FINRA Fines Broker-Dealer for Inaccurate Order Execution Reports

A broker-dealer settled FINRA charges for publishing 74 inaccurate monthly order execution reports and failing to maintain a supervisory system adequate to detect the errors.

According to the AWC, the firm incorrectly classified approximately 67 million orders that required special handling as standard covered orders under Regulation NMS Rule 605 ("Disclosure of order execution information") by distorting reported execution quality statistics. FINRA had previously identified the misclassification during an examination in March 2023. 

FINRA also found that, during the same period, the firm had no procedures and no supervisory process to determine whether orders were properly classified as covered orders. As a result, FINRA determined that the firm violated Regulation NMS Rule 605 ("Monthly Reports of Order Executions"), FINRA Rule 3110 ("Supervision"), and FINRA Rule 2010 ("Standards of Commercial Honor and Principles of Trade").

The broker agreed to a censure and to pay a $250,000 fine. FINRA noted that the firm had previously consented to a censure and a $50,000 fine for Rule 605 misclassifications covering a previous period.