Municipal Bond Sales, Dark Pool and Investment Adviser Caught in Trio of $20 Million SEC Fines

This week has seen a trio of $20 million settlements with investment companies for violations of the securities laws related to the sale of municipal bonds, the operation of a dark pool and a conflict of interest transaction involving an investment adviser.

Edwards Jones will pay $20 million to settle the SEC investigation into whether it overcharged retail customers between 2009 and 2013 in its municipal bond sales. As a result of its pricing practices, customers paid $4.6 million more than they should have. New bonds are required to be sold at the initial offering price but Edward Jones sold them to customers at higher prices after they started trading in the secondary market or from their underwriting inventory.

Guggenheim Partners agreed to pay $20 million to settle charges it failed to disclose a loan by a client to a senior executive of the investment company that was used in a personal investment made by the Guggenheim executive in a deal put together by the investment adviser company. The investment adviser did not disclose the conflict of interest to its clients. The SEC also said that their compliance program was deficient, failing to prevent violations of federal securities laws.

The SEC also announced the $20.3 million settlement by ITG which the company previously suggested to the media. The ITG settlement involved the misuse of highly confidential information from its dark pool by a secret proprietary trading desk engaged in high frequency trading that was run by the firm.

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