Firm Settles NYSE Charges for Supervisory Failings on Trade Surveillance

A broker-dealer settled charges in a number of closely related enforcement actions brought by various "NYSE exchanges" for supervisory failings over "trading activity in warrants, rights, units, and certain OTC equity securities."

In the various Letters of Acceptance, Waiver and Consent, the Exchanges said that in nine surveillance reports, the firm failed to spot potentially manipulative trading, and that the surveillance reports did not include information as to all types of securities traded by the firm. The Exchanges determined that due to these gaps, the firm could not conduct reasonable supervisory reviews of trading activity in these securities for potential manipulation. Further, the Exchanges found that the firm's supervisory system and written supervisory procedures did not mandate review of its automated surveillance reports to ensure all relevant securities were included.

The firm agreed to be censured by the various exchanges and to pay a $512,500 total fine, with that amount divided among the various exchanges.