On December 27, 2012, FINRA fined Citigroup, Goldman Sachs, JP Morgan, Merrill Lynch, and Morgan Stanley more than $4.48 million for “unfairly obtaining the reimbursement of fees they paid to the California Public Securities Association from proceeds of municipal and state bond offerings.” This was a violation of fair dealing and supervisory rules of the Municipal Securities Rulemaking Board.
These five firms “billed” municipal and state bond taxpayers for reimbursement payments they made to the California Public Securities Association (Cal PSA). The firms were essentially passing along the costs of their Cal PSA memberships to taxpayers and failing to disclose that these costs were unrelated to bond deals.
Additionally, three of the five firms failed to have adequate systems and procedures in place to monitor how municipal securities associations used the funds the firms paid them.
The California Public Securities Association is an active political lobbying organization that seeks to influence the California state government on behalf of Wall Street firms. Thus, these Wall Street firms were essentially passing the cost of funding an anti-investor organization to Main Street investors.
Jason Doss is the owner of The Doss Firm, LLC, an Atlanta-based law firm devoted to representing consumers across the country in a variety of areas including investment disputes and consumer class action litigation. Mr. Doss earned his J.D. from Florida State University in 2002 and his B.A. from the University of Florida in 1997.