According to FINRA, Calton & Associates, Inc. was censured and fined $75,000 for failing to disclose required mark-up and mark-down information on customer confirmations and for trade reporting violations.

The Tampa, Florida firm failed to disclose required mark-up and mark-down information on hundreds of retail customer confirmations for municipal securities and corporate and agency debt securities transactions. These failures stemmed from inadvertent errors made when personnel manually entered orders into the clearing firm's system.

Mark-up and mark-down disclosures help customers understand the cost of their fixed income transactions. When a firm buys a bond and sells it to a customer at a higher price, the difference is the mark-up. These disclosures allow investors to assess whether they're receiving fair pricing.

Additionally, the firm reported incorrect execution times for municipal and corporate bond transactions. The firm uniformly reported "00" in the seconds field for these transactions, even though its system could correctly report seconds and the actual execution time was known.

The firm's supervisory system was not reasonably designed for compliance with trade reporting rules. Until April 2021, the firm's procedures did not address the requirement to report time of trade to the second. Updated procedures explaining how to review report accuracy, review frequency, and documentation methods were not implemented until July 2024.

Accurate trade reporting supports market transparency. The Real-Time Transaction Reporting System for municipal securities and TRACE for corporate bonds rely on accurate time reporting to provide meaningful information about market activity.

For fixed income investors, always review your trade confirmations to ensure you understand the costs of your transactions, including any mark-ups or mark-downs.