The SEC instituted a settlement against a firm that provided the SEC with incomplete "blue sheet" information about executed trades.
According to the SEC, there was a coding error in the software that the firm used to process SEC requests for blue sheet data. The error resulted in the omission of 26,810 securities transactions from responses to more than 2,300 blue sheet requests from May 1999 to April 2014. The SEC stated that the firm failed to (i) report the incident after discovering the coding error, and (ii) take any steps to produce the omitted data until nine months after the incident.
The SEC contended that the firm's "failure to discover the coding error and to produce the missing data for many years potentially impacted numerous [SEC] investigations." SEC Enforcement Division Market Abuse Unit Co-Chief Robert A. Cohen emphasized that accuracy is a broker-dealer's responsibility. He said:
"Broker-dealers have a core responsibility to promptly provide the SEC with accurate and complete trading data for us to analyze during enforcement investigations. [This firm] did not live up to that responsibility for an inexcusably long period of time, and it must pay the largest penalty to date for blue sheet violations."
The firm agreed to pay a $7 million penalty and admit wrongdoing.
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