BROWSE BY TOPIC
- Investments - Strategies
- Investments - Unsuitable
- Investor Protection
- Regulatory Sanctions
- Investments - Private
- Rules & Regulations
- Bad Advisors
- Bad Brokers
- Boiler Rooms
- Wall Street News
- Terminations/Cost Cutting
- Compliance Concepts
- General News
- Donald Trump & Co.
- Big Banks
Stories of Interest
- Sarah ten Siethoff is New Associate Director of SEC Investment Management Rulemaking Office
- Catherine Keating Appointed CEO of BNY Mellon Wealth Management
- Credit Suisse to Pay $47Mn to Resolve DOJ Asia Probe
- SEC Chair Clayton Goes 'Hat in Hand' Before Congress on 2019 Budget Request
- SEC's Opening Remarks to the Elder Justice Coordinating Council
- Massachusetts Jury Convicts CA Attorney of Securities Fraud
- Deutsche Bank Says 3 Senior Investment Bankers to Leave Firm
- World’s Biggest Hedge Fund Reportedly ‘Bearish On Financial Assets’
- SEC Fines Constant Contact, Popular Email Marketer, for Overstating Subscriber Numbers
- SocGen Agrees to Pay $1.3 Billion to End Libya, Libor Probes
- Cryptocurrency Exchange Bitfinex Briefly Halts Trading After Cyber Attack
- SEC Names Valerie Szczepanik Senior Advisor for Digital Assets and Innovation
- SEC Modernizes Delivery of Fund Reports, Seeks Public Feedback on Improving Fund Disclosure
- NYSE Says SEC Plan to Limit Exchange Rebates Would Hurt Investors
- Deutsche Bank faces another challenge with Fed stress test
- Former JPMorgan Broker Files racial discrimination suit against company
- $3.3Mn Winning Bid for Lunch with Warren Buffett
- Julie Erhardt is SEC's New Acting Chief Risk Officer
- Chyhe Becker is SEC's New Acting Chief Economist, Acting Director of Economic and Risk Analysis Division
- Getting a Handle on Virtual Currencies - FINRA
We seek to provide information, insights and direction that may enable the Financial Community to effectively and efficiently operate in a regulatory risk-free environment by curating content from all over the web.
Stay Informed with the latest fanancialish news.
NEWSLETTERS & ALERTS
Firm Ticketed for Routing Mismarked Orders
by Howard Haykin
WHAT WENT WRONG – ORDER ENTRY. Examiners from FINRA Options Regulation determined that OptionsHouse (or OMSL) had incorrectly calculated the average number of daily orders each month for each account - dividing the number of monthly orders per account by calendar days, rather than by business days. This effectively diluted the counts by including holidays and weekends with zero trades.
As a result, 2 customer accounts under common ownership that together met the ‘Professional Customer’ threshold were misclassified as ‘Customer’. And it was the orders from these accounts - 136,579 contracts – that had an inaccurate origin code of Customer, instead of Professional Customer.
WHAT WENT WRONG – SUPERVISION. As we know, each violation that FINRA detects must be attributed to inadequate supervision. And in this case, ... while OMSL had in place WSPs that addressed Professional Customer reviews …
- the WSPs failed to explain to the reviewer the proper method of counting orders to determine Professional Customer threshold. Although OMSL had reviewed monthly reports of customer account activity, those reports were not limited to options orders, and thus were not a reasonable tool to count the total number of options orders each month to enable OMSL to assess Professional Customer status for options orders.
- OMSL lacked documentary evidence that it had conducted quarterly Professional Customer reviews prior to 2016.
- prior to 2Q-2016, OMSL failed to verify the accuracy of FIX messages sent to one of its executing brokers to ensure that proper configurations were in place when it routed Professional Customer orders for execution to that executing broker.
This case was reported in FINRA Disciplinary Actions for February 2019.
For further details, go to ... FINRA Disciplinary Actions Online, and refer to Case #2016049700801.