Among recent enforcement actions, the Financial Industry Regulatory Authority fined Barclays Capital Inc. $1.3 million for what it said were “systemic” failures to enter correct information into its Order Audit Trail System.
In addition, Instinet found itself in FINRA’s sights in two separate instances, over disclosure failures and its own OATS reporting issue, and Purshe Kaplan Sterling Investments was censured and fined for due diligence failures relating to its registered representatives’ outside business activities.
Barclays Capital Fined $1.3 Million on OATS, Supervisory Failures
FINRA has fined Barclays Capital Inc. $1.3 million for what it described as systemic Order Audit Trail System (OATS) reporting violations and related supervisory failures.
According to the agency, its rules require the complete and accurate transmission of data by firms to OATS that relates to events in the lifecycle of an order, called Reportable Order Events (ROEs). However, FINRA found 15 system issues at Barclays Capital that gave rise to OATS reporting violations.
Barclays Capital transmitted more than 3 billion inaccurate or incomplete ROEs to OATS, including omitted special handling codes; inaccurate timestamps, execution quantities and member type codes; and duplicate or erroneous reports. In addition, Barclays Capital failed to transmit millions of ROEs to OATS. FINRA also found that Barclays Capital’s supervisory system was not up to the task of achieving compliance with its OATS reporting obligations.
In settling with FINRA, Barclays Capital neither admitted nor denied the charges but consented to the entry of FINRA’s findings.
Instinet Censured, Fined by FINRA in Two Instances
Instinet LLC, an online security brokerage and electronic trading service, was censured and fined by FINRA in two separate instances, the first involving disclosure failures and the second OATS reporting.
In the first, the firm was fined $115,000 and required to revise its policies and procedures, including written supervisory procedures, after FINRA found that it failed to properly disclose that on some occasions, it acted in a principal trading capacity in its alternative trading systems (ATSs) when processing errors.