SEC Fines 21 Securities Firms and a Bank for Rule G-36 Violations
News related to:Municipal Securities Underwriters · 2 min read
On September 11, 2026, the Securities and Exchange Commission (SEC) announced significant enforcement actions against 21 securities firms and a bank division for violations of Rule G-36 of the Municipal Securities Rulemaking Board (MSRB). The rule mandates that underwriting firms submit official statements from municipal securities offerings to the MSRB within one day of receiving the information from the issuer, or at most 10 days after agreeing to purchase the securities. The rule is crucial for enhancing the quality of disclosure and maintaining the integrity of the municipal securities market.
The total fines amount to $325,000. The SEC, NASD Regulation Inc., and the Comptroller of the Currency collaborated in this coordinated effort. The sanctions were imposed by NASD Regulation Inc. on the following firms:
1. Bear, Stearns & Co. Inc. - $25,000 2. First of America Securities, Inc. - $10,000 3. First Southwest Company - $10,000 4. First Union Capital Markets Corp. - $10,000 5. Goldman, Sachs & Co. - $25,000 6. J.P. Morgan Securities Inc. - $25,000 7. Merrill Lynch, Pierce, Fenner & Smith Inc. - $10,000 8. Miller, Johnson & Kuehn, Inc. - $10,000 9. Morgan, Keegan & Co., Inc. - $10,000 10. Morgan Stanley & Co., Incorporated - $10,000 11. Oppenheimer & Co., Inc. - $10,000 12. PaineWebber Incorporated. - $25,000 13. Piper Jaffray Inc. - $10,000 14. PNC Capital Markets, Inc. - $10,000 15. Prudential Securities Incorporated. - $25,000 16. Raymond James and Associates - $10,000 17. Seattle-Northwest Securities Corp. - $10,000 18. Smith Barney Inc. - $25,000 19. Stone & Youngberg, LLC - $10,000 20. SunTrust Capital Markets, Inc. - $10,000 21. Sutro & Co. Inc. - $25,000
In addition to these securities firms, Commerce Capital, a division of Commerce Bank, N.A., was sanctioned by the Office of the Comptroller of the Currency for similar violations, receiving a fine of $10,000.
The SEC's chairman, Arthur Levitt, emphasized the importance of Rule G-36, stating, "Today's enforcement actions are a wake-up call to municipal securities underwriters. The lapses here are particularly unfortunate because they are so widespread, involving every category of municipal underwriter, from national and regional securities firms to a bank. Rule G-36 is an important investor protection rule. The requirements of the rule enhance the quality of disclosure, and improve the overall integrity and efficiency of the municipal securities market."
Levitt's statement highlighted the significance of the rule in ensuring transparency and accountability in the municipal securities market. The enforcement actions underscore the SEC's commitment to upholding the integrity of the financial system and protecting investors.
The SEC, NASD Regulation Inc., the Comptroller of the Currency, the Federal Reserve Board, and the Federal Deposit Insurance Corporation share the responsibility for enforcing the MSRB rules. This coordinated effort aims to ensure compliance and maintain the high standards necessary for the functioning of the municipal securities market.