A firm settled FINRA charges for reporting short-interest positions that were already reported by its clearing firm.
In a Letter of Acceptance, Waiver and Consent, FINRA stated that the firm reported over 20,000 short-interest positions that were custodied with, and already reported by, its clearing firm. According to the Letter, as a result of its duplicative reporting, the firm reported inaccurate short-interest position information, in violation of FINRA Rules 4560 ("Short-Interest Reporting") and 2010 ("Standards of Commercial Honor and Principles of Trade").
FINRA stated that the firm's supervisory system was not reasonably designed to ensure that its short-interest position reporting was accurate. Specifically, FINRA found that the firm's supervisory procedures did not include provisions for taking into account and excluding positions that were custodied and reported by its clearing firm, in violation of FINRA Rules 3110(a) ("Supervisory System") and 2010.
To settle the charges, the firm agreed to (i) a censure and (ii) a $250,000 fine: $150,000 for the reporting violations and $100,000 for the supervisory violations.
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