Three broker-dealers — Citadel Securities, Natixis Securities Americas and MUFG Securities Americas Inc. — agreed Monday to pay the Securities and Exchange Commission more than $6 million for providing incomplete and inaccurate securities trading information via blue sheet data.
The SEC uses the blue sheet data to carry out its enforcement and regulatory obligations, including investigating insider trading and other fraudulent activity.
According to the SEC’s orders, over a period of several years, Citadel, Natixis and MUFG Securities Americas each made numerous deficient blue sheet submissions containing inaccurate or missing data; incorrect order execution times that failed to adjust for time zone changes; and incorrect or missing exchange codes, transaction type identifiers, opposing broker number and contra-party identifiers.
Citadel, the largest provider of blue sheet data of the firms charged today, submitted incorrect data for nearly 80 million trades while Natixis and MUFG submitted incorrect data for approximately 150,000 trades and 650,000 trades, respectively, the SEC states.
“These deficiencies largely stemmed from undetected coding errors,” the SEC said, adding that “none of the firms had adequate processes designed to validate the accuracy of its submissions.”
Kelly Gibson, associate regional director of the SEC’s Philadelphia Regional Office, said that the securities regulator routinely use blue sheet data “to detect wrongdoing and protect Main Street investors through our enforcement efforts. Firms must be diligent and take seriously their obligations to provide accurate and complete data in response to our requests.”
Each of the firms has engaged in remedial efforts to address the causes for the deficient submissions, including the retention of an outside consultant and the adoption of new policies and procedures for processing blue sheet requests, the orders state.
The SEC’s orders also found that Citadel, Natixis and MUFG willfully violated the broker-dealer books and records and reporting provisions.
— Check out SEC Uses Data Analysis to Bust Cherry-Picking Broker: Enforcement on ThinkAdvisor.