US SEC Records First Case of Broker-Dealer Municipal Advisor Violation

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US SEC Records First Case of Broker-Dealer Municipal Advisor Violation

<p class="text-align-justify">The United States Securities and Exchange Commission (SEC) on Wednesday announced that it has fined Loop Capital Markets, a Chicago-based investment bank and broker-dealer, $100,000 for violating the regulator's municipal advisor registration rule.</p><p>SEC said it charged <a href="https://www.financemagnates.com/tag/brokers/">the broker-dealer</a> for providing advice to a municipal city in the country without being registered to do so.</p><p>The watchdog said Loop Capital Markets neither admitted or denied its findings but agreed to pay the fine. The penalty comes with $5,456.73 in interest for disgorgement and prejudgment.</p><p>"The action marks the first time the SEC has charged a broker-dealer for violating the municipal advisor registration rule," the market supervisor said in <a href="https://www.sec.gov/news/press-release/2022-163">a press statement</a>.</p><p>According to the regulator, between September 2017 and February 2019, Loop Capital Markets advised a city in the Midwest of the United States to invest in certain fixed income securities.</p><p>The regulatory authority said the city purchased the securities based on the advise using its municipal bond issuances.</p><p>However, the SEC in an investigation conducted by Sally Hewitt and Kristal Olson of the Commission's Public Finance Abuse Unit, found that Loop Capital Markets "did not maintain a system reasonably designed to supervise its municipal securities activities."</p><p>The watchdog also found that the broker-dealer "had inadequate procedures, including insufficient methods to identify potential violations of the municipal advisor registration rules."</p><p>LeeAnn Ghazil Gaunt, Chief of the Enforcement Division's Public Finance Abuse Unit, explained that the municipal advisor registration rules were designed to protect municipal entities from abuse. </p><p>Gaunt further noted that the rules apply to all participants in the country's financial markets.</p><p>"Registered broker-dealers must either register as municipal advisors or refrain from engaging in municipal advisory activities," he added.</p><p>Recent Charges</p><p>Last month, the SEC <a href="https://www.financemagnates.com/forex/us-sec-charges-18-for-hacking-retail-brokerage-accounts-to-buy-microcap-stocks/">charged 18 persons and entities</a> for their involvement in a fraudulent scheme that involved hacking dozens of online retail brokerage accounts.</p><p>SEC said the hack happened between late 2017 and early 2018 and was coordinated by a Canada-based man, Rahim Mohamed.</p><p>The regulator also noted that several other individuals within and outside the US participated in or benefited from the scheme.</p><p>Earlier in August, the watchdog also <a href="https://www.financemagnates.com/cryptocurrency/us-sec-charges-4-co-founders-7-others-in-cross-country-300m-crypto-scheme/">charged 11 individuals</a> before the United States District Court in the Northern District of Illinois for alleged fraud.</p><p>Four of these 11 individuals were the Co-Founders of Forsage, a project the SEC described as a "fraudulent crypto pyramid and ponzi scheme."</p><p>The US financial markets supervisor found that the individuals raised over $300 million from retail investors from around the world through the scheme.</p>

This article was written by Solomon Oladipupo at www.financemagnates.com.

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