An AWC was issued in which the firm was censured and fined $110,000. Without admitting or denying the findings, the firm consented to the sanctions and to the entry of findings that it engaged in trading unit aggregation but failed to ensure that individual traders were assigned to only one aggregation unit (AGU) at any time. The findings stated that the firm failed to ensure that AGUs had operated autonomously and engaged in separate trading strategies without regard to other trading units, and that AGUs had not coordinated trading activities, interacted, or shared order or position information. The findings also stated that the firm employed four individuals who acted as both a trader in one AGU and as a trader or supervisor in another AGU, including two individuals who served in such dual capacities. Such an arrangement is improper because it could result in the coordination of trading strategies or trading based upon position or trading information of the other AGU. The firm failed to provide adequate supervision to monitor for compliance with Rule 200(f) of Regulation SHO requiring a firm to aggregate all of its positions in a security unless it qualifies for independent trading unit aggregation. Aggregation of a unit’s independent net position prior to each sale limits the potential for abuse associated with coordination among units. The firm’s written plan of organization reflected unclear strategies, strategies that overlapped for multiple AGUs, and traders that also acted as traders or supervisors in other AGUs. The firm also lacked adequate WSPs and supporting documentation reflecting its creation and approval of AGUs and its supervision of traders. The findings also included that the firm transmitted reports that contained inaccurate, incomplete, or improperly formatted data to the Order Audit Trail System (OATSTM), failed to report non-market making proprietary orders to OATS and erroneously submitted post-trade allocations as reportable order events to OATS. FINRA found that the firm failed to provide written notification disclosing to its customer that a transaction was executed by the firm at an average price, that transaction details were available upon request, and/or its capacity in the transaction. FINRA also found that the firm inaccurately marked short sell orders as long. In addition, FINRA determined that the firm accepted a short sale order in an equity security from another person, or effected 4 Disciplinary and Other FINRA Actions October 2017 a short sale in an equity security for its own account, without borrowing the security, or entering into a bona-fide arrangement to borrow the security or having reasonable grounds to believe that the security could be borrowed so that it could be delivered on the date delivery is due, and documenting compliance with Rule 203(b)(1) of Regulation SHO. (FINRA Case #2014039939801)
