David M. Joyce, a municipal securities trader for Kildare Capital, Inc., was fined $25,000.00 and suspended for twelve months from associating with any Financial Industry Regulatory Authority (FINRA) member firm in any capacity after consenting to findings that he engaged in unlawful pre-arranged round trip transactions. Letter of Acceptance, Waiver and Consent, No. 20120317482-02 (June 8, 2016).
According to the AWC, on July 7, 2010, Joyce bought one-hundred and sixty Colorado Education & Cultural Facilities Cesar Chavez Charter School bonds at a price of 85.276. Subsequently, on July 14, 2010, Joyce apparently agreed with another broker for a planned round trip bond transaction involving the Chavez bonds. Joyce reportedly sold the bonds at a price of 91.561 to the broker. Two seconds later, according to the AWC, Joyce bought the bonds back at a price of 91.811. The AWC stated that on July 23, 2010, and August 16 2010, Joyce sold the bonds to other brokers at prices ranging from 90.05 to 94.651, where Joyce made approximately $12,076.40 in the process.
Upon investigation by FINRA in December, 2012, Joyce alleged that his round trip transaction was prompted by another broker wishing to conduct an auction for such bonds, and that there was no trade that resulted. Joyce apparently argued to FINRA that he intended on compensating the broker a commission for his efforts. However, Joyce later admitted that his comments to FINRA were false, as there was no such auction that Joyce spoke of. FINRA found that Joyce’s false statements in this regard were violative of FINRA Rules 2010 and 8210.
FINRA noted in the AWC that the transaction which was pre-arranged for July 14, 2010, was prompted for a price 6.285 points higher than the price Joyce acquired the bonds just a week prior. FINRA found that Joyce’s pre-arranged round trip transaction did not have an economic purpose, and there was ultimately no change in the ownership of such bonds. FINRA found Joyce’s conduct to be violative of MSRB Rule G-17.
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