Broker-Dealer Penalized for Insufficient Information in Transaction Confirmations

A broker-dealer settled charges with FINRA that it sent confirmations to institutions' customers that "inaccurately reflected the capacity in which the firm acted."

In an Acceptance, Waiver and Consent, FINRA found that the firm sent approximately 325,000 trade confirmations to customers that (i) did not reflect that the transactions were effected through multiple separate executions and, thus, the prices shown were average prices rather than the price of a single execution and (ii) the firm did not indicate on the confirmation that actual prices were available upon request. FINRA also charged that firm did not act promptly to institute a remedy after becoming aware of the problem.

FINRA determined that the firm failed to make the disclosures required by Exchange Act Rule 10b-10 ("Confirmation of transactions"), the firm violated FINRA Rule 3110 ("Supervision") and Rule 2010 ("Standards of Commercial Honor and Principles of Trade").

To settle the charges, the firm agreed to (i) a censure and (ii) a $425,000 fine.