On September 16, FINRA accepted a Letter of Acceptance, Waiver, and Consent (AWC) from a member firm for violating trade reporting rules. According to the AWC, FINRA found the firm failed to include necessary indicators in approximately 23,000 municipal securities transactions and 155,000 transactions in TRACE-eligible securities between July 2016 and April 2021. Specifically, the firm’s electronic reporting system failed to account for transactions with affiliates where no transaction-based compensation was charged, resulting in a failure to report the Non-Transaction Based Compensation (NTBC) indicator for municipal securities transactions and the No Remuneration (NR) indicator for TRACE-eligible transactions.
The AWC noted FINRA determined the firm’s supervisory systems were not reasonably designed to ensure compliance with MSRB Rule G-14 and FINRA Rule 6730 (in violation of MSRB Rule G-27 and FINRA Rules 3110 and 2010, respectively), and lacked supervisory reviews and written procedures to check the accuracy of the NTBC and NR indicators. As a result of these findings, FINRA imposed a censure and a $150,000 fine on the firm. The firm agreed to pay the fine and waived its rights to contest the findings or the sanctions.
