Broker-Dealer Settles FINRA Charges for Short Sale Reporting Violations

A broker-dealer settled FINRA charges for failing to correctly indicate short sale identifiers when reporting to the FINRA/Nasdaq Trade Reporting Facility and the OTC Reporting Facility.

In a Letter of Acceptance, Waiver, and Consent, FINRA determined that the broker-dealer submitted clearing transactions to the reporting facilities without short sale indicators. FINRA found that the broker-dealer failed to update its trade reporting systems to include short sale indicators on non-tape, clearing-only regulatory reports. FINRA also found that the broker-dealer failed to implement a supervisory system reasonably designed to achieve compliance with trade reporting obligations for short sales.

As a result, FINRA found that the broker-dealer violated FINRA Rule 2010 ("Standards of Commercial Honor and Principles of Trade"), Rule 3110 ("Supervision"), Rule 6182 ("Trade Reporting Short Sales") and Rule 6624 ("Trade Reporting Short Sales of OTC and Restricted Equities").

To settle the charges, the broker-dealer agreed to (i) a censure and (ii) a $200,000 fine.