RBC Capital Markets has agreed to pay more than $800,000 to the Securities and Exchange Commission to resolve charges that it engaged in unfair dealing in muni bond offerings.
Without admitting or denying the findings, RBC consented to a public administrative and cease-and-desist order that requires the firm to pay a $150,000 penalty disgorgement of $552,440, and prejudgment interest of $160,886, and imposes a censure.
According to the SEC’s order, over a nearly four-year period, RBC improperly allocated municipal bonds that were intended for institutional customers and dealers to parties known as “flippers,” which then resold or “flipped” the bonds to other broker-dealers at a profit.
In addition, in three instances where an issuer had told RBC to place retail customer orders first, RBC ignored those instructions and allocated bonds to flippers before filling orders for retail customers.
In related actions, the SEC instituted settled proceedings against Kenneth G. Friedrich, RBC’s former head of municipal sales, trading and syndication, and Jaime L. Durando, head of its municipal syndicate desk.
Friedrich agreed to a censure and to pay a civil penalty of $30,000, and Durando agreed to a censure and to pay a civil penalty of $25,000. Friedrich further consented to a six-month limitation on supervisory activities and a six-month prohibition on trading negotiated new-issue municipal securities.
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