Broker-Dealer Settles With SEC Over Faulty Trading-Data Reports

A broker-dealer settled SEC claims that it sent the agency incomplete and inaccurate trading-data reports (commonly referred to as "electronic blue sheets" or "EBS") for years.

The SEC alleged that from March 2018 through December 2023, the firm made at least 19,571 EBS submissions that were inaccurate or incomplete as a result of coding or programming errors at the firm or its vendors. The SEC said the errors affected at least 51.8 million transactions. The firm's conduct included (i) mismarking more than 53,400 trades as solicited, (ii) tagging about 21,500 options trades as short sales, (iii) failing to report about 2.5 million trades, (iv) giving incomplete branch and representative codes for nearly 1.2 million trades, and (v) omitting or misstating the transaction-type identifier for more than 48.1 million trades.

That conduct violated Section 17(a)(1) (Records and Reports) and Rules 17a-4(j) (records to be preserved by certain exchange members, brokers and dealers) and 17a-25 (electronic submission of securities transaction information).

The firm agreed to a cease-and-desist order, a censure, and a $1.9 million civil penalty. In explaining the penalty amount, the SEC credited the firm's cooperation and its fixes, such as a new pre-submission validation tool, a dedicated compliance-technology team, and corrected resubmissions.