James Gabriel Collard, of Boerne, Texas, was fined $5,000.00 and suspended by Financial Industry Regulatory Authority (FINRA) in connection with an Order Accepting Offer of Settlement containing findings that Collard charged customers’ excessive markups on investments. Department of Market Regulation v. James Gabriel Collard, No. 20120342425-01 (Sept. 23, 2016).
According to the Order, between February 2012 and June of 2012, while Collard was associated with Further Lane Securities, he charged customers excessive markups in fifty-five corporate bond transactions. Collard apparently worked as the assigned representative of an investment advisor, ABC, an entity owned by SH, which is where the majority of markups occurred.
The Order stated that Collard made a proposal to SH that customers of ABC invest in a bond laddering strategy in order to mitigate interest rate risk in the bond market. Collard reportedly advised SH of the specific portfolio of bonds to buy, and provided pricing and other financial details via charts and graphs in order to project how his proposed portfolio would perform.
The Order reported that Collard subsequently worked with a firm trader to build the bond ladder, at which point the trader effected Collard’s trades and subsequently reported execution prices associated with such trades to Collard. The Order further stated that the firm’s trader incorporated a markup regarding the transaction, and then such bonds were sold by Collard to one of SH’s retail customers with an additional markup. ABC’s customers were effectively charged two markups, according to the Order.
According to the Order, Collard charged customers markups that ranged from just over three percent up to nearly seven percent, in which customers paid an average of five percent. The Order stated that Collard had sold such bonds at prices which were unfair considering the market conditions, as well as the firm’s expectations of a profit in light of expenses. Consequently, FINRA found that Collard committed violations of FINRA Rules 2010, NASD Rule 2440, IM-2440-1, and IM-2440-2.
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