Rush Harding Suspended by FINRA for Alleged MSRB Rule Violations
Rush Harding (CRD #: 501131), a broker formerly registered with Crews & Associates, has been suspended by FINRA, according to his BrokerCheck record, accessed on June 13, 2023. If you have questions about his alleged conduct as a broker, read on.
FINRA Suspension
On May 16, 2023, Rush Harding consented to the entry of findings that he allegedly violated MSRB rules in connection with 94 municipal securities transactions made between January 2017 and June 2021.
According to a Letter of Acceptance, Waiver & Consent (AWC), Crews & Associates allegedly had an agreement with its affiliated bank to not sell the bank secondary-market municipal bonds with a markup to remain in compliance with a prohibition by banking regulators.
Rush Harding was allegedly responsible for sourcing bonds for the affiliate bank, and had access to two Crews & Associates trading accounts: first, an account for bonds the firm intended to sell to the bank, with no added markups; and second, a general inventory account with markups intended for other clients.
Further, Rush Harding allegedly also had discretion over which account to place bonds purchased by his firm in.
Alleged Contravention of Firm Agreement
During the relevant period, Rush Harding allegedly contravened the firm’s arrangement with its affiliate bank and circumvented Crews & Associates’ prohibitions against markups to the affiliate in relation to 94 municipal securities transactions.
In each transaction, Rush Harding allegedly anonymously offered bonds from the firm’s general inventory through a broker’s broker, then informed another broker-dealer that the bonds were available and of potential interest to the affiliate bank.
This other broker-dealer would allegedly purchase the bonds and sell them to the affiliate bank with an additional markup.
Crews & Associates’ bank affiliate allegedly paid $918,476 in total markups and other fees to the firm and third-party broker-dealers that would have been avoided if Rush Harding had placed the bonds in the correct account and sold them according to the bank’s agreement with Crews & Associates.
The AWC concluded that these allegations constitute violations of MSRB Rules G-18(b) and G-17.
MSRB Rules G-17 and G-18
MSRB Rule G-17 requires brokers, dealers, and municipal securities dealers and advisors to engage in fair dealing and prohibits them from engaging in unfair and deceptive practices.
MSRB Rule G-18(b) prohibits broker-dealers from interjecting a third party between themselves and the best market for a client’s transaction.
Sanctions
Rush Harding consented to the following sanctions:
- $30,000 fine
- 1-year suspension
His suspension began on June 5, 2023, and will end on June 4, 2024.
You can read a copy of the AWC here.
SEC Action
On August 26, 2021, the Securities and Exchange Commission filed cease-and-desist proceedings alleging that Rush Harding, as CEO of Crews & Associates (“Crews”), failed to disclose a conflict of interest created by the firm between the County Commission of Ohio County, West Virginia (the “County”) and the firm’s bank affiliate.
Crews and Rush Harding allegedly recommended that the County attempt to reduce its outstanding debt service expense through a tender offer for bonds issued in 2006. They allegedly also recommended that the County offer to pay bondholders a higher price than the current market price of its outstanding bonds so as to incentivize bondholders to tender their bonds.
Further, the firm allegedly recommended that the County used the sale of new, lower interest rate bonds, which the firm would underwrite, to fund the County’s purchase of the 2006 bonds.
However, the SEC alleged that neither Rush Harding nor Crews disclosed to the County that the firm had recently acquired more than $1 million of the County’s outstanding bonds at market prices and then sold them to two clients.
As Crews and the County finalized the terms of the proposed 2006 bond transaction, the firm allegedly purchased approximately $4.8 million more of the County’s outstanding bonds at market prices and sold them to an affiliated entity (the “Affiliate”) and to clients.
According to the SEC, almost all of the bonds acquired by Crews were eventually sold to the Affiliate and tendered back to the County by the Affiliate at Crews’ recommended price. Rush Harding, as CEO, allegedly approved every purchase and sale of these bonds by the firm.
The SEC alleged that, when recommending the County’s purchase price, Crews & Associates failed to disclose that the Affiliate had acquired these bonds and the conflict of interest created by the Affiliate’s financial interest in the tender offer.
The SEC alleged that Rush Harding willfully violated Municipal Securities Rulemaking Board Rules G-17 and G-27, and caused Crews & Associates’ violation of Section 15B(c)(1) of the Securities Exchange Act of 1934.
MSRB Rule G-27
MSRB G-27 requires firms to establish supervisory systems to ensure their compliance with securities regulations.
Securities Exchange Act of 1934
Section 15B(c)(1) of the Securities Exchange Act of 1934 bans brokers, dealers, and municipal securities dealers from manipulating or deceiving investors through fraudulent devices.
Sanctions
Rush Harding was censured, ordered to cease and desist from violations of Section 15B(c)(1) of the Securities Exchange Act of 1934, and subject to undertakings. The SEC also ordered him to pay the following:
- $100,000 fine
- $36,524 disgorgement
- $9,957 additional sanction
Additionally, the SEC limited Rush Harding from participating in offerings of new issue municipal securities or tender offers, including engaging in activities with any representative of any broker, dealer, or issuer for the purposes of issuing municipal securities or tender offers.
These limitations do not limit him from communicating with non-issuer clients about their purchases or sales of municipal securities or from executing trades for these clients.
Background Information
Rush Harding has passed the following exams:
- Series 63 – Uniform Securities Agent State Law Examination
- Series 79TO – Investment Banking Registered Representative Examination
- SIE – Securities Industry Essentials Examination
- Series 3 – National Commodity Futures Examination
- Series 7 – General Securities Representative Examination
- Series 53 – Municipal Securities Principal Examination
- Series 24 – General Securities Principal Examination
He previously worked for Crews & Associates (CRD#:8052) and T. J. Raney & Sons (CRD#:3128).
Kurta Law Can Help
If you worked with Rush Harding and you have concerns about your investments, please contact us today at 877-600-0098 or info@kurtalawfirm.com for a free consultation.
For over 20 years, Kurta Law has advocated on behalf of investors who want to recover their investment losses from brokers and brokerage firms. Kurta Law is a nationally recognized law firm and exclusively represents investors against brokers and brokerage firms on a contingency basis. This means that the firm only earns a fee if our securities attorneys recover money on your behalf.
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