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A broker-dealer settled FINRA charges of systemic Trade Reporting and Compliance Engine ("TRACE") violations.
In a Letter of Acceptance, Waiver and Consent, FINRA found that the firm violated FINRA Rule 6730 ("Transaction Reporting") in that:
- due to manual trade amendments and the firm's traders entering late trades, the firm reported over 2% of its Corporate transactions to TRACE more than 15 minutes after the time of execution, with approximately 1,000 late reports per month;
- due to coding errors, the firm over-reported Treasury transactions to TRACE that were executed between the firm and its affiliate, where the firm was executing offsetting transactions with customers or other dealers; and
- when the firm did not timely enter transactions, the order management system would report the transactions' execution time as the time the transaction was entered into the system.
Additionally, FINRA found that the firm had an insufficient supervisory system with regard to trade reporting, in violation of FINRA Rule 3110 ("Supervision").
To settle the charges, the firm agreed to (i) a censure, (ii) a $650,000 fine, and (iii) revise the firm's supervisory systems with respect to the over-reporting of Treasury transactions eligible for TRACE reporting.
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