Broker-Dealer Settles FINRA Charges for OATS Violations
Commentary by Steven Lofchie
An SEC-registered broker-dealer and FINRA member agreed to settle FINRA charges for failing to properly or timely submit 366,428 Reportable Order Events ("ROEs") in one quarter to the Order Audit Trail System ("OATS"), and 58,365 ROEs during a four-month period in the same calendar year, in violation of FINRA Rule 7450 ("Order Data Transmission Requirements").
According to the Letter of Acceptance, Waiver and Consent, Great Point Capital LLC agreed to a censure and to pay $20,000 to settle the charges.
Commentary
Under current Sanctions Guidelines, the number of violations that the regulators can find when a firm does not trade report correctly is astronomic. Here, a small firm was found to have committed almost a half a million violations. While the amount of fines levied by FINRA in this case seems modest, under the Sanctions Guidelines, FINRA has the power to assess an amount based on each failure to report as a separate violation. Perhaps the Sanctions Guidelines should be revisited so that they provide for more reasonable penalties - in line with what FINRA actually assessed in this case - for unintended trade reporting failures.