The Financial Industry Regulatory Authority said Tuesday that it fined 19 broker-dealers $2.8 million for overstating their advertised trading volume to three private service providers.
The federal regulator said it fined eight firms $200,000 each: Broadpoint Capital Inc.; Canadian Imperial Bank of Commerce's CIBC World Markets Corp.; Lehman Brothers Inc.; Merrill Lynch, Pierce, Fenner & Smith Inc.; Needham & Co. LLC; Robert W. Baird & Co. Inc.; Thomas Weisel Partners LLC; and UBS Securities LLC.
Six firms — Bear, Stearns & Co. Inc.; Bank of Montreal's BMO Capital Markets Corp.; Cowen and Co. LLC; Deutsche Bank Securities Inc.; Leerink Swann & Co. Inc.; and Royal Bank of Canada's RBC Capital Markets Corp. — were fined $150,000 each. Four — Friedman, Billings, Ramsey & Co. Inc., Jefferies & Co. Inc., JMP Securities LLC, and Pacific Crest Securities Inc. — were fined $50,000 each.
Piper Jaffray & Co.'s fine was reduced to $100,000 because it conducted its own internal investigation and then provided the regulator with the results.
The regulator compared the firms' advertised trade volume in selected securities with their executed trade volume for the same securities in August 2006 and found "substantial overstatements" for each firm in one or more of the securities reviewed.
The authority also found that before September 2006, all the firms lacked an adequate supervisory system and procedures for communicating trade volume to such services.
