FINRA Fines Alternative Trading System for AML and Supervision Failures
FINRA fined an alternative trading system ("ATS") $550,000 for failing to develop a reasonable AML program to detect and report suspicious trading activity and for failing to maintain a supervisory system adequate to detect potential market manipulation on its platform.
According to the AWC, the firm operated an overnight trading session - between 8:00 PM ET and 4:00 AM ET - which accounts for approximately 95 percent of all overnight trading volume in NMS stocks, including a substantial volume of low-priced securities. FINRA found that the firm's monitoring was limited to a weekly manual review of two reports - a low-priced securities report and a wash sale report - conducted by one employee who lacked meaningful AML experience and training. FINRA found that those reports flagged an average of 2,500 and 1,000 transactions per week, respectively, and did not enable the firm to identify patterns of suspicious activity over time or across subscribers and securities. FINRA found that the firm failed to detect and investigate numerous red flags of potentially suspicious order schemes.
As a result, FINRA said the firm's AML policies and procedures failed to identify red flags of potential market manipulation relevant to its business, including spoofing, layering, and other manipulative order entry patterns. FINRA also found that, during the same period, the firm's written supervisory procedures did not address various forms of market manipulation relevant to its business, including spoofing, layering, and other manipulative order entry patterns. FINRA noted that in November 2025, the firm began implementing an automated monitoring system to detect potential spoofing and layering.
FINRA charged the ATS with violating FINRA Rule 3310 ("Anti-Money Laundering Compliance Program"), FINRA Rule 3110 ("Supervision"), and FINRA Rule 2010 ("Standards of Commercial Honor and Principles of Trade").
To settle the matter, the ATS agreed to a censure and a $550,000 fine, and committed to certify in writing within 180 days that the firm remediated both the AML and supervisory deficiencies identified in the AWC.