Southwest hit with $500K fine

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

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

The unit of SWS Group Inc. paid five people, including three former officials of Texas municipal bond issuers, to solicit business on its behalf from October 2006 through April 2009. The consultants, who were paid a total of $200,000, helped Southwest obtain 24 securities underwritings and two roles as financial adviser to Texas municipalities.

“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,” Brad Bennett, Finra’s chief of enforcement, wrote in an e-mail statement.

Southwest, which settled the claims without admitting or denying wrongdoing, agreed to appoint a company officer to confirm 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.

“We believe this settlement is in the best interest of our firm, our shareholders and our clients,” SWS Group chief executive James H. Ross said in a prepared statement.