10 Key Principles To Consider When Establishing An IT Control Program

On May 9, 2007, the SEC brought an administrative proceeding against a large investment bank alleging that the firm embedded undisclosed mark-ups and mark-downs in certain OTC executions and delayed execution of other orders, thereby not providing best execution to its retail customers.¹ The SEC alleged that the firm was reckless in improperly programming its automated OTC marketmaker system, which caused the errors. Without admitting or denying the allegations, the firm agreed to pay a civil monetary penalty of $1.5 million and disgorgement plus interest of approximately $6.4 million. The firm also agreed to retain an independent compliance consultant to conduct a comprehensive review and provide recommendations on its automated retail order handling system.