The Financial Industry Regulatory Authority (FINRA) today announced it has imposed a fine of $2.95 million on Macquarie Capital (USA) Inc. over the firm’s failure to file comprehensive and accurate trade data in an automated format when requested by the Securities and Exchange Commission (SEC) and FINRA.
In addition, Macquarie was ordered to carry out a thorough review of its policies, systems and procedures related to the so-called “blue sheet” submissions. The company will also have to certify that they have established procedures to address and correct the violations.
FINRA has found that from January 2012 to September 2015, Macquarie suffered a multitude of problems with its electronic systems used to compile and produce blue sheet data. This resulted in the firm:
filing some blue sheets that misreported buys as sells and vice versa on allocations of certain customer trades,- miscalculating the net amount of transactions,
- failing to report post-trade cancels and corrections,
- and failing to provide accurate customer information.
FINRA also found that Macquarie did not have adequate audit systems in place.
Trade data in the form of “blue sheets” is requested by the SEC and FINRA, in order to help them in investigations concerning equity trading, including market manipulation and insider trading. Firms should submit this information to FINRA and other regulators electronically upon request. “Blue sheets” provide important information regarding securities transactions, including the security, trade date, price, share quantity, customer name, and whether it was a buy, sale, or short sale. This information is considered crucial for regulators’ ability to discharge their enforcement and regulatory mandates.
Cameron Funkhouser, Executive Vice President and Head of FINRA’s Office of Fraud Detection and Market Intelligence, said,
“FINRA’s ability to conduct market surveillance and complex investigations is dependent on the accuracy of member firm blue sheet data. All introducing and clearing firms should take inventory of their processes for producing accurate trading data to ensure that they are in position to comply with blue sheet requests from regulators in a complete and timely manner.”
Macquarie neither admitted nor denied the charges, but agreed to the entry of FINRA’s findings.
You can view the official announcement from FINRA by clicking here.