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ARTICLE · 08 SEPTEMBER 2023

FINRA Settles First Significant CAT Reporting Enforcement Action

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On August 16, Instinet, LLC (Instinet or the Firm) agreed to pay a $3.8 million fine to settle an enforcement action with the Financial Industry Regulatory Authority (FINRA) regarding its alleged failure...

United StatesFinance and Banking
James Brady
James Brady
Michael Diver
Michael Diver
Danette R. Edwards
Danette R. Edwards
Christian Kemnitz
Christian Kemnitz
Susan Light
Susan Light
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Michael Lohnes
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On August 16, Instinet, LLC (Instinet or the Firm) agreed to pay a $3.8 million fine to settle an enforcement action with the Financial Industry Regulatory Authority (FINRA) regarding its alleged failure to comply with certain of its Consolidated Audit Trail (CAT) reporting obligations.1 This case is FINRA's first significant enforcement action in the CAT space and should prompt member firms to revisit the efficacy of their CAT compliance programs.

Background

The CAT is a central repository created by the Securities and Exchange Commission (SEC) to allow regulators to track the activity of broker-dealers throughout US markets in national market system securities. FINRA utilizes CAT data as a part of its automated market surveillance program to detect manipulative activity and other potential violations. Pursuant to FINRA Rule 6830(a), FINRA members are required to record and electronically report certain details for each order and each reportable event to the

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