Instinet, LLC, was censured and fined a total of more than $1.5 million for violations of various provisions the Market Access Rule and related exchange supervisory rules.
The Market Access Rule requires broker-dealers that provide their customers access to an exchange or alternative trading system to adequately control the financial and regulatory risks of providing such access. The rule is designed to ensure that broker-dealers appropriately control the risks associated with market access, so as not to jeopardize their own financial condition, that of other market participants, the integrity of trading on the securities markets, and the stability of the financial system.
The action against Instinet was taken by FINRA, along with BOX Options Exchange; the Cboe BZX Exchange; Investors Exchange (IEX); The NASDAQ Stock Market; the New York Stock Exchange; and certain of their affiliated exchanges. The fine was apportioned among FINRA and the exchanges.
“This case demonstrates the importance of reasonable market access procedures to appropriately monitor for errors and risks that can be harmful to the integrity of our securities markets,” said FINRA and the exchanges in a joint statement.
In settling this matter, Instinet neither admitted nor denied the charges but consented to the entry of FINRA’s and the exchanges’ findings.
Instinet provided market access to numerous clients. According to FINRA and the exchanges, the firm failed to supervise trading to detect and prevent potentially “violative and manipulative activity.”
Further, FINRA and the Exchanges found that the firm failed to comply with the Market Access Rule by failing to implement financial and regulatory risk management controls and procedures reasonably designed to prevent the entry of erroneous or duplicative orders, orders that exceeded appropriate pre-set credit or capital thresholds, or erroneous messaging activity resulting from malfunctioning customer algorithms and trading systems.
Courts Fine and Bar “Winning the Money Game” Advisor for Fraud
Courts ordered an investment advisor and his companies to pay more than $255,000 for defrauding clients, according to the Securities and Exchange Commission.
On April 2, a federal district court in Washington, D.C., entered final judgments against Ikenna “Ike” Ikokwu, a Georgia-based investment advisor, and his companies Winning the Money Game with Ike, Inc., and Winning the Money Game, LLC, all of which the SEC charged with fraud.
According to the SEC’s complaint, Ikokwu persuaded more than 20 clients of his companies to collectively invest $5 million in securities issued by FutureGen Company. The SEC previously charged FutureGen and its principal, Lawrence Schmidt, with defrauding investors.