A broker-dealer settled NYSE charges for compliance failures concerning customer credit limits and setting erroneous order controls.
According to the Letter of Acceptance, Waiver and Consent, the NYSE found that the firm did not:
- reasonably describe in its written supervisory procedures ("WSPs") the firm's process for determining credit limits or for setting erroneous order controls;
- demonstrate that its credit limits were reasonable based on customers' financial conditions and trading activity; and
- address how it would make intra-day changes to its credit limits or to its erroneous order controls.
The NYSE found that the firm failed to (i) disclose five accounts belonging to employees, (ii) supervise the use of personal smartphones on the NYSE floor, (iii) develop WSPs for post-trade reviews of customer trading and (iv) follow up on trading activity flagged by its automated reports.
The firm was found in violation of SEA Rule 15c3-5 ("Risk Management Controls for Brokers or Dealers with Market Access"), NYSE Rule 407A ("Disclosure of All Member Accounts"), NYSE Rule 36 ("Communications between Exchange and Members' Offices") and NYSE Rule 3110 ("Supervision"). To settle the charges, the firm agreed to (i) a censure, (ii) a $45,000 fine and (iii) an undertaking to revise its WSPs to address the violations identified.
Primary Sources
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.