← Broker database 2024-01-29
FINRA Fines Academy Securities, Inc. $30,000 for Late and Inaccurate Form G-37 Filings
According to FINRA, Academy Securities, Inc. (CRD #17433), based in New York, New York, was censured and fined $30,000 pursuant to a Letter of Acceptance, Waiver and Consent (AWC) issued on January 29, 2024.
FINRA found that Academy Securities failed to timely and accurately file quarterly Form G-37 reports with the Municipal Securities Rulemaking Board (MSRB). Form G-37 is a critical disclosure document under MSRB Rule G-37 that requires municipal securities dealers to report information about political contributions and municipal securities business. These filings promote transparency in the municipal securities market and help prevent "pay-to-play" practices where political contributions might improperly influence the awarding of municipal securities business.
The findings stated that the firm filed Form G-37 reports between one and 645 days late, representing a significant and prolonged pattern of untimely filings. Additionally, the firm filed Form G-37 reports that omitted required information about the municipal issuers with which the firm had done business in the prior quarter. Specifically, these reports failed to disclose municipal underwritings for which the firm acted in a managerial capacity, including as a senior manager, co-senior manager, or co-manager.
FINRA also found that the firm failed to establish, maintain, and enforce a supervisory system, including WSPs, reasonably designed to achieve compliance with MSRB Rule G-37. The firm failed to supervise its municipal securities activities with regard to filing accurate and timely Form G-37 reports. The firm's WSPs failed to include procedures regarding the process for identifying and compiling information required to be reported. For example, the WSPs failed to assign anyone the responsibility to maintain a record of reportable information, did not identify the sources from which reportable information should be collected, and did not provide for a review of the Form G-37 reports to ensure accuracy.
In practice, the firm's compliance department relied on a spreadsheet of municipal underwritings prepared by the firm's municipal underwriting department. However, the spreadsheet at times omitted certain underwritings required to be reported, and the firm failed to conduct a reasonable review of the spreadsheet's content for completeness before using the information to prepare Form G-37 reports.
Without admitting or denying the findings, Academy Securities consented to the sanctions and the entry of findings.
This case reminds investors of the importance of transparency in the municipal securities market. Accurate and timely Form G-37 filings help regulators and the public monitor relationships between dealers and municipal issuers, supporting a fair and competitive marketplace for government bonds.