Firm Settles FINRA Charges for TRACE and Muni Trade Reporting Violations

A firm settled FINRA charges for failing to accurately report over 500 transactions in TRACE-eligible and municipal securities.

According to the AWC, the firm failed to report approximately 290 back-to-back principal transactions in TRACE-eligible securities. FINRA found that the firm reported trades with broker-dealers but failed to report offsetting customer transactions, also known as "step-out" trades.

FINRA determined that the firm under-reported 270 municipal securities transactions to the MSRB's Real-Time Transaction Reporting System ("RTRS") and, in a separate instance, over-reported 40 canceled municipal securities transactions. FINRA said these errors arose because the firm failed to establish adequate supervisory procedures to ensure compliance with trade reporting requirements.

FINRA determined that the firm violated FINRA Rules 2010 ("Standards of Commercial Honor and Principles of Trade") and 6730 ("Transaction Reporting") as well as MSRB Rule G-14 ("Reports of Sales or Purchases").

To settle the charges, the firm agreed to (i) a censure and (ii) pay a $20,000 fine, $10,000 of which pertains to municipal securities reporting violations.