The Gms Group, Llc

Allegations: ALLEGED VIOLATIONS OF NASD MARKETPLACE RULES 6230(A) AND (C)(8) AND CONDUCT RULE 2110 IN THAT THE FIRM FAILED TO REPORT TO TRACE, 364 OF ITS TRANSACTIONS IN TRACE ELICIBLE SECURITIES WITHIN 15 MINUTES OF EXECUTION AND FAILED TO REPORT THE TIME OF EXECUTION FOR EACH SUCH TRANSACTION. THIS REPRESENTED 17% OF ALL TRANSACTIONS THE FIRM WAS REQUIRED TO REPORT TO TRACE DURING THE PERIOD REVIEWED (7/1/08 - 9/30/08) Status: Final Sanction Detail: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTED TO THE DESCRIBED SANCTION AND TO THE ENTRY OF FINDINGS; THE FIRM WAS FINED $5,000. THE FINE WAS PAID DECEMBER 26, 2008.

Allegations: THE AWC ALLEGES THAT AT VARIOUS TIMES DURING THE PERIOD MAY 8, 2008 THROUGH MAY 24, 2008 GMS FAILED TO DELIVER OFFICIAL STATEMENTS BY SETTLEMENT DATE TO CERTAIN CUSTOMERS WHO HAD PURCHASED NEW ISSUE MUNICIPAL SECURITIES DURING THE PRIMARY OFFERING DISCLOSURE PERIOD IN ACCORDANCE WITH MSRB RULE G-17 AND G-32. THE AWC FURTHER ALLEGES GMS'S WRITTEN POLICIES AND PROCEDURES AND INTERNAL COMPLIANCE REVIEW PROCEDURES WERE DEFICIENT WITH RESPECT TO DELIVERY OF OFFICIAL STATEMENTS TO CUSTOMERS FOR NEW ISSUE MUNICIPAL SECURITIES AS REQUIRED BY MSRB RULE G-27 AND G-32. Status: Final Sanction Detail: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTED TO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS. THE FIRM WAS CENSURED AND FINED $50,000. THE FINE WAS PAID 05/16/2011.

Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTED TO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT RECOMMENDED AND SOLD MUNICIPAL BONDS TO RETAIL CUSTOMERS IN AMOUNTS BELOW THE MINIMUM DENOMINATION. THE FINDINGS STATED THAT ON THREE OCCASIONS, THE FIRM FAILED TO DISCLOSE TO CUTOMERS THAT THEIR PURCHASE WAS IN AN AMOUNT BELOW THE MINIMUM DENOMINATION. THE FINDINGS ALSO STATED THAT THE FIRM RECOMMENDED AND SOLD FOUR BONDS IN TRANSACTIONS TO CUSTOMERS WHO WERE NOT QUALIFIED INSTITUTIONAL BUYERS(QIBS), EVEN THOUGH THE OFFICIAL STATEMENTS FOR THESE BONDS STATED THAT THEY WERE ELIGIBLE FOR SALE ONLY TO QIBS. THE FINDINGS ALSO INCLUDED THAT THE FIRM'S WSPS PROHIBITED THE SALE OF BONDS BELOW THE MINIMUM DENOMINATION (ABSENT CIRCUMSTANCES NOT PRESENT HERE) AND RESTRICTED THE SALE OF BONDS WITH A QIB RESTRICTION TO ELIGIBLE PURCHASERS. HOWEVER, THE FIRM DID NOT HAVE ADEQUATE SYSTEMS OR CONTROLS IN PLACE TO MONITOR AND PROHIBIT SALES BELOW MINIMUM DENOMINATION OR TO INELIGIBLE PURCHASERS. Status: Final Sanction Detail: THE FIRM WAS CENSURED AND FINED $45,000. FINES PAID IN FULL JANUARY 10, 2017. Summary: THE FIRM WAS CENSURED AND FINED $45,000. FINES PAID IN FULL JANUARY 10, 2017.

Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTED TO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT CHARGED UNFAIR AND UNREASONABLE MARK-UPS AND MARK-DOWNS IN TRANSACTIONS INVOLVING BELOW INVESTMENT GRADE MUNICIPAL SECURITIES, WHICH RANGED FROM 3.0% TO 5.85% ABOVE THE PREVAILING MARKET PRICE OF THOSE SECURITIES. THE FINDINGS STATED THAT IN SOME INSTANCES, THE MARK-UPS CHARGED BY THE FIRM RESULTED FROM THE USE OF AN AVERAGE COST METHODOLOGY (ACM) TO CALCULATE THE MARK-UPS INSTEAD OF CALCULATING THE MARK-UPS BASED ON THE FIRM'S CONTEMPORANEOUS COST. IN THOSE INSTANCES WHERE THE FIRM USED AN ACM THE FIRM CALCULATED MARK-UPS BASED UPON THE AVERAGE PRICE PAID BY THE FIRM TO ACQUIRE THE SAME BONDS IN SIMILAR INTER-DEALER TRANSACTIONS INSTEAD OF THE FIRM'S CONTEMPORANEOUS COST. IN THE REMAINING TRANSACTIONS, THE FIRM CHARGED MARK-UPS AND MARK-DOWNS WITHOUT REASONABLY CONSIDERING THE PREVAILING MARKET PRICE OF THE BONDS BASED UPON THE FIRM'S CONTEMPORANEOUS COST OR PROCEEDS. THE FINDINGS ALSO STATED THAT THE FIRM FAILED TO ESTABLISH AND MAINTAIN A SUPERVISORY SYSTEM, INCLUDING WRITTEN SUPERVISORY PROCEDURES (WSPS), REASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITH ITS MUNICIPAL SECURITIES FAIR PRICING OBLIGATIONS. THE FIRM'S SUPERVISORY SYSTEM WAS NOT REASONABLY DESIGNED TO DETERMINE WHEN AN ACM WAS USED OR HOW FIRM SUPERVISORS SHOULD DETERMINE THE PREVAILING MARKET PRICE FOR THE BONDS UNDER SUCH CIRCUMSTANCES. IN ADDITION, THE FIRM'S WSPS DID NOT PROVIDE REASONABLE GUIDANCE AS TO HOW THE FIRM'S SUPERVISORS SHOULD ASSESS WHETHER A MARK-UP OR MARK-DOWN THAT MET THE FIRM'S INTERNAL GUIDELINES WAS FAIR AND REASONABLE, INCLUDING WHETHER THE MARK-UP OR MARK-DOWN WAS BASED UPON THE PREVAILING MARKET PRICE OF THE SUBJECT BONDS. Status: Final Sanction Detail: THE FIRM WAS CENSURED, FINED $90,000, IS ORDERED TO PAY $42,446.06, PLUS INTEREST, IN RESTITUTION TO CUSTOMERS, AND REQUIRED TO REVISE ITS WSPS. Summary: THE FIRM WAS CENSURED, FINED $90,000, IS ORDERED TO PAY $42,446.06, PLUS INTEREST, IN RESTITUTION TO CUSTOMERS, AND REQUIRED TO REVISE ITS WSPS.

Allegations: VIOLATION OF NASD MEMBERSHIP AND REGISTRATION RULE 1031(A) AND NASD CONDUCT RULES 2110 AND 3010B Status: Final Sanction Detail: CENSURE AND FINE OF $10,000

Allegations: NASD RULES 2110, 3010, MSRB RULES G-17, G-27, G-30(A) THE GMS GROUP, LLC PURCHASED/SOLD MUNICIPAL SECURITIES FOR ITS OWN ACCOUNT FROM/TO A TOTAL OF (4) FOUR CUSTOMERS AT AN AGGREGATE PRICE (INCLUDING ANY MARKDOWN OR MARKUP) THAT WAS NOT FAIR AND REASONABLE, TAKING INTO CONSIDERATION ALL RELEVANT FACTORS, INCLUDING THE BEST JUDGMENT OF THE BROKER, DEALER OR MUNICIPAL SECURITIES DEALER AS TO THE FAIR MARKET VALUE OF THE SECURITIES AT THE TIME OF TRANSACTION AND OF ANY SECURITIES EXCHANGED OR TRADED IN CONNECTON WITH THE TRANSACTION, THE EXPENSE INVOLVED IN EFFECTING THE TRANSACTION, THE FACT THAT THE BROKER, DEALER, OR MUNICIPAL SECURITIES DEALER IS ENTITLED TO A PROFIT, AND THE TOTAL DOLLAR AMOUNT OF THE TRANSACTION. THE FIRM'S SUPERVISORY SYSTEM DID NOT PROVIDE FOR SUPERVISION REASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITH APPLICABLE SECURITIES LAWS, REGULATIONS AND FINRA AND MSRB RULES CONCERNING MARKUPS/MARKDOWNS FOR CORPORATE BONDS AND FAIR AND REASONABLE COMPENSATION FOR MUNICIPAL BONDS. Status: Final Sanction Detail: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTED TO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS; THEREFORE, THE FIRM IS CENSURED, FINED $10,000, REQUIRED TO REVISE ITS WRITTEN SUPERVISORY PROCEDURES REGARDING MARKUPS/MARKDOWNS FOR CORPORATE BONDS AND FAIR AND REASONABLE COMPENSATION FOR MUNICIPAL BONDS WITHIN 30 BUSINESS DAYS OF ACCEPTANCE OF THIS AWC BY THE NAC. THE FIRM SHALL ALSO PAY $2,336.87, PLUS INTEREST, IN RESTITUTION TO A TOTAL OF (4) FOUR PUBLIC CUSTOMERS.