A broker-dealer settled FINRA charges related to reporting, recordkeeping and supervisory failures on inaccurate net capital and customer reserve calculations.
According to the Letter of Acceptance, Waiver and Consent, calculation errors by Lime Brokerage, LLC ("Lime") caused (i) six instances of miscalculating its net capital and consequently failing to meet the minimum amount of net capital required by Exchange Act Rule 15c3-1 ("Net Capital Requirements for Brokers or Dealers"), and (ii) one instance of failing to calculate the customer reserve properly and make a sufficient deposit into a Reserve Account.
Due to these failures, FINRA found that Lime was not:
- maintaining accurate books and records;
- filing accurate FOCUS reports;
- timely and properly closing out open fail-to-deliver positions on 18 occasions; and
- establishing or maintaining adequate supervisory systems or written procedures.
FINRA also found that Lime violated Rule 204(a) and Rule 204(b) of Regulation SHO ("Short Sale Rule") and FINRA Rule 2010 ("Principles of Trade") by failing to timely and properly close out failure-to-deliver positions resulting from short sales.
Lime agreed to pay $75,000 to settle the charges.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.