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- North Korean caught secretly mining bitcoin rival
- IPO Timelines Cut by 80% After SEC's Private Filing Decision
- How the Carried Interest Break Survived the Tax Bill
- FINRA: The Neutral Corner
- Coinbasex Says Buying and Selling Temporarily Disabled Amid Price Rout
- Bitcoin plunges by more than a third in a single day
- Goldman Is Setting Up a Cryptocurrency Trading Desk
- Jefferies Lets Employees Choose When to Receive Their Bonuses
- UBS Told to Pay $903K After Losing Retaliation Verdict
- BEWARE: Long Island Iced Tea Shares Soar After Changing Name to Long Blockchain
- Gary Cohn’s Last Laugh: Cashing Out on Trump’s Tax Plan
- E*Trade Lets Customers Trade in CBOE Bitcoin Futures
- Swiss Find Serious Shortcomings at JPMorgan in 1MDB Case
- Washington-based Investment Adviser and His Business Partner Charged in Multi-Million Dollar Scheme
- FINRA Board of Governors Meeting
- Cryptocurrency Market Now Doing Same Daily Volume as the NYSE
- Jailed Barclays Trader Must Pay $400,000 From Libor Profits
- Trump Asks ‘How’s Your 401(k)?’ But Most Voters Don’t Have One
- A Bitcoin Hedge Fund’s Return: 25,004% (That Wasn’t a Typo)
- Madoff Victims Near Full Recovery of Principal With Payout
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NEWSLETTERS & ALERTS
Good Execution Falls Short When 'Best Execution' is Required
by Howard Haykin
Aegis Capital Corp. agreed to pay a $27.5K fine and $620 plus interest in restitution to settle FINRA charges that it failed to provide best execution on customer orders. The firm was also ordered to revise its WSPs.
FIRM PROFILE. Aegis is a broker-dealer based in New York, NY; it's been a FINRA member since 1984. It has these prior relevant regulatory disclosures:
► In June 2015, Aegis settled FINRA charges – paying $85K (of which $45K is related) – over market order timeliness/best execution violations; the firm also agreed to update its WSPs for compliance with market order timeliness requirements.
► In June 2014, Aegis settled FINRA charges – paying $50K (of which $12.5K is related) - over order handling and best execution violations.
FINRA FINDINGS. When FINRA tested Aegis trading activity for Q4 of 2015 (10/1/15 to 12/31/15), it found that Aegis had failed to execute orders fully and promptly in 22 instances. For 11 of these orders, the firm failed to use reasonable diligence to ascertain the best inter-dealer market and failed to buy or sell in such market so that the resultant price to its customer was as favorable as possible under prevailing market conditions.
FINRA concluded that: (i) customer orders had been disadvantaged by a 'whopping '$620 – of which $477 (or 79%) of that total applied to just 3 orders; and, (ii) the firm's supervisory system was not reasonably designed to achieve compliance with, among other things, FINRA Rule 5310 - Best Execution and Interpositioning.
At a minimum, Aegis’ WSPs pertaining to quality of markets topics appeared to lack these WHO, WHAT, WHEN and HOW details: (i) specific identification of the individual(s) responsible for supervision; (ii) the supervisory steps and reviews to be taken by the appropriate supervisor; (iii) the frequency of such reviews; and (iv) how such reviews shall be documented.
FINANCIALISH TAKE AWAYS. In my opinion, Aegis’ trading results for the review period looked pretty clean. But the firm had little, if any, wiggle room because FINRA had recently fined Aegis twice for similar violations, and it had ordered Aegis (earlier in 2015) to update its WSPs for compliance with market order timeliness requirements. And so, FINRA levied a fine that seemed out-of-line with the apparent cost to customers. That said, Aegis and its Chief Compliance Officer, David Hentschel, accepted the sanctions - probably as just another cost of doing business.
This case was reported in FINRA Disciplinary Actions for November 2017.
For details on this case, go to ... FINRA Disciplinary Actions Online, and refer to Case #2016048939201.