FRB and OCC Fine Bank for Surveillance Failures on Trading Activity

The Federal Reserve Bank ("FRB") and the Office of the Comptroller of the Currency ("OCC") fined a bank for failing to monitor firm and client trading activities.

According to the Consent Order, the OCC found that (i) the bank's trade surveillance program had deficiencies that compromised its effectiveness, (ii) the bank failed to establish adequate governance over certain trading venues and (iii) the bank’s trade surveillance program operated with gaps in venue coverage and without adequate data controls required to maintain an effective program. The OCC found that, as a result of the deficiencies, the bank failed to surveil trading activity on various global trading venues. The FRB said that it expects the bank "maintain[s] a global trade surveillance program to monitor employee and customer trading activities throughout the Firm for potential violations of laws and regulations, including those relating to market misconduct and other manipulative behaviors."

For purposes of the Consent Order, a "trading venue" was defined to include "systems or electronic platforms operated by investment firms or market operators that bring together multiple third party buying and selling interests in financial instruments to perform transactions.

The FRB fined the bank $98.2 million and the OCC fined the bank $250 million.