Broker-Dealer Fined for Inaccurate Execution Quality Reports

A broker-dealer settled FINRA charges for publishing inaccurate data in required monthly reports on order execution quality.

According to the AWC, over a two year period, the broker-dealer filed inaccurate Regulation NMS Rule 605 ("Disclosure of order execution information") execution quality statistics as required when operating as a market center for National Market System securities. FINRA found that the inaccurate data resulted from multiple coding errors that caused the firm to misclassify over 80% of reported orders. FINRA said these inaccuracies led to the inclusion of non-covered orders and the miscalculation of execution quality statistics, including time-to-execution and average realized spread.

FINRA determined that the broker-dealer violated Regulation NMS Rule 605, FINRA Rule 2010 ("Standards of Commercial Honor and Principles of Trade") and Rule 3110 ("Supervision").

To settle the charges, the broker-dealer agreed to (i) a censure and (ii) pay a civil monetary penalty of $150,000.