According to FINRA, The Frazer Lanier Company, Incorporated has been censured, fined $125,000, and required to certify remediation for failing to establish and maintain supervisory systems designed to achieve compliance with MSRB Rule G-37.

The firm's written supervisory procedures required employees to disclose political contributions but did not specify when disclosures had to be made or how supervisors should review them. The firm had no system to aggregate employee political contributions or track donations to specific candidates during primary or general elections.

Critically, the firm failed to detect that a $500 political contribution from a municipal finance professional, which was reported as two separate $250 contributions from a joint checking account, actually exceeded the de minimis exception under MSRB Rule G-37(b).

The firm was also a dues-paying member of a non-profit organization that contributed to political candidates through affiliated PACs. While the firm obtained letters stating its dues would not be used for political contributions, it had no procedures to monitor the PAC's activities or ensure its dues were not used for prohibited contributions.

MSRB Rule G-37 exists to prevent pay-to-play arrangements in municipal securities. For investors in municipal bonds, this rule helps ensure that underwriting business is awarded based on merit rather than political connections.