Virtu Americas censured and fined for allegedly overstating its advertised trade volume
The firm had configured its systems to advertise its trading volumes in numerous securities on Bloomberg and Thomson Reuters market data systems.
As a result of changes made by the firm to its Bloomberg messaging format the firm’s trade volume cancellation messages could not be processed by Bloomberg between May 2017 and January 2020. This resulted in the firm inadvertently overstating its executed trade volume on Bloomberg in approximately 4,500 instances by approximately 5.8bn shares.
In addition, between December 2021 and February 2022 an error in the firm’s transaction coding process connected to a system migration caused the firm to erroneously advertise some journaled transaction not eligible for advertisement. This resulted in the firm inadvertently overstating its executed trade volume on Bloomberg and Thomson Reuters in approximately 106,00 instances and by approximately 11.3bn shares.
The firm failed to implement a supervisory system reasonably designed to ensure the accurate communication of its trade volume data. Although the firm had a system that included a daily reconciliation process for trade volume data, it did not initially have in place any supervisory reviews to monitor the accuracy of its trade volumes as actually advertised.
When supervisory reviews were eventually implemented they did not address the possibility of discrepancies between the trade volume data reported to the service providers and the trade volumes actually published.
FINRA Rule 2010
FINRA Rule 3110
FINRA Rule 5210
Former securities representative suspended and fined for allegedly recommending unsuitable transactions
The recommendations resulted in overconcentration of four customer accounts in a Unit Investment Trust (UIT) that invested exclusively in the energy sector. This overconcentration was not consistent with the customers’ investment objectives and risk tolerances.
A disgorgement of $34,878.29 plus interest has also been ordered.
FINRA Rule 2010
FINRA Rule 2111
Former securities representative suspended and fined for allegedly submitting falsified documents
The documents were submitted in connection with an investigation of a firm customer who had a personal relationship with the representative.
The customer had submitted a fabricated offer of employment from the firm in support of a mortgage loan application.
During the course of the investigation the representative produced falsified documents to make the firm believe that he had hired the customer.
The representative also provided false responses to FINRA’s request for documents and information in connection with this investigation.
FINRA Rule 2010
FINRA Rule 8210
JP Morgan censured and fined for allegedly failing to accurate report its short interest positions
820,00 short interest positions involving approximately 77bn shares were inaccurately reported as a result of variety of problems including:
- Short interest positions of non-US broker-dealer affiliates being reported on a net rather than on a gross basis;
- Certain positions resulting from stock loan activity being included in its short interest reporting;
- Positions in Canadian and Latin American securities held in certain accounts being incorrectly excluded from the short interest reporting logic;
- Certain dually listed OTC foreign securities being excluded from its short interest reporting;
- Positions related to dividend reinvestment activity being incorrectly included in short interest position reports;
- Certain positions in an affiliate’s omnibus account being incorrectly excluded from its short interest reporting.
The firm failed to establish and maintain a supervisory system that was reasonably designed to achieve compliance with its short interest reporting obligations. Crucially the firm did not have a process in place to periodically review whether accounts were properly included or excluded for the purpose of short interest reporting.
FINRA Rule 2010
FINRA Rule 3010
FINRA Rule 3110
NASD Rule 2110
NASD Rule 3360
Former securities representative barred for allegedly failing to appear for on-the-record testimony
FINRA Rule 2010
FINRA Rule 8210
Builder Advisor Group censured and fined for alleged AML program failings
Between January 2020 and January 2024 the firm failed to establish an implement a system reasonably designed to identify and verify the identities of the beneficial owners of its legal entity customers.
The firm also failed to conduct independent testing of its AML program in 2021 and 2022.
FINRA Rule 2010
FINRA Rule 3310
Contracts representative suspended and fined for allegedly falsely certifying that he had personally completed the continuing education required to hold an insurance license
Another person had completed 15 hours of insurance continuing education on his behalf.
FINRA Rule 2010
Former securities representative suspended and fined for allegedly improperly using firm funds
The representative submitted meal expenses to the firm even though these did not comply with firm policy.
FINRA Rule 2010
Jefferies censured and fined for allegedly failing to comply with Regulation M and related notification rules
The firm failed to conduct supervisory reviews of its determination whether an offering qualified as a distribution and whether applicable restricted periods were accurate.
The firm also failed to ensure that it did not engage in impermissible trading or bidding activity during the restricted period.
FINRA Rule 2010
FINRA Rule 3110
Interactive Brokers censured and fined for alleged violations connected with customers who engaged in “free-riding”
The firm failed to detect more than 20,000 cash account customers selling securities before the original purchase settled and using the proceeds of the sale to cover the cost of the original or subsequent transaction (instead of requiring full cash payment of each securities purchase).
An automated surveillance system was in place to monitor customer cash accounts for such “free-riding”, but the firm inadvertently failed to program this to monitor for free-riding in option and issued options.
In addition the firm failed to establish and maintain a supervisory system reasonably designed to achieve compliance with Regulation T.
FINRA Rule 2010
FINRA Rule 3110
FINRA Rule 4210
Securities representative suspended and fined for allegedly entering into a mortgage lending arrangement with a customer without notice or approval from his firm
FINRA Rule 2010
FINRA Rule 3240
UBS Financial Services censured and fined for alleged inaccurate trade confirmations sent to customers
Between February 2014 and November 2024, as a result of a number of different systems changes, the firm sent its retail and institutional customers over 330 million confirmations that “either failed to disclose that the price shown was in fact an average price or disclosed that the price shown may have been an average price when it was not an average price.”
The firm also failed to have in place a supervisory system reasonably designed to supervise average prices disclosures in its confirmations.
NASD Rule 3010
FINRA Rule 2010
FINRA Rule 2232
FINRA Rule 3310
SEA 1934 Rule 10b-10
Citigroup Global Markets censured and fined for allegedly permitting unqualified individuals to engage in activity requiring qualification
The individuals in question co-authored 470 municipal securities research reports. One of the individuals authored an additional four reports without a qualified representative as co-author.
MSRB Rule G-2
MSRB Rule G-3
Barclays Capital censured and fined for allegedly failing to comply with net capital requirements
The firm misclassified certain firm commitment offerings as best efforts offerings and failed to include the open contractual commitment charge in its net capital computations as a result.
Because its net capital computation were inaccurate the firm’s general ledger, its record of its net capital computations as well as 16 FOCUS reports overstated the firm’s net capital by amounts ranging from approximately $44m to $949m.
FINRA Rule 2010
FINRA Rule 3110
FINRA Rule 4511
SEA 1934 Rule 17a-3
SEA 1934 Rule 17a-5
| Unless otherwise noted all respondents accepted and consented to FINRA’s findings without admitting or denying them. |