Miami Brokerage Firm Censured and Fined for Selling Bonds at Unfair Prices
FINRA’s Department of Market Regulation has fined a Miami, Florida-based broker-dealer $65,000 for improperly reporting transactions and selling corporate bond securities at an unfair price to investors. Global Strategic Investments, LLC (CRD#: 117028), a brokerage firm licensed to operate in Florida and five other U.S. states was accused of failing to report the proper execution time on dozens of corporate debt securities transactions.
This is an important legal violation, as the company’s failure to follow the standard trading protocols resulted in several customers being overcharged. Brokerage firms have a legal duty to charge their clients fair, fully disclosed fees. Without admitting to or denying the misconduct, Global Strategic Investments consented to FINRA’s proposed sanctions. Here, our experienced Miami securities fraud attorneys explain exactly what happened in this case.
Understanding the Allegations Against Global Strategic Investments
Background: TRACE Eligible Corporate Debt Securities
Under United States securities law, registered brokerage firms must follow strict transaction reporting requirements. This case involved corporate debt securities which are subject to TRACE reporting requirements in certain circumstances. Specifically, “over-the counter” secondary market transactions of bonds must always be reported in compliance with FINRA’s Trade Reporting and Compliance Engine (TRACE). First and foremost, these regulations are important to protect overall market integrity. If investors cannot rely on market pricing to be fair, everyone suffers as a result. At the same time, proper transaction reporting is necessary to protect a firm’s individual investors. It creates a paper trail that can be used to ensure that brokers are treating customers fairly and charging appropriate prices.
Corporate Bonds Were Sold At Unfair Prices
In the case of Global Strategic Investments, the firm was buying and selling corporate bonds on behalf of its customers. Due to the nature of how these transactions occur, the brokerage firm was put in a position as a secondary market-maker. This means that the firm was buying from and selling to its clients. When this type of trading occurs, fair pricing is a must. Otherwise, broker-dealers can take advantage of unsuspecting customers. Unfortunately, investors often do not have access to the full information that they need to ensure that pricing is fair. FINRA officials allege that Global Strategic Investments used unfair pricing when making these trades, taking advantage of its position to get better trading prices of itself. This conduct can severely damage investors, potentially making it impossible for them to make profitable trades. As part of FINRA’s action, Global Strategic Investments has agreed to pay full financial restitution to all affected investors.
Were You a Victim of Investment Fraud in South Florida?
Our Florida broker negligence lawyers are can help. At Carlson & Associates, P.A., we have helped many fraud victims recover compensation for their losses. If you lost money because your broker or brokerage firm overcharged you, we can help you fight for compensation. From our office in Miami, we serve communities throughout South Florida, including West Palm Beach, Fort Lauderdale, Hialeah, Pembroke Pines, Hollywood and Miami Beach.
Resources:
brokercheck.finra.org/firm/summary/117028
finra.org/industry/trace