- within Intellectual Property, Food, Drugs, Healthcare, Life Sciences, Government and Public Sector topic(s)
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A firm settled NYSE American charges for (i) preemptively crossing an order that enabled the firm to circumvent competition from on-floor market makers and (ii) adjusting a trade to an inferior price for a customer without prior customer agreement.
In a Letter of Acceptance, Waiver, and Consent, NYSE American found that the firm's trader instructed an NYSE American floor broker to preemptively cross and sell calls before the underlying stock reached the liquidity provider's bid price, thereby avoiding competition from on-floor market makers in the trading crowd. As to a separate trade, NYSE American found that the firm failed to obtain an agreement from a customer prior to execution of a trade that ultimately resulted in a worse price for the customer.
Relatedly, NYSE American found that the firm did not have a reasonable supervisory system in place, resulting in its failure to review options orders sent to the NYSE American trading floor where an execution order was subsequently nullified and/or adjusted. NYSE American also found that the firm did not require employees to obtain prior customer agreement for price adjustments.
As a result, the firm violated NYSE American Rules 16 ("Business Conduct"), 966NY ("Trade Nullification and Price Adjustment Procedure") and 320(e) ("Approval, Supervision and Control").
To settle the charges, the firm agreed to (i) a censure and (ii) a $175,000 fine.
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