FROM: U.S. SECURITIES AND EXCHANGE COMMISSION
November 3, 2014
The Securities and Exchange Commission sanctioned 13 firms for violating a rule primarily designed to protect retail investors in the municipal securities market.
All municipal bond offerings include a “minimum denomination” that establishes the smallest amount of the bonds that a dealer firm is allowed to sell an investor in a single transaction. Municipal issuers often set high minimum denomination amounts for so-called “junk bonds” that have a higher default risk that may make the investments inappropriate for retail investors. Because retail investors tend to purchase securities in smaller amounts, this minimum denomination standard helps ensure that dealer firms sell high-risk securities only to investors who are capable of making sizeable investments and more prepared to bear the higher risk.
In its surveillance of trading in the municipal bond market, the SEC Enforcement Division’s Municipal Securities and Public Pensions Unit detected improper sales below a $100,000 minimum denomination set in a $3.5 billion offering of junk bonds by the Commonwealth of Puerto Rico earlier this year. The SEC’s subsequent investigation identified a total of 66 occasions when dealer firms sold the Puerto Rico bonds to investors in amounts below $100,000. The agency instituted administrative proceedings against the firms behind those improper sales: Charles Schwab & Co., Hapoalim Securities USA, Interactive Brokers LLC, Investment Professionals Inc., J.P. Morgan Securities, Lebenthal & Co., National Securities Corporation, Oppenheimer & Co., Riedl First Securities Co. of Kansas, Stifel Nicolaus & Co., TD Ameritrade, UBS Financial Services, and Wedbush Securities.
The enforcement actions are the SEC’s first under Municipal Securities Rulemaking Board (MSRB) Rule G-15(f), which establishes the minimum denomination requirement. Each firm agreed to settle the SEC’s charges and pay penalties ranging from $54,000 to $130,000.
“These actions demonstrate our commitment to rigorous enforcement of all types of violations in the municipal bond market,” said Andrew J. Ceresney, Director of the SEC’s Division of Enforcement. “We will act quickly and use all available tools to protect investors in municipal securities.”
LeeAnn G. Gaunt, Chief of the SEC’s Municipal Securities and Public Pensions Unit added, “These firms violated a straightforward investor protection rule that prohibits the sale of muni bonds in increments below a specified minimum. We conduct frequent surveillance of trading in the municipal bond market and will penalize abuses that threaten retail investors.”
The SEC’s orders against the 13 dealers find that in addition to violating MSRB Rule G-15(f) by executing sales below the minimum denomination, they violated Section 15B(c)(1) of the Securities Exchange Act of 1934, which prohibits violations of any MSRB rule. Without admitting or denying the findings, each of the firms agreed to be censured. They also agreed to review their policies and procedures and make any changes that are necessary to ensure proper compliance with MSRB Rule G-15(f).
The SEC’s investigation, which is continuing, is being conducted by Joseph Chimienti, Sue Curtin, Heidi M. Mitza, and Jonathon Wilcox with assistance from Kathleen B. Shields. The case is supervised by Kevin B. Currid and Mark R. Zehner. The SEC appreciates the assistance of the MSRB.
A PUBLICATION OF RANDOM U.S.GOVERNMENT PRESS RELEASES AND ARTICLES
Showing posts with label COMMONWEALTH OF PUERTO RICO. Show all posts
Showing posts with label COMMONWEALTH OF PUERTO RICO. Show all posts
Wednesday, November 5, 2014
Sunday, April 21, 2013
DOL OBTAINS $35 MILLION IN BACK WAGES FOR PUERTO RICAN CORRECTIONS AND REHABILITATION WORKERS
FROM: U.S. DEPARTMENT OF LABOR
US Department of Labor obtains more than $35 million in back wages for nearly 5,000 workers in the commonwealth of Puerto Rico
Recovery is among largest in department's history
SAN JUAN, Puerto Rico — Following an investigation by the U.S. Department of Labor's Wage and Hour Division that found violations of the federal Fair Labor Standards Act's overtime and record-keeping provisions, the commonwealth of Puerto Rico has agreed to pay $35,037,586 in back wages and interest to 4,490 current and former employees of the territory's Department of Corrections and Rehabilitation. This is one of the largest settlements in the Wage and Hour Division's history.
The agreement is a part of a consent judgment approved today by Judge Juan M. Pérez Giménez of the U.S. District Court for the Commonwealth of Puerto Rico. Officials representing the commonwealth and the Department of Corrections and Rehabilitation also have agreed to take significant steps to ensure future compliance with the law, including installing an electronic timekeeping system at its facilities, training supervisors in the use of the new system, hiring additional staff to reduce the need for overtime and adjusting daily tours of duty for guards.
The commonwealth government already has restored more than $15 million in back wages due to employees for overtime hours worked since November 2011. The remaining back wages will be paid on an installment basis, and distributed to current and former employees as scheduled through 2016.
"We are pleased that the commonwealth of Puerto Rico has been our partner, through a long and arduous process, in correcting the improper payment of back wages," said acting Secretary of Labor Seth D. Harris. "This agreement returns hard-earned wages to workers and underscores the U.S. Department of Labor's commitment to ensuring that workers receive the wages they earn, as mandated by federal law."
The FLSA requires that covered employees be paid at least the federal minimum wage of $7.25 for all hours worked, plus time and one-half their regular hourly rates, including commissions, bonuses and incentive pay, for hours worked beyond 40 per week. In general, "hours worked" includes all time an employee must be on duty, or on the employer's premises or at any other prescribed place of work, from the beginning of the first principal work activity to the end of the last principal activity of the workday. Additionally, the law requires that accurate records of employees' wages, hours and other conditions of employment be maintained.
Under certain conditions, employees of state or local government agencies may receive compensatory time off, at a rate of not less than one and one-half hours for each overtime hour worked, instead of cash overtime pay. Law enforcement personnel may accrue or "bank" up to 480 hours of comp time. In this case, the Department of Corrections and Rehabilitation regularly allowed employees' comp time "banks" to greatly exceed 480 hours. The back wages found due for the employees are the cash amounts of unpaid comp time accrued in excess of the limit.
"The Labor Department has been working tirelessly with the commonwealth of Puerto Rico to reach this agreement," said Mary Beth Maxwell, acting deputy administrator of the Wage and Hour Division. "I am very pleased that staff in our Caribbean region persevered, ensured these employees will be paid the back wages they are owed and brought this case to conclusion. Thanks to this resolution, thousands of employees will see money put back into their pockets – and into their local economies."
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