Firm Settles FINRA Charges for Inaccurate Trade Confirmations

A firm settled FINRA charges for issuing inaccurate trade confirmations to institutional customers and for related supervisory failures. 

According to the AWC, despite receiving two prior written warnings regarding similar issues, the firm issued approximately 41,000 inaccurate trade confirmations during the relevant period. FINRA found that for roughly 38,000 confirmations, the firm failed to disclose that the price was an "average price" because the operations team erroneously entered combined execution quantities into the firm's allocation tool. Conversely, for approximately 3,000 single-price transactions, the firm incorrectly included an average price disclosure due to "outdated blotter codes [in] a legacy order management system."

FINRA found that the firm failed to reasonably remediate these issues or meet its supervisory obligations. The firm’s written supervisory procedures failed to specify the process, parameters, and frequency required for reviewing trade confirmations. FINRA stated that the firm’s reviews were not sufficiently broad to identify potential errors across different platforms, and consequently, the system was not reasonably designed to identify inaccurate confirmations.

FINRA concluded that the firm violated Exchange Act Rule 10b-10 ("Confirmation of transactions"), as well as FINRA Rules 2232 ("Customer Confirmations"), 3110 ("Supervision"), and 2010 ("Standards of Commercial Honor and Principles of Trade").

The firm agreed to (i) a censure and (ii) a $40,000 fine.