The Securities and Exchange Commission revealed on Wednesday that it has charged Chicago-based Loop Capital Markets, LLC for providing advice to a municipal entity without registering as a municipal advisor.
The regulator clarified that this is the first time the SEC has charged a broker-dealer for violating the municipal advisor registration rule.
According to the official press release, during the period between September 2017 and February 2019, Loop Capital advised a Midwestern city to buy particular fixed income securities. The city executed the purchase using the proceeds of its own municipal bond issuances.
Furthermore, SEC discovered that Loop Capital did not maintain a system reasonably designed to supervise its municipal securities activities. The regulator noted that its procedures were inadequate, using insufficient methods to identify potential violations of the municipal advisor registration rules.
LeeAnn Ghazil Gaunt, Chief of the Enforcement Division’s Public Finance Abuse Unit, said:
The municipal advisor registration rules apply to all market participants and are intended to protect municipal entities from abuse. Registered broker-dealers must either register as municipal advisors or refrain from engaging in municipal advisory activities.
Loop Capital has agreed to settle the charges with the Commission without admitting or denying any findings and was ordered to pay disgorgement and prejudgment interest of $5,456.73 and a civil penalty of $100,000.
The SEC recently revealed it has filed a litigated action against Oppenheimer & Co. Inc. and separately filed settlements with BNY Mellon Capital Markets LLC, TD Securities (USA) LLC, and Jefferies LLC for failing to comply with municipal bond offering disclosure requirements.