South Florida Arbitration & Litigation Lawyer Blog
FINRA Securities Fraud and Mismanagement Attorney, Russell L. Forkey, Esq.
January, 2011:
Cohen & Company Securities, LLC (CRD #104002, Philadelphia, Pennsylvania) submitted a Letter of Acceptance, Waiver and Consent in which the firm was censured, fined $50,000, ordered to pay $899,251, plus interest, in restitution to customers, and required to review its supervisory system and procedures concerning its pricing of principal transactions with customers for compliance with FINRA rules and the federal securities laws, and to certify to FINRA within 90 days that it has in place systems and procedures reasonably designed to achieve compliance with laws, regulations and rules concerning charging fair prices in principal transactions with customers, including transactions in debt securities. Without admitting or denying the findings, the firm consented to the described sanctions and to the entry of findings that it charged excessive mark-ups in the sales of investment grade Collateralized Debt Obligation (CDO) securities in which it acted as principal. The findings stated that the firm sold, as principal, CDO securities to institutional customers at prices that were not fair and reasonable taking into consideration all relevant circumstances, including that the price was not reasonably related to the amount the firm contemporaneously paid for the CDO securities and that the securities had an investment grade rating as determined in accordance with NASD IM-2440-2(b)(9). The findings also stated that at the time of these transactions, the firm had failed to establish, maintain and/ or enforce a supervisory system and written supervisory procedures reasonably designed to ensure that prices at which it bought debt securities from, and at which it sold debt securities to, customers in principal transactions were fair and reasonable and to otherwise achieve compliance with all applicable laws, rules and regulations pertaining to effecting principal transactions with customers. (FINRA Case #2009016281001).