Two firms have fallen foul of the Financial Industry Regulatory Authority (Finra) in the USA.
According to a report by Bond Buyer
, both Edward Jones
and Stoever, Glass & Company have been fined by the regulator in separate charges.
In the case of Edward Jones
, it has settled for $200,000 on accusations that it was misrepresenting to its clients that the interest it paid them on short positions for municipal bonds was non-taxable.
The publication writes that the company has procedures and policies in place for short positions – but from June 2009-December 2014 the company held around 244 short positions, sometimes for more than a year. Allegedly when it paid interest to customers as a substitute payment on long positions, it told clients that a minimum of $129,624 would be exempt.
As well as paying the fine, Edward Jones
has also agreed to settle the clients’ tax obligations.
Meanwhile, Stoever, Glass & Company picked up a fine of $40,000 for selling municipal bonds below the minimum level of proscribed denominations.
Its fine related to 14 transactions and two bonds with amounts smaller than the $100,000 minimum denomination.