Southwest Securities hit with $500K Finra fine

Southwest Securities Inc. will pay $500,000 to resolve Financial Industry Regulatory Authority claims that the firm violated Municipal Securities Rulemaking Board rules by using paid consultants to solicit business.

The unit of Dallas-based SWS Group Inc. paid five people, including three former Texas municipal issuer officials, to solicit business on its behalf from October 2006 through April 2009, Finra said today in an e-mail statement. The consultants, who where paid a total of $200,000, helped Southwest obtain 24 securities underwritings and two roles as financial adviser to Texas municipalities, Finra said.

“Southwest’s payments to former municipal insiders and others to solicit municipal securities business on its behalf contravened the MSRB’s prohibition against such activity, and threatened to compromise the integrity of the municipal securities market,” Finra Chief of Enforcement Brad Bennett said in the statement.

Southwest, which settled the claims without admitting or denying wrongdoing, agreed to have a company officer confirm that to Finra that internal compliance systems and procedures are in accordance with MSRB rules and certify that its systems and procedures are reasonably designed to achieve compliance, Finra said.

–Bloomberg