Alternative Trading System Fined for Failing to Preserve Order Memoranda

A FINRA-registered alternative trading system settled charges for failing to preserve memoranda on more than 95 million orders received from broker-dealer customers.

In a Letter of Acceptance, Waiver, and Consent, FINRA stated that the broker-dealer did not independently preserve memoranda. FINRA found that the broker-dealer relied on a third-party vendor to preserve the memoranda. FINRA found that when the firm changed vendors, the prior vendor deleted the broker-dealer's existing order memoranda history and that the broker-dealer did not maintain backups.

FINRA determined that the broker-dealer violated Exchange Act Section 17(a) ("Records and Reports"), Exchange Act Rule 17a-4(b)(1) ("Records to be Preserved by Certain Exchange Members, Brokers and Dealers"), FINRA Rule 2010 ("Standards of Commercial Honor and Principles of Trade") and Rule 4511 ("General Requirements"). To settle the charges, the broker-dealer agreed to (i) a censure and (ii) a civil monetary penalty of $100,000.