More On Legal & Compliancefrom The Advisor's Professional Library
- Nothing but the Best Execution Along with the many other fiduciary obligations owed by RIAs, firms owe a duty to seek best execution of clients transactions. If they fail to do, RIAs violate Section 206 of the Investment Advisers Act.
- Client Commission Practices and Soft Dollars RIAs should always evaluate whether the products and services they receive from broker-dealers are appropriate. The SEC suggested that an RIAs failure to stay within the scope of the Section 28(e) safe harbor may violate the advisors fiduciary duty to clients, so RIAs must evaluate their soft dollar relationships on a regular basis to ensure they are disclosed properly and that they do not negatively impact the best execution of clients transactions.
The Financial Industry Regulatory Authority announced Tuesday that it has fined TD Ameritrade Clearing Inc. $1.2 million and SG Americas Securities, Inc. $675,000 for failing to report or accurately report certain large options positions and for related supervisory deficiencies.
FINRA found that from May 2007 to January 2010, TD Ameritrade failed to properly aggregate certain reportable positions as acting-in-concert, which impacted nearly 4,100 accounts and resulted in the firm failing to report approximately 1.4 million positions.
In addition, TD Ameritrade failed to establish and maintain reasonable supervisory procedures and supervisory systems to ensure compliance with rules applicable to the accurate reporting of options positions.
“It is essential that regulators receive accurate, timely and complete information about large options positions, particularly those positions that involve accounts trading in concert, because this information is necessary to conduct market surveillance and to protect the integrity of the marketplace,” said Thomas Gira, executive vice president for FINRA Market Regulation, in a statement.
In a separate case, FINRA said that it found that from December 2007 to January 2013, SG Americas failed to report over-the-counter (OTC) options positions in approximately 500,000 instances; failed to report the counterparty for OTC options positions or incorrectly reported its customers' OTC options positions in more than 600,000 instances; and failed to report or misreported OTC index options positions in more than 900,000 instances.
In addition, SG Americas failed to establish and maintain reasonable supervisory procedures and supervisory systems to ensure compliance with rules applicable to the accurate reporting of options positions, FINRA said.
In concluding these settlements, TD Ameritrade and SG Americas neither admitted nor denied the charges, but consented to the entry of FINRA’s findings.
Check out 8 Critical Questions to Prepare for FINRA Suitability Exams on ThinkAdvisor.