Broker-Dealer Settles SEC and FINRA Charges for Blue Sheet Inaccuracies

A broker-dealer settled SEC and FINRA charges (see here and here) for reporting incomplete and inaccurate securities trading information.

In its Order, the SEC found that between 2014 and 2019, the broker-dealer submitted electronic blue sheet ("EBS") requests that contained incomplete trade data. The SEC stated that the broker-dealer submitted EBS data lacking customer identification and inaccurate EBS fields. The SEC charged the broker-dealer with violating the recordkeeping and reporting requirements under Section 17(a) of the Exchange Act. The SEC found that the EBS inaccuracies resulted from unidentified coding errors, both in the broker-dealer's and a vendor's data. The SEC also recognized that the broker-dealer engaged in remedial efforts to address the causes of the deficient submissions.

In a parallel enforcement action, FINRA found blue sheet deficiencies. FINRA stated that the broker-dealer failed to maintain sufficient written supervisory procedures for the validation of blue sheet requests during the relevant period. FINRA found violations under Rule 8211 and 8213 on automated submission of trading data and under Rule 3010 (Supervision).

To settle the charges of both agencies, the broker-dealer agreed to, among other operational changes, (i) a censure and (ii) a $3.1 million fine.