UNITED STATES OF AMERICA

Before the

SECURITIES AND EXCHANGE COMMISSION

SECURITIES EXCHANGE ACT OF 1934

Release No. 85433 / March 28, 2019

ADMINISTRATIVE PROCEEDING 

File No. 3-17154

ORDER ESTABLISHING FAIR FUND AND 

DIRECTING PAYMENT OF FUNDS

On March 7, 2016, the Securities and Exchange Commission (“Commission”) issued an 

Order Instituting Administrative and Cease-and-Desist Proceedings Pursuant to Sections 15(b), 

15B(c)(2) and 21C of the Securities Exchange Act of 1934, Making Findings, and Imposing 

Remedial Sanctions and a Cease-and-Desist Order (“Order”)1against First Southwest Company, 

LLC (“First Southwest”). The Order found that First Southwest, a registered broker-dealer, 

municipal securities dealer and municipal advisor, willfully violated the fair dealing and financial 

advisory agreement rules of the Municipal Securities Rulemaking Board (“MSRB”) in connection 

with financial advisory services rendered by First Southwest to its municipal client, the Rhode 

Island Economic Development Corporation (“RIEDC”) (now known as the Rhode Island 

Commerce Corporation), relating to a private placement offering of municipal securities on 

October 22, 2010 (the “2010 bond issuance”). 

The Commission found that, from March 2010 to November 2010, First Southwest 

rendered financial advisory services to the RIEDC in connection with the 2010 bond issuance 

without memorializing that relationship by a written agreement until seven months into the 

financial advisory relationship. As a result, the Commission found that First Southwest willfully 

violated MSRB Rule G-17, MSRB Rule G-23(c) and Section 15B(c)(1) of the Securities 

Exchange Act of 1934 (“Exchange Act”).

The Commission ordered First Southwest to pay to the Commission disgorgement of 

$120,000; prejudgment interest of $22,400; and a civil money penalty of $50,000, $25,000 of 

which was to be transferred to the MSRB in accordance with Section 15B(c)(9)(A) of the 

Exchange Act. According to the Order, the Commission would hold the collected funds, less the 

 

1

 Exchange Act Rel. No. 77300 (Mar. 7, 2016).

In the Matter of

FIRST SOUTHWEST COMPANY, LLC

Respondent.
2

$25,000 directed to the MSRB (“Net Civil Money Penalty”), pending a decision as to whether the 

Commission, in its discretion, will seek to do a distribution. First Southwest has paid in full and 

the Commission currently holds approximately $172,000, comprised of disgorgement, 

prejudgment interest, the $25,000 Net Civil Money Penalty, and accrued interest. 

The Commission’s Division of Enforcement recommends that a Fair Fund (“Fair Fund”) 

be established pursuant to Section 308(a) of the Sarbanes-Oxley Act of 2002 so that the Net Civil 

Penalty can be included with the disgorgement and prejudgment interest for distribution to 

affected bondholders. The Division of Enforcement further recommends that the Fair Fund be 

paid to The Bank of New York Mellon Trust Company, N.A. as the Trustee for the 2010 bond

issuance (“Trustee”), for distribution to affected bondholders. 

Accordingly, IT IS HEREBY ORDERED that:

A. Pursuant to Section 308(a) of the Sarbanes-Oxley Act of 2002, a Fair Fund is 

established so that the Net Civil Money Penalty can be added to the disgorgement and 

prejudgment interest paid by First Southwest for the benefit of harmed investors; and 

B. The Commission staff is directed to pay the collected disgorgement, prejudgment 

interest, and the Net Civil Money Penalty, plus accrued interest, to the Trustee for 

distribution to affected bondholders. Payment shall be made payable to The Bank 

of New York Mellon Trust Company, N.A. 

By the Commission.

Vanessa A. Countryman 

Acting Secretary