Cabrera Capital Markets, LLC, a brokerage firm headquartered in Chicago, Illinois, was censured and fined $25,000.00 by Financial Industry Regulatory Authority (FINRA) based upon allegations that the firm, inter alia, failed to supervise the underwriting of municipal securities issued through the firm. Letter of Acceptance, Waiver and Consent, No. 2015043640701 (Oct. 12, 2017).
According to the AWC, from August of 2012 to October of 2013, the firm was main underwriter for issuances of five municipal securities which accumulated funds ranging from nearly eight million dollars to about one-hundred and fifty million dollars. In the course of underwriting the municipal issuances; however, the firm reportedly failed to record whether any adequate due diligence had been conducted regarding the truthfulness and completeness of the issuers’ disclosures and representations.
The AWC stated that the firm’s registered representatives’ failure to record due diligence activities within the firm’s files obstructed the firm’s ability to adequately supervise the municipal issuance underwriting process. The AWC also stated that the firm failed to provide specific instructions about how documents were to be retained for purposes of demonstrating that due diligence had been conducted. FINRA found that the firm’s failure to supervise due diligence in that regard was violative of Municipal Securities Rulemaking Board (MSRB) Rule G-27.
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