NASD Tags Oppenheimer for Reporting Failures

May 5, 2005 ( - Regulators on Thursday charged Oppenheimer & Co., Inc., with failing to cooperate in an NASD investigation, failing to retain business-related electronic mail, and violating Municipal Securities Rulemaking Board (MSRB) rules.

NASD announced   it had charged Oppenheimer, which is not related to OppenheimerFunds, with multiple violations of its obligation to report municipal securities transactions to the MSRB timely and accurately.  The regulator said that between January 2003 and May 2004, Oppenheimer failed to report more than 6,100 municipal bond transactions with other dealers to the MSRB on a timely basis – and in many cases, the reports were inaccurate when they were finally made.  Oppenheimer also inaccurately reported the price, time and other required details of hundreds of municipal bond transactions with retail customers in May and June 2003, the NASD said.

“Oppenheimer’s failure to fully and accurately report municipal bond transactions deprived the investing public and market participants of critical information,” said NASD Vice Chairman Mary Schapiro. “And all firms have a fundamental obligation to cooperate fully with NASD in its investigations.”

In addition,    Oppenheimer is charged with reporting more than 1,300 retail municipal bond transactions that were never effected and failing to report over 700 completed transactions with retail customers.

According to the NASD announcement, the agency also charged Oppenheimer with violating its obligation to cooperate with an NASD investigation in two ways.  First, NASD requested information from Oppenheimer in September 2004 about Oppenheimer’s retention of electronic communications for 20 employees, most of whom traded municipal securities and were critical to NASD’s investigation into the trade reporting problems.  Despite one extension of time to respond and repeated communications with NASD, Oppenheimer never provided NASD with the information requested.

Second, in August 2003, NASD asked that Oppenheimer provide certain trade confirmations for municipal securities transactions NASD was investigating.  NASD, on several occasions, reiterated its request for Oppenheimer to produce the confirmations.  Despite those repeated requests, NASD did not receive the requested documents until over a year after the original request, the agency said.

NASD charged that from July 1, 2002 through at least the first quarter of 2004, Oppenheimer didn’t keep electronic communications between its employees, instead allowing its employees to delete e-mails.  Firms are required under federal securities laws and NASD Rules to retain electronic communications for at least three years. Oppenheimer also was charged with supervisory failures – regarding its e-mail retention system and procedures and regarding its municipal bond trade reporting system.