Background Of Dealerweb (CRD)
Dealerweb has been a FINRA member since 1987, and its registration remains effective. Respondent is a broker-dealer who acts as an interdealer broker in fixed-income securities, facilitating trades between buyers and sellers on electronic and voice platforms.
The firm is headquartered in Jersey City, New Jersey, employs approximately 125 registered individuals, and has three branch offices. The respondent does not have any relevant disciplinary history.
From April 2016 through March 2019, Dealerweb failed to conduct a documented comparison required by its WSPs to confirm the accuracy of the Time of Trade reported to the MSRB.
In addition, the WSPs failed to designate the frequency of and supervisor responsible for the Time of Trade review. As a result, Dealerweb violated MSRB Rule G27 during the period.
Activity(s) Reported – Dealerweb
This matter stems from a review conducted by FINRA’s Department of Market Regulation of the firm’s compliance with MSRB Rules applicable to municipal securities trade reporting. Inaccurate and Late Trade Reporting of Municipal Securities
- MSRB Rule G-14(b)(i) requires each broker, dealer or municipal securities dealer to report information about each purchase and sale transaction effected in municipal securities to the RTRS in the manner prescribed by Rule G-14 RTRS Procedures and the RTRS Users Manual.
- Rule G-14 RTRS Procedures (c) states that the RTRS Users Manual is comprised of, inter alia, the Specifications for Real-Time Reporting of Municipal Securities Transactions. Section 4.2.1 of the Specifications states that when reported to the MSRB, “Trade Date” is a mandatory field used on all messages to specify Trade Date and Trade Time with seconds being reported if capable.
- MSRB Rule G-14 RTRS Procedure (a)(ii) requires dealers to submit municipal securities transaction data to the MSRB within 15 minutes of the Time of Trade, with limited exceptions. MSRB Rule G-14(b)(ii) requires all dealers to report the information in the Rule G-14 RTRS Procedures promptly, accurately, and completely.
- Prior to April 2016, Dealerweb’s trade reporting system reported the seconds in municipal transactions. In April 2016, the firm changed its order management system, which gave rise to a system issue that resulted in transactions being reported with “00” in the seconds field. This persisted until April 2019, when FINRA notified the firm of the issue. From April 2016 through March 2019, in approximately 147,000 transactions, Dealerweb failed to report the correct Time of Trade to the MSRB’s RTRS in increments of seconds. These 147,000 transactions constituted 100% of the municipal transactions reported by the firm.
- From October 2017 through December 2017, due to a manual trade entering process, Dealerweb failed to report the correct Time of Trade in 167 municipal transaction reports to the RTRS and failed to report the same 167 timely transactions within 15 minutes of the Time of Trade.
- By virtue of the foregoing, Respondent violated MSRB Rule G-14.
- Inaccurate Books and Records Related to Municipal Securities
- MSRB Rule G-8 requires every broker, dealer, and municipal securities dealer to create and maintain order memoranda that reflect, among other things, the date and time of order receipt, price and date of execution, and, to the extent feasible, the execution time.
- During 4Q17, Dealerweb created and maintained 167 municipal security ordertickets that failed to reflect an accurate execution time.
- By virtue of the foregoing, Respondent violated MSRB Rule G-8. Supervision
- MSRB Rule G-27(a) requires each broker, dealer and municipal securities dealer to supervise the conduct of the municipal securities activities of the dealer and its associated persons to ensure compliance with Board rules and the applicable provisions of the Securities Exchange Act of 1934 and rules thereunder.
- MSRB Rule G-27(c) requires each dealer to adopt, maintain and enforce WSPs reasonably designed to ensure that the conduct of the municipal securities activities of the dealer and its associated persons comply with MSRB
Rule G-27(a). - From April 2016 through March 2019, Dealerweb’s WSPs required a review of the accuracy of municipal transaction reporting, including the accuracy of the time of trade reported to the MSRB. The WSPs called to compare the firm’s records and the corresponding contra-party trade report. The completion of the review was to be evidenced by maintaining the sample and related notes in a review file. The firm, however, failed to conduct the documented comparison required by its WSPs to confirm the accuracy of the Time of Trade reported to the MSRB.
- Additionally, the WSPs failed to designate the frequency of and supervisor responsible for the Time of Trade review.
- By virtue of the foregoing, Respondent violated MSRB Rule G-27.
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Penalties And Sanctions
■ Censure; and
■ A fine of $25,000 ($15,000 for the MSRB Rule G-14 and G-8 violations and $10,000
for the MSRB Rule G-27 violation).
Respondent agrees to pay the monetary sanction upon notice that this AWC has been accepted and that such payment is due and payable. Respondent has submitted an Election of Payment form showing the method by which it proposes to pay the fine imposed.
Respondent specifically and voluntarily waives any right to claim an inability to pay, now or at any time after the execution of this AWC, the monetary sanction imposed in this matter. The sanctions imposed in this AWC shall be effective on a date set by FINRA.
Recent Activity(s)Of The Individual/Firm
From April 2016 through March 2019, Dealerweb failed to report approximately 147,000 trades to the Municipal Securities Rulemaking Board’s (MSRB) Real-time Transaction Reporting System (RTRS) in increments of seconds.
As a result, Dealerweb violated MSRB Rule G-14 during the period. From October 2017 through December 2017, Dealerweb failed to report the correct Time of Trade in 167 reports to the RTRS and timely report those transactions to the RTRS in violation of MSRB Rule G-14.
In the same 167 instances, Dealerweb failed to record the correct Time of Trade on its trade memorandum, violating MSRB Rule G8.
How To Spot A Fraud Finance Advisor (Infographic)
Help For Victims Of Dealerweb
If you have lost funds because of misrepresentation, unsuitable investment, or unsuitable investment strategy from Dealerweb, you can take legal action and get justice.
Fraud, Malpractice, and dereliction of duty should not be taken lightly, especially in this industry. We highly suggest you notify authorities or seek legal action if your financial advisor or brokerage firm fails to abide by FINRA’s rules and regulations.
Similar Report: Kurt Jason Gunter
Financial advisors are regulatory & legally obligated to suggest (recommend) the most suitable investments/investment strategies to their clients. Their suggestions should have their client’s best interests and be appropriate for their goals and needs.
Similarly, the brokerage firm that hires financial advisors also has a regulatory & legal obligation to keep a close watch and supervise their Financial Advisors’ practices & behavior.
They need to ensure that the financial advisor is not manipulative or has an unreasonable bias towards certain investments. If the financial advisor and/or the brokerage firm breaches these duties, the client/customer may be entitled to a full or partial recovery of their losses.
Financial advisors must consider their client’s interests when making suggestions related to investments and investment strategies.
Reasonable basis suitability requires the advisor to do their best to analyze and identify the risks and rewards associated with their suggested investment and/or investment strategy.
