenheimer & Co., Inc. $675,000 for charging unfair prices in municipal securities transactions and for failing to have an adequate supervisory system, according to a press release.

Finra also ordered Oppenheimer to pay more than $246,000 in restitution, plus interest, to the customers who were overcharged. In addition, Oppenheimer's head municipal securities trader, David Sirianni, was fined $100,000 and suspended for 60 days.

According to Finra, from July 1, 2008 through June 30, 2009, Oppenheimer, through Sirianni, priced 89 customer transactions at 5.01% to 15.57% above the firm's contemporaneous cost. Of those, 54 transactions had markups that exceeded 9.4%. Sirianni purchased the municipal securities from a broker-dealer for Oppenheimer, held the bonds in inventory for at least a night and then made the bonds available for resale to Oppenheimer customers at unfair prices, which Sirianni was responsible for determining.

"Finra has no tolerance for firms or individuals who charge customers excessive markups," Finra executive vice president and head of market regulation Thomas Gira said in the release. "Oppenheimer charged customers unfair prices in numerous municipal securities transactions and failed to properly supervise municipal securities transactions with its customers."

Oppenheimer's supervisory system failed to detect the unfair prices charged, as supervisory personnel relied solely on a surveillance report that only captured intra-day transactions to review the fairness of markups and markdowns in municipal securities transactions. From at least 2005 through June 30, 2009, if an Oppenheimer trader purchased municipal securities and held them for a day or longer, the transaction would not populate the firm's surveillance report or be subjected to a fair pricing review.

Oppenheimer and Sirianni did not admit or deny the charges but consented to the entry of Finra's findings, the release said.

New York-based Oppenheimer is an investment boutique.

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