WASHINGTON -- A securities firm in Scottsdale. Ariz.. and one of its former employees have been fined and suspended by the National Association of Securities Dealers for engaging in municipal bond transactions that violated Municipal Securities Rulemaking Board rules.
The NASD announced yesterday that Franklin-Lord Inc. was fined $20,000 and suspended as an association member for five days.
John E. Cathcart. who worked at Franklin-Lord in 1991 and 1992, was fined $20,000 and suspended from associating with any NASD member for 30 days. CatScart was also ordered to requalify by examination as a general securities representative and a general securities principal.
Cathcart is no longer with FranklinLord and has since joined the firm Regency Capital Group Inc., the association said.
The sanctions are not in effect yet because the Securities and Exchange Commission is considering an appeal brought by Franklin-Lord and Cathcart. the association said.
The association charged that the firm, acting through Cathcart, engaged in two municipal bond transactions Without having paid a registration fee to the MSRB and without having a qualified municipal securities principal. The actions violated MSRB Rules A-12, G-2, and G-27, the association said.
The group also found that the firm and Cathcart failed to meet inventory and municipal bond trading restrictions under a "Restriction Agreement."
In addition, the two filed seven broker-dealer registration applications in 1991 and 1992 that contained inaccurate information about the ownership of the firm, the NASD said.
-- Lynn Stevens Hume