A firm settled FINRA charges for inaccurately coding
options orders submitted by customers on the firm's online
trading platform.
The alleged failures resulted in a violation of
FINRA Rule 3110 ("Supervision"), among other
securities regulations. FINRA Rule 3110 requires broker-dealers to
establish, maintain and enforce both supervisory systems and
written supervisory procedures reasonably designed to supervise
broker-dealers' activities and the activities of their
representatives.
According to the Letter of Acceptance, Waiver and Consent, the
firm routed to options exchanges orders that were marked as
"Customer" rather than as "Professional
Customer." This resulted in the execution of approximately
500,000 mismarked options orders. FINRA alleged that the miscoding
(i) led to inaccurate order records and (ii) potentially caused
"those orders to be given undue priority for execution on the
options exchanges." FINRA determined that the firm failed to
implement (i)
