Isaak Bond Investments, Inc. (IBI) has been fined $20,000 and formally censured by the U.S. Financial Industry Regulatory Authority (FINRA) for multiple violations, the firm revealed Tuesday.
The violations are said to include failing to maintain the required net capital while conducting securities business.
According to a Letter of Acceptance, Waiver, and Consent published by FINRA, the Colorado-based municipal bond dealer operated below its minimum capital requirements in March 2022, breaching the Securities Exchange Act and several FINRA rules.
The regulator also found that IBI filed inaccurate financial reports, maintained faulty records, and failed to notify regulators promptly about its capital shortfall.
The investigation found IBI’s net capital calculations were flawed for nearly two years, between January 2022 and November 2023.
The firm explained that IBI had failed to apply required “haircuts,” risk-based deductions from asset values, for municipal securities held in inventory. As a result, its net capital was overstated across 23 months of regulatory filings.
Additionally, IBI reportedly failed to conduct independent annual testing of its anti-money laundering (AML) compliance programme since November 2017, another violation of FINRA’s rules.
FINRA’s enforcement action stemmed from a routine cycle examination. As part of the settlement, IBI did not admit or deny the findings but consented to the sanctions. The firm waived its right to a hearing or appeal, and FINRA stated that no further action would be taken based on the same facts.