FINRA Fines Three Firms a Total of $1.6 Million for OATS Reporting and Supervision Violations
Washington, DC — The Financial Industry Regulatory Authority (FINRA) announced today that it has fined TradeStation Securities, Inc., E*Trade Securities, LLC and CIBC World Markets Corp. a total of $1.6 million for multi-year violations relating to FINRA's Order Audit Trail System (OATS) rules and related supervisory failures.
Under the OATS rules, firms must report information related to the handling and execution of customer orders, as well as for certain proprietary orders for Nasdaq and OTC Equity securities. This information allows FINRA to recreate the life cycle of an order and is critical to effective regulation.
"Firms must be vigilant in monitoring the accuracy and completeness of the data they provide to regulators and each firm must ensure that it reports all required order information, no matter which desk receives or handles the order," said Tom Gira, Executive Vice President of FINRA's Market Regulation Department.
TradeStation Securities, Inc. was fined $750,000 for failing to report approximately 23.5 million Reportable Order Events relating to orders received. E*Trade Securities was fined $500,000 for failing to report "New Order Reports" and "Route Reports." CIBC was fined $350,000 for failing to report to OATS over 28 million orders which were generated by an affiliate.
FINRA further found that the three firms did not have adequate systems of supervision in place to monitor their OATS reporting compliance.
The fine for CIBC was reduced in recognition of the firm's actions in reporting the problem to FINRA and taking prompt remedial actions to correct the problem. In settling these matters, the firms neither admitted nor denied the charges, but consented to the entry of FINRA's findings.
Investors can obtain more information about, and the disciplinary record of, any FINRA-registered broker or brokerage firm by using FINRA's BrokerCheck. FINRA makes BrokerCheck available at no charge. In 2007, members of the public used this service to conduct 6.7 million reviews of broker or firm records. Investors can access BrokerCheck at www.finra.org/brokercheck or by calling (800) 289-9999.
FINRA, the Financial Industry Regulatory Authority, is the largest non-governmental regulator for all securities firms doing business in the United States. Created in 2007 through the consolidation of NASD and NYSE Member Regulation, FINRA is dedicated to investor protection and market integrity through effective and efficient regulation and complementary compliance and technology-based services. FINRA touches virtually every aspect of the securities business-from registering and educating all industry participants to examining securities firms; writing and enforcing rules and the federal securities laws; informing and educating the investing public; providing trade reporting and other industry utilities; and administering the largest dispute resolution forum for investors and registered firms.
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