Pricing Service Settles SEC Charges Related to Single Broker Quotes

A global securities pricing service (the "company") settled SEC charges for compliance failures related to delivering quotes to clients received from a single market participant (i.e., "single broker quotes").

According to the Order, the SEC found that the company provided independent evaluations for 2.8 million fixed-income securities by considering various market inputs; however, for approximately 46,000 securities, the company's applications and models did not produce evaluations due to insufficient information and, in these cases, the company provided single broker quotes. The SEC found that the company failed to adopt and implement sufficient policies and procedures to insure that the single broker quotes reasonably reflected the value of the securities. The SEC concluded that the company's compliance failures related to single broker quotes affected its pricing of more than 40,000 fixed-income securities, and that some of the prices provided to clients did not reasonably reflect the value of the securities.

As a result, the company violated Section 206(4) of the Advisers Act and Rule 206(4)-7 ("Compliance Procedures and Practices") thereunder.

To settle charges, the company agreed to (i) cease and desist, (ii) a censure and (iii) pay an $8 million civil money penalty.