Dallas Firm Hit With Second Finra Fine In A Month
Southwest Securities, Inc., a Dallas based brokerage firm, has been ordered by the Financial Industry Regulatory Authority (FINRA) to pay a $650,000 fine to resolve claims over improper short sales that caused a $6.3 million loss for the firm, according to a report by Bloomberg. According to the report, the firm's "due diligence, risk assessment and written supervisory procedures' came under scrutiny as a correspondent firm, Cutler Securities, established a 2.5 million share short position on a stock, creating an unsecured debit balance that it was unable to cover. This meant that Southwest had to meet the obligation costing the firm $6.5 million. FINRA enforcement chief Brad Bennett said "Southwest's systemic failures in overseeing its clearing services led to considerable financial losses for itself and illustrates the risks that can be created by correspondent firms." Cutler Securities was expelled by FINRA and its president, Glenn Cutler, was barred over the short sale violations.
Less than a month ago a unit of Southwest Securities, SWS Group, Inc. was fined $500,000 by FINRA for violating regulations by paying outside consultants to funnel municipal bond business to the firm.