FINRA Fines Firm for Inaccurate Order Routing Disclosures

A firm settled FINRA charges for publishing inaccurate and incomplete quarterly order routing reports and related supervisory failures. 

According to the AWC, the firm published seven quarterly Rule 606 ("Disclosure of order routing information") reports that failed to comply with the rule. FINRA determined that the firm:

• inaccurately reported in several filings that it "received a net payment of $0.04 per hundred shares from every listed options venue," when the firm "paid a $0.04 commission to an intermediary broker-dealer for those orders;"
• erroneously stated in one report that it received "identical payments for order flow from twelve options venues," although the firm did not actually receive uniform payments from those venues; and
• incorrectly identified, across multiple reports, "two of the venues to which it routed the most non-directed orders for execution."

FINRA also found that the firm’s supervisory system was not reasonably designed to ensure the accuracy of its public reports on the handling of customer orders. The firm’s written procedures required a designated supervisor to meet quarterly with stakeholders to review the reports before publication, but the procedures did not provide adequate guidance on how those reviews should be conducted. FINRA highlighted that the firm did not perform reasonable reviews to verify the accuracy of the reports, such as comparing sample data in draft reports against transaction records.

To settle the charges, the firm agreed to (i) a censure and (ii) a $90,000 fine.