FINRA Charges Oppenheimer $921K For Overcharging Customers

Financial industry regulators hit Oppenheimer & Co. with an order to pay more than $921,000 in fines and restitution for overcharging customers and for failing to adequately supervise employees.

The charge was handed down by the Financial Industry Regulatory Authority (FINRA) on December 9, ordering Oppenheimer to pay $675,000 for charging unfair prices in municipal securities transactions and for providing inadequate supervision. The company was also ordered to pay more than $246,000 in restitution, plus interest, to customers that it overcharged, according to a FINRA press release.

At issue were 89 customer transactions that were marked up by the company’s head municipal securities trader, David Sirianni. According to FINRA, from July 1, 2008 through June 30, 2009, he marked up transactions from 5.01% to 15.57% above the actual cost. Most of the transactions were increased more than 9.4% in cost.

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FINRA indicates that Sirianni bought municipal securities on Oppenheimer’s behalf, held them overnight and then resold them at unfair prices. He has been personally fined $100,000 and suspended for 60 days.

Oppenheimer should have detected the price irregularities and stopped them, FINRA determined. However, the company’s supervisory system only looked at one report on intra-day transactions to make sure the pricing was fair. If one of the company’s traders bought municipal securities and held them for a day or longer, the company did not review the pricing.

“FINRA has no tolerance for firms or individuals who charge customers excessive markups,” wrote Thomas Gira, FINRA’s executive vice president and head of market regulation. “Oppenheimer charged customers unfair prices in numerous municipal securities transactions and failed to properly supervise municipal securities transactions with its customers.”

FINRA oversees all securities firms doing business in the United States, providing arbitration services for claims against stock brokers and serving to protect investors by making sure the securities industry operates fairly and honestly.

The authority was created in July 2007 as a successor to the National Association of Securities Dealers, to arbitrate stock broker fraud claims that can include charges of breach of contract, breach of fiduciary duty, negligence, misrepresentation, unauthorized trading and other claims that investments were improperly handled.


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