Firm Settles FINRA Charges for Securities Trading Violations

A broker-dealer settled FINRA charges for accepting market orders for newly issued shares "prior to the commencement of trading those shares on the secondary market."

In a Letter of Acceptance, Waiver and Consent, FINRA stated that the firm, which provides market access and routing/execution services to broker-dealers, improperly accepted 128 market orders for the purchase of 49 new issue shares in the secondary market "prior to the commencement of trading of such shares in the secondary market."

As a result, FINRA found that the firm violated FINRA Rule 5131(d)(4) ("New Issue Pricing and Trading Practices") and Rule 2010 ("Standards of Commercial Honor and Principles of Trade"). FINRA also found that the firm violated FINRA Rule 3110 ("Supervision") for failing to maintain a "reasonable" supervisory system by implementing written supervisory procedures that "placed the responsibility of compliance" on the broker-dealer clients to reject market orders not compliant with Rule 5131.

To settle the charges, the firm agreed to (i) a censure and (ii) pay a $45,000 fine.