SEC Charges Loop Capital Markets in First Action Against Broker for Violating Councilor Registration Rule

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Washington DC, September 14, 2022 —

The Securities and Exchange Commission today charged Chicago-based Loop Capital Markets, LLC with providing advice to a municipal entity without registering as a city councilman. The action marks the first time the SEC has charged a broker with violating the councilor registration rule.

According to the SEC order, between September 2017 and February 2019, Loop Capital advised a Midwestern city to purchase particular fixed income securities, which the city purchased using proceeds from its own bond issues. municipal. Additionally, the Commission’s order found that Loop Capital did not maintain a reasonably designed system to oversee its municipal securities business and had inadequate procedures, including insufficient methods to identify potential violations of listing rules. city ​​councillors.

“The municipal councilor registration rules apply to all market participants and are intended to protect municipal entities from abuse,” said LeeAnn Ghazil Gaunt, head of the Public Finance Abuse Unit of the Division of law enforcement. “Registered brokers must either register as city councilors or refrain from carrying out city council business.”

Loop Capital agreed to settle with the SEC and consented, without admitting or denying any finding, to the entry of an SEC order finding that it had violated the rules regarding the registration and supervision requirements of advisers municipalities, censuring her and ordering her to pay restitution and prejudgment interest of $5,456.73 and a civil penalty of $100,000.

The SEC investigation was led by Sally Hewitt and Kristal P. Olson of the Public Finance Abuse Unit with assistance from Jonathan Wilcox and Eric Celauro. The investigation was overseen by Brian D. Fagel. The SEC review that led to the investigation was conducted by Ben Kempton, Catherine Cotey, David Kinsella, Michael Wells and John Brodersen of the Chicago Regional Office.

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