FINRA has announced that GFI Securities LLC (“GFI”) was censured and fined $2.1 million in connection with claims that it had engaged in “collusive interactions in 2005 and 2006 … among FINRA-registered brokers whereby the brokers sought to frustrate their customers’ efforts to obtain competitive brokerage rates on credit default swap (CDS) transactions.” GFI was one of a “relatively small number of firms that brokered inter-dealer CDS transactions.” The complaint alleges that “[i]n response to certain commission reduction proposals, and unbeknownst to the customers, the individual Respondents in this proceeding and their counterparts at competing firms colluded with one another in an effort to keep the customers from obtaining CDS brokerage services at more favorable fates. By knowingly engaging in anticompetitive conduct through which they benefited themselves at their customers expense.”
FINRA alleged that GFI “lacked reasonable supervisory procedures to prevent misconduct of the kind alleged” and “failed to adequately supervise the activities of the firm’s CDS brokers so as to prevent such misconduct.”
Dept. of Market Regulation v. GFI Securities, LLC (CRD No. 19982), Disciplinary Proceeding No.20060051583.