A broker-dealer settled FINRA charges for reporting inaccurate trade information and incorrect reporting times of trade executions to the Trade Reporting and Compliance Engine ("TRACE").
In a Letter of Acceptance, Waiver and Consent, FINRA alleged that the broker-dealer reported to TRACE (i) 1,304 transactions that were actually internal transfers of securities that it was not required to report and (ii) 506 transactions with the incorrect trade execution time. FINRA found that the incorrect trade execution times were the result of manual recording errors by the broker-dealer's traders or back office personnel. These trade reporting violations followed four separate earlier occasions in which the broker-dealer was found to have violated the trade reporting rules.
FINRA determined that the manual recording errors made by the broker-dealer's personnel also resulted in incorrect trade execution times in 77 brokerage order memoranda, in violation of FINRA Rule 4511(a) ("General Requirements") and SEA Rule 17a-3 ("Records to be made by certain exchange members, brokers and dealers"). In addition, FINRA found that the broker-dealer violated FINRA Rule 3110 ("Supervision") and FINRA Rule 2010 ("Standards of Commercial Honor and Principles of Trade") because its supervisory system did not include a review for mismatched execution times.
To settle the charges, the broker-dealer agreed to (i) a censure, (ii) a $100,000 fine, and (iii) an undertaking to revise its written supervisory procedures.
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