Domestic Securities of Montvale, NJ, agreed to pay nearly $150K in fines, restitution and interest, and to revise the trading section of its WSP, to settle FINRA charges relating to its handling of customer limit orders, customer market orders, among other things. 

    Customer Limit Orders.   FINRA found that Domestic failed to execute (and, in some cases failed to contemporaneously or partially execute) customer limit orders ("L/O's") in Nasdaq securities after it traded each subject security for its own market-making account at a price that would have satisfied each customer’s L/O. 

    Customer Market Orders.   FINRA found that the firm accepted and held customer market orders, traded for its own account at prices that would have satisfied the customer market orders, and failed to immediately thereafter execute the customer market orders up to the size and at the same price at which it traded for its own account or a better price.  Domestic also allegedly failed to fully and promptly execute orders.

    Other Trading Areas, FINRA Found ...  (i) in transactions for or with a customer, firm failed to use reasonable diligence to ascertain the best inter-dealer market and, in doing so, customer did not get the most favorable price;  (ii) firm executed short sale transactions and failed to report them accurately. 

All told, FINRA found that Domestic's supervisory system was deficient in addressing market order protection, Nasdaq Rule 4755, trade reporting, riskless principal transactions, best execution, not held orders, riskless principal transactions, best execution, principal transactions, and disclosure of order execution information.   This is FINRA Case #2005003185202.   [FINRA March Disciplinary Actions]