A complaint filed against Calton & Associates Inc., located in Tampa, Florida, and Kenneth Harter of Roland, Arkansas alleges that they “charged customers prices that were not reasonable in municipal bond transactions.” The complaint alleges that R.M. Duncan Securities, acting through two of its representatives and, eventually, Calton & Associates and Mr. Harter, sold bonds to its customers at unfair prices. R.M. Duncan Securities representatives allegedly solicited three elderly customers to purchase a total of $215,000 par value of the bonds.
According to FINRA, the representatives told their clients the bonds “would receive an 11% tax-free yield on the bond interest payments, despite the fact that the bonds were in default and not paying full interest.” Calton & Associates and Mr. Harter allegedly solicited customers to purchase bonds that were purchased from the R.M. Duncan Securities at a price that was 60% higher than the prevailing market price. FINRA alleges that R.M. Duncan Securities and Calton & Associates worked in “concert” to make the inter-dealer appear higher than the market price to pull off their scheme. FINRA alleges the brokerage firms failed to supervise their municipal securities activities and prices and are currently under investigation. Continue Reading